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Direct2U Supermarket: From local to virtual

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Managing Director of in Navi Mumbai, , set up a maiden store just over three years ago, with the objective of offering customers from neighbouring catchments the convenience of buying high quality products under food and FMCG categories. As the retailer now edges closer to an ecommerce model, Satia speaks to Progressive Grocer India on the new realities of food retailing in India…

Direct2U Supermarket: From Local to Virtual
Manoj Satia, set up a maiden store just over three years ago, with the objective of offering customers from neighbouring catchments the convenience of buying high quality products under food and FMCG categories

You launched Direct2U Supermarket in 2012, at Nerul, Navi Mumbai on a retail space of 2100 sq.ft. What’s your target audience?

Our supermarket at Nerul is located in the upmarket locality of Palm Beach Road. It is fairly cosmopolitan in character. The families are mostly nuclear. Though they consume a fairly good amount of traditional groceries, there is more inclination towards heat-n-eat, RTC, RTE and frozen foods. Consumer packaged food products such as biscuits, chips, chocolates, cookies, juices, cold drinks and ice creams also find a good traction with our TG.

In the past year, have you introduced any new categories or SKUs in the store?

Yes, adding new promising and upcoming categories and phasing out the under-performing categories is a routine practice in our store. We introduced some gourmet categories in the store and are generating excellent responses due to our upmarket clientele.

 

Do you have a loyalty programme or membership? If yes, how many loyalty members do you have?

No, We do not have a formal loyalty programme. This is because modern customers typically want instant gratification. They do not want to accumulate points and wait for redemption of the same. They want their loyalty to be acknowledged and appreciated instantly. We run cart schemes every now and then.

WHO’S WHO: Manoj Satia, MD, Direct2U Retail

In terms of operational costs, which are the biggest components  f your expenses?

As is true for any retailer, the significant cost elements are manpower, rent and electricity in that order, and is in our case as well. Interestingly, the major savings also are derived from these three elements, if managed well.

In your opinion, how important is it to maintain healthy supplier partnerships? Do you have any specific initiatives or processes to ensure optimal supply chain partnerships?

Yes, healthy supplier partnerships are very important because they form the backbone of a retail operation. Therefore, last fiscal we initiated a “Meet-a-Vendor Programme” to discuss the performance of products from each of the vendors in terms of sales, margins and stock availability. As a result of this meet, our sales went up,margins improved and the stock availability was also fairly good.

What are the biggest challenges for independent supermarket owners in India? With modern chains spreading fast, are independent retailers at risk?

I believe the Neighborhood Modern Retail [NMT] format is going to play a significant role in the years to come. The big retail chains are interested in big ticket sizes. The smaller ticket sizes are just not feasible for them because of their higher operating costs. On the other hand, mom-n-pop/kirana stores are upgrading themselves to NMT/ standalone outlets. However, it appears that the manufacturers/ brand owners/ companies still do not understand the importance of NMT/ standalone outlets. They treat these as old traditional mom-n-pop stores. And, this is biggest challenge for any NMT/ standalone retailer.

Share your strategy on grocery e-commerce. What challenges are you expecting in this field?

As of now, we are not including fruits & vegetables, frozen products and ice creams in our e-commerce offer. This requires refrigerated vans, which are expensive and need food/ safety licenses. We will study these categories for another six months before taking a decision. However, we have gone ahead with other food & grocery SKUs that do not require refrigeration.

Why did you choose retail as your field of work?

I enjoy being in retail because it means being close to the consumer and this throws up many opportunities to closely study consumer behaviour and get first-hand feedback. Secondly, retailing in the world’s biggest consumer market — which is highly diverse and fragmented — is always very challenging.

What do you make of the fast mutating retail landscape in India?

In the past five years, many new formats and concepts have been conceived, but I believe only a few will actually sustain successfully. Among the online marketplace models, .com looks like a winner.