With its primary focus on ‘fresh’ perishable products, the Heritage Fresh retail chain follows the farm to fork model. Jagadish Krishnan, Chief Operating Officer – Retail and Bakery Divisions, Heritage Foods Limited, delves into the company’s growth over the past seven years.
Hyderabad-based retail chain, Heritage Fresh currently has 70 stores with a strong presence in Hyderabad, Chennai and Bangalore. Its parent company, The Heritage Group, was founded by Shri Nara Chandra Babu Naidu with an aim to delight customers with ‘fresh and healthy’ food products.
Heritage Fresh was launched in November 2006, initially under the brand name Fresh@; the first set of pilot stores opened in Hyderabad. After going through several changes in the business model that aimed primarily on the perishable category (which now accounts for one-third of the company’s sales), the retail chain was renamed as Heritage Fresh. Today, Heritage Fresh is a modern supermarket stocking about 7,000 SKUs, with its core strength coming from perishable products such as dairy, fruits and vegetables. Explains Jagadish Krishnan, COO, Retail and Bakery Divisions, “We have made significant back-end investments in the perishable categories. Till date, we have invested about Rs 300 cr in our retail business.”
Heritage Fresh clocked a turnover of Rs 7 cr in FY 2006-2007 and in FY 2012-2013, it registered a turnover of Rs 327 cr. The company is expecting a revenue of Rs 400 crore by the end of FY 2014.
The retail chain’s operations and warehouses are spread across Hyderabad, Bangalore and Chennai. Its cumulative warehouse area covers 1.4 lakh sqft,and stocks about 6,000 skus and 7 days of inventory.
The farm to fork model is a ‘Relationship Farming’ engagement model that promotes growth for the farmers by giving them inputs and work alongside to improve their farm productivity. The farmers’ produce is bought at a fair prevailing market rate and they are free to sell to Heritage Fresh or to any other retailer. Heritage Fresh has also set up two ultra modern Pack Houses with an investment of around Rs 35 cr that includes all modern facilities like grading lines, pre–cooling chambers, fruit ripening chambers, cold storages with a processing capacity of 300 metric tonnes per day. These are located strategically to serve the retail chain’s presence in Hyderabad, Bangalore and Chennai.
The Heritage Fresh retail business came with several internal challenges such getting viable, commercially approved locations to scale up business, quality of human resources at leadership level with retail understanding, business remodelling issues keeping in view the margin and cost structure, process refinement issues to arrest shrinkage and margin leaks and scarcity of trained staff to man the stores.
According to Krishnan, over the last decade, grocers have been working on understanding and fine tuning their business models to the requirement and of their local population and to find solutions to the issues.
Positioned on the ‘Fresh’ platform, a significant part of the retail chain’s sales come from fresh produce. All Heritage Fresh stores open at 6.30 am for customers who want to shop for dairy, fruits and vegetables early in the morning at a fair deal.
Heritage Fresh presently has about 2.3 lakh square feet of trading space and is planning to increase it to 6 lakh square feet in the next 3 years. As per the company’s plans, New Heritage MART format 15,000 square feet stores will be launched in the next two quarters.
