“If we take a look at Fortune 500 companies, a vast majority of them are retail giants. I would ponder over this; so when I had to consider doing something, I knew it would be retail,” says Mohammed Azim about his foray into the world of modern trade. He operates a retail store called Metto Supermarket in Cuttack, and has recently opened another in Bhubhaneshwar.
Azim shares, “Inspiration came to me from my neighborhood. During my visits to my hometown once a year (he did his schooling in Missourie and college from Delhi) I would see that new kirana stores were opening every year in the catchment, and they were doing good business. I felt that I too could operate successfully in the the retail industry and open a store of my own.”
He adds, “What made me confident of my project was that if retailers and companies from other parts of the country could run a successful business in my city, then as a local resident I had an edge over them. After all, I had a better understanding of the local needs and other cultural nuances of the local people.”
Fortunately for Azim, his family was in the business of real estate, so finding a suitable property for his store was not so challenging. He opened his first 7, 000 sqft Metto Supermarket in Cuttack on May 20, 2012 with an investment of Rs 40 lakh.
But the launch wasn’t easy considering that neither he nor his family had any experience in retail and were totally new to the business. It took him two years to put his plans into execution. “Being new to this industry took a heavy toll on my planning. I started out in August 2010 but opened my store almost two years later!”
To ensure that his ideas and plans were in sync with what retailing entailed in reality, Azim decided to acquire hands-on training. He joined a national chain as store manager. “After working there for eight months I was able to grasp the nitty-grittys of retail, but I felt it was not enough.”
Following a meeting with retail veteran S C Misra and Sarvodaya founder Chetan Sangoi, Azim managed to clear all his doubts. “Chetan Bhai guided me right through the store’s opening, and till date remains my mentor in moments of crisis or indecisiveness. Spending quality time with the two experts changed my outlook towards food and grocery retail, and my understanding of how the trade functions,” reveals Azim.
Doing up the store
Azim minces no words when he says, “The store is based on the No Thrill – No Frill concept. One wouldn’t find anything fancy in the store, but everything necessary for a comfortable shopping experience is in place. The 5-ft wide aisle gives ample space for customers to move freely. The 5 ft high high racks give a clear view of the entire store, and unlike most supermarkets, Azim has provided chairs for customers to rest on.
All the employees at Metto are local people, and Azim shares (with a sense of pride) that he also employs women who do not even have basic education. In fact, most of his employees are people who have been unsuccessful in finding employment due to lack of education. For Azim, it was a conscious decision at the outset that the unemployed youth in his area would find decent employment through his stores.
“Having brands to stock their brands at my store was not difficult, because they know that modern trade would get them better visibility. So they were happy to support me,” says Azim. The challenge was in convincing distributors to supply goods on credit. “We were new in the market so not many distributors were willing to partner with us.”
When Metto opened, there were approximately 4,000 skus; now the count has gone up to 10,000 skus. Over the years, Azim also started stocking categories like plastic, steel, crockery, luggage, toys, etc.
Building a customer base
With modern retail gaining ground in the country, people in smaller cities and towns too appreciate having a supermarket in their vicinity. Azim reveals, “Our customers in Cuttack were very excited when we opened Metto because we were a local retail store amidst other national chains, and we were right at their doorstep.”
The customers were very encouraging, but old habits die hard. A challenge that Azim faced with them early on was that of extending credit to them – just like at the kirana stores. “However, in due course of time they understood the modern nature of my business and were happy to shop in a store that gave them the freedom to choose and pick products off the shelf, and offered them a pleasant shopping environment,” says Azim.
Following the phenomenal response, Azim decided to open another store. “But we wanted to consolidate our position first, which took two years. This was a conscious decision because we wanted to gain enough loyal customers and at the same time wanted the existing team to acquire enough experience and confidence to run another store.”
The second store opened at Bhubhaneshwar in May 2014 with an investment of Rs 20 lakh. Spread over 3000 sqft, it has 4,200 skus currently.
Edible oil and grocery items are the main categories in both the supermarkets. Approximately 150 and 300 sqft are allotted to them, respectively. Oil constitutes about 12 percent of their sales, and grocery accounts for about 18 percent.
Azim shares, “The growth of these categories is directly correlated with the growth of the store. In the last two years, the edible oil category has grown 20 percent and grocery by 15 percent, which has led to the store’s growth of 20 percent. Such a growth is a positive sign for any store as it means that women (who are the main decision makers in a household) have started accepting the quality of your products, and have become your regular customers.”
Apart from offering free home delivery, Metto’s Cuttack outlet offers customers a minimum of 5 percent discount on all food items, and 10 percent on non-food items. At both the stores, a bonus is offered in the form of free sugar, oil, onions, towels, etc, based on their purchase amount.
Elaborating on one of their most successful schemes, Azim reveals, “We have this unique scheme in which we give customer one month’s purchase free on 12 month’s purchase. This offer took the whole city by storm and people were vying to become a member. At present, we have 2,000 + members and more than 800 members have taken this offer.”
Azim informs that the Cuttack store gets 10,000 footfalls in a month and does monthly sales of Rs 50 lakh.”Having lived in a metro city, I understood what Cuttack was missing. The options, freedom to select, discounted prices were not available here. While a few national retail chains were present, they sold most of the products on MRP.”
Pulling a page from his experience book, Azim shares, “India’s economic stature has grown rapidly over the last decade. Rising income and media has given power to people to choose and spend. Also, expansion of organized retail into tier 2 and tier 3 cities has been a boon for cities like Cuttack. Customers have evolved too. Shopping in an organized retail store, they compare brands and look for a good deal. They feel they have more control in a modern store than at a kirana.”
He shares other interesting points: Local owner managed supermarkets need to always update themselves on new trends, technology, products, etc, as big players are penetrating small towns and cities.
Customers should never be taken for granted. To build a loyalty base store owners need to keep coming up with attractive offers and schemes.
The operating principle should be: Right Behaviour, Right Price, Right Quality. Retailers’ target audience should be clear, based on which they should choose their location.
Sharing some advice, Azim says, “Cuttack holds many festivals, which are celebrated with pomp and show. As a retailer, you cannot ignore the people’s sentiments as they expect something special during these days of celebration. A good retailer should be ready with the festival calendar and prepare accordingly.”