The story of Hearty Mart supermarket reads like a potboiler script of guts, glory and gumption. The pangs of the wound inflicted by the Godhara communal riots of 2002 were still raw even two years later in the Muslim dominated Juhapura neighbourhood of Ahmedabad, which was bursting at the seams with refugees from all over the State.
In times of such existential crisis, thoughts of starting a business might have seemed like a foolhardy decision. But for Nadeem Jafri, looking to rehabilitate himself after an aborted career in advertising, the situation though adverse offered an opportunity for taking an entrepreneurial plunge. It was in these not-so-favourable circumstances that Heart Mart was born. The store opened its door for business in Juhapura, Ahmedabad, in February 2004, as a convenience store providing a one-stop-shop solution for all the daily needs of the residents of the neighbourhood.
Jafri did not consider its vast Muslim population to be victims and refugees, but potential customers with aspirations like anyone else. And there was no organised retailer catering to their needs: Although there were other superstores such as Reliance Fresh and Big Bazaar in Ahmedabad, none had ventured into restive Juhapura.
Sanjay Kumar of Progressive Grocer spoke to the Founder and Chief Mentor of Hearty Mart, which has diversified and spawned other food-related businesses and a successful supermarket franchising model to boot, about the troughs and peaks of his retail journey and how his venture has today evolved into a complete food company.
How did you come into the grocery business?
While working for an advertising agency I was deputed to work on an advertising pitch for a telecom company at the agency’s Mumbai office in late 2002. Our office was inside the Phoenix Mill Compound at Parel. Just opposite our office stood a Big Bazaar store. I used to visit the store regularly, whenever the time permitted and enjoyed my shopping experience there. The merchandise on display used to leave me very impressed. This was my first experience with an organised retail store of that magnitude and i remained etched in my mind for long.
During my stay in Mumbai I visited recruitment consultancies to try my luck. But I was told that I should not expect great results as far as job prospects were concerned in the advertising industry. There was a big mismatch between my age and experience. I was 32 years old with only two years of experience in this field then. Ahmedabad never offered a good career option in this sector and hence there was no choice left for me except to look at entrepreneurship as a career. This was when I seriously started pondering a career shift to entrepreneurship.
Today, as a founder and chief mentor of Hearty Mart, I feel satisfied with my decision to have ventured into entrepreneurship.
How did you settle down to choosing the location for your venture?
Coming from Gujarat and hailing from Ahmedabad, it was natural for me to look up to
my community in Juhapura locality of the city for support for my venture. Th is locality had a booming real estate, which promised development, but it still remained devoid of basic amenities like a proper organised retail store, which could provide the convenience of purchase to its residents.
It was in this gap that I found a huge opportunity to start an organised food and grocery store in the area in early 2004. Vishala Circle was the fastest developing area within Juhapura. It was not cramped unlike other parts of the area and we could speculate a good growth of the area in the near future.
With the vision of bringing convenience to the locality, we started our retail venture – Hearty Mart in February 2004. It was modelled as an ideal neighbourhood store and positioned as ‘Sabse Khaas Ghar ke Paas’. A store, which was positioned as a convenience store, and wanted to establish itself as a one-stop-solution for the daily needs of groceries, cosmetics, food grains etc.
Now that you have been 12 years in the business, have you been able to develop and hone your business model into something unique?
Our learnings from entering into an unexplored Juhapura provided us with the insights and courage to target unexplored areas of rural Gujarat. At the same time, the Hearty Mart model has also became a successful case study for aspiring entrepreneurs who would like to take up organised retail as their business through our innovative franchisee model. With our franchise model, we train the entrepreneurs at our Juhapura supermarket and share with them insights and knowledge of organised retail and thus guide them to run their own franchise store at their respective villages.
We have formed a Franchise Development Cell (FDC) at Hearty Mart. It consists of B-school graduates and senior partners of the company and aims at providing a retail ecosystem to our franchisees and works as a guiding force for them. We take a one-time fee and a brand royalty for our efforts from our franchisees. We have also taken a distributorship for certain brands, which we purchase centrally and send to our 11 franchisees. Creating entrepreneurs at a rural level with our franchisee model and hand-holding and supporting them through our Franchise Development Cell makes Hearty Mart a unique business model.
Please share with us your vision for Hearty Mart.
Our purpose here is to help the entrepreneurs with their franchise business. We believe that our growth would be reflected in their growth. We nurture them and train them and even invest in their companies to make them own a venture. In that sense, Hearty Mart works on an inclusive growth strategy. The social impact is that it generates entrepreneurs and promotes entrepreneurship at the rural level. Our vision can be best defined as: To touch the life of every Indian and provide him with the best merchandise that suits his lifestyle; to constantly work to open up new entrepreneurial avenues for rural communities.
What is the average size of Hearty Mart stores?
The average size of our rural franchisees is 750-1,000 square feet. But we also have a few stores, which are bigger in size as they are multi-storeyed. For example, our Dholka and Chhapi franchisees.
How much investment goes into setting up a Hearty Mart store?
A total investment of approximately Rs. 35 lakh to Rs. 40 lakh is needed for a decent 1,000 sq. ft. store in a rural set-up.
What is the typical retailer’s margin in this business? How much time does it take for a store to break even?
The net margin is 7-8 per cent. This makes it a business of turnover. Typically, a 1,000 square feet store in a rural set-up would take around three years to break even.
How many Hearty Mart stores are currently in operation and where are they located?
Hearty Mart is a rural chain of supermarkets based on a franchise model. We have in all 12 stores in villages of central, southern and north Gujarat. The company-owned store is in Juhapura, Ahmedabad; the remaining 11 stores are franchisee-based. Two more franchisees would be operational in the first half of 2016.
What is the total retail space under operation under the Hearty Mart umbrella?
More than 10,000 sq. ft. of retail space is under operation currently, which includes the 1,500 square feet store at Juhapura and the remaining 11 franchisees.
Which are the fast moving product categories in your chain of stores?
Hearty Mart being a food-grocery retail store, the categories related to food groceries and beverages are definitely fast moving in our stores. Categories include loose lentils and rice along with packaged spices and flavourings like coriander, cumin, chilli powder of national and regional brands like Everest, Badshah, MDH and Ramdev. In villages, the more localised brands in the same product line with an economical pricing are sold. In the category of beverages, regional teas compete with the might of the national players like Tata Tea and Lipton. Jivraj Tea, Wagh Bakri and Navkar are the few brands that fight tooth and nail with the established and multinational tea brands. Hindustan Unilever’s and Proctor & Gamble products in cosmetics, shampoos, dental care and hair care form a large part of other fast moving categories at Hearty Mart.
As a retail entrepreneur which have been the mistakes that have given you valuable learnings and experience?
My biggest mistake was to enter an industry that was not my area of expertise. Being from an advertising field, I did not know much about the retail sector. But I was lured to enter as I found the industry promising.
Disappointments and failures are a part of the entrepreneurial journey. The initial five years of my retail journey were really tough as the store did not break even till this period. As an entrepreneur, I was required to remain calm during this testing time and kept motivating my team to work with a positive mind-frame.
For my personal sustenance, I started visiting B-schools to deliver guest sessions. This failure taught me two things, which shaped my further entrepreneurial journey. Firstly, the experience of my dealing with students made me a better mentor to my team at my business and, secondly, the failure at my store inspired us to think of our innovative retail franchise model.
I feel that failure is a much needed booster dose, which helps in igniting the fire in an entrepreneur and inspires him to do better. We launched a retail franchisee network and entered the HoReCa segment only because we failed initially to earn profits for almost five years at the Juhapura store. Had we succeeded in earning profits straightaway, we would have remained a one-store venture without innovation.
Tell us about your marketing strategy. Please provide details of the promotional activities that you have carried or keep carrying at your stores.
Lots of promotional activities were carried out during the launch of our Juhapura store and we follow the same launch strategy with our new and upcoming franchisee stores.
Launch strategy: During the Juhapura store launch, we had sent personal invites to residents of the shortlisted colonies in the vicinity of our store. We had hired an auto rickshaw to run the promotional jingle of Hearty Mart and to distribute pamphlets announcing the launch of the supermarket in the area. This activity was continued for three weeks – a week before the launch and two weeks after the launch. On the launch day, we greeted our customers with a cup of ice-cream.
Goodwill creation: On completion of 100 days of the store launch, we gifted our key customers with a pack of sugar along with a personalised letter acknowledging their support for our store. This goodwill gesture helped us in creating more patrons of Hearty Mart from the area. We have introduced smart card and loyalty programmes for key customers and we also launch monthly promotional discounts on select products.
Festival offers: The Juhapura store predominantly caters to Muslim customers and hence Ramzan is the peak business month for us. We come up with iftaar packages and introduce discount schemes on beverages and dates. The rest of the franchisees cater to all communities and thus we have attractive discounts during the festive season of Diwali, Christmas, apart from Ramzan.
Events promotion: In order to promote our private brand – Chef Ki Pasand – among restaurants and caterers, we organise an annual event called Chef Ka Kamaal. In this event we invite chefs from small restaurants and conduct a cookery competition. They are required to cook a specific recipe using our brands. The event is adjudged by a panel of neutral judges and the first three winners get a cash price and citation signed by the judges.
The organised food grocery stores are more worried about footfalls. Once the customer enters the store, the purchase is ensured. Hence, all the efforts of our promotional activities are aimed in the direction of luring customers to the store and maintaining a long-term relationship with them.
Which have been the instances where you have partnered with brands to build new categories and make more money than other categories/ brands or products in the same space?
Iba is the first halal cosmetic brand launched in India. Halal cosmetics is a new category targeting consumers looking for pure products – free from animal fats and chemicals. The category is doing really well worldwide. But in India, Iba is the only brand in this segment. Hearty Mart has been appointed as a sole distributor for this brand of products to sell it among its franchise network. This is a new category and it has helped us attract more footfall at our store because of the exclusivity of the brand. And we are earning decent margins on the sale of Iba products among our network.
Brand partnership is necessary for a retailer to earn higher margins and thus it can create a win-win situation for both – the brand and its retail partner. A retailer is extra attentive to the brands whose exclusive rights have been given to him. In India we saw the classic case of Xiomi brand launched with an exclusive tie-up with Flipkart.
What is the contribution of your private labels to the revenue?
Private labels help the retailer to connect with his customers more efficiently since the in-house private brand is created based on the experience and key consumer insights. Hearty Mart has recently forayed into private labels by launching Duro brand of products in the toiletry category. Duro brand contributes almost 50 per cent of the category sales. It includes products like toilet cleaner, glass cleaner, hand-wash and floor cleaner.
In the beverage category we have a brand – Day Break. The contribution of this tea brand in the category sales is approximately 10 per cent. Apart from this, we have also launched Krispi brand of mouth freshener (mukhwaas), which is popular among our customers and contributes 40 per cent of the category sales.
Our GoodTime brand of spices and flavourings was launched recently and it has slowly started picking up. As of now it caters to 5 per cent of the overall category sales, which is dominated by brands like Everest, MDH, etc.
With e-commerce and m-commerce pulling ahead as more convenient and preferable mediums of shopping, are you doing anything special to beef up your presence on these channels?
In May 2015, we launched a new venture iheartymart.com. It is a unique format with an innovative mix of online/offline store. A branded van visits the localities outside the vicinity of our physical store for taking offline orders. The order is delivered to the residents on a scheduled day and time.
We have also developed an android app and we plan to slowly divert these customers to order through this app. The service is currently available only in our Ahmedabad store but in the near future we would introduce the same at our rural franchisees as well.
How do you see the course of Hearty Mart trajectory going forward?
Started as a retail store, Hearty Mart has evolved as a prominent name in the food and grocery sector today. February 2004 saw the flagship store of Hearty Mart supermarket being launched in not so-favourable conditions. Our journey began with selecting a strategic location in Juhapura where, after analyzing the need of the hour, a convenience store providing a one-stop-shop solution for all the daily needs of the residents came into being.
This success paved the way for entry into the villages through the rural franchising concept, and the next store was born in April 2007, in Ilol village near Himmatnagar. From then on, there has been no looking back and today Hearty Mart has a count of 12 stores in the rural market covering towns and villages like Dholka, Ilol, Chhapi and many more.
In early 2008, we launched a wholesale business of food-grocery and hotel supplies – Hearty Mart Enterprise Pvt. Ltd. It was a milestone for our group as we merged Hearty Mart with Ashish Enterprise, a company already working into this domain, to create Hearty Mart Enterprise (HME). It caters to more than 500 restaurants across Gujarat as on date and has gained a good name for itself as an established HoReCa supplier. With HME, we launched our private brands – Chef Ki Pasand spices and masalas catering to the hotel and restaurant industry and GoodTime catering to the retail market.
With the expansion in number of stores and geographical outreach, the need to integrate the businesses to maintain uniformity of quality and service deliverables was essential. This led to the inception of Hearty Mart Marketing & Logistics in 2010, connecting HME and the franchisees, store owners and retailers and for providing a channel of distribution for all the other products and brands.
All these ventures opened up windows of new opportunities. One such opportunity gave birth to Hearty Mart Tea Packers, which launched a new brand of tea – Day Break Tea – and tapped onto the huge potential market of highway restaurants.
Our recent launches of iheartymart.com, the online store, and Hearty Mart Bakers Point, our in-house bakery products, have taken our group in the direction of evolving into a complete food company.
Hearty Mart is committed to work for the development of the rural public and is continuously on the lookout for different opportunities, which can be created at the rural level.