Please tell us about inception of Savemax
Savemax Wholesale, established in 2011, is relatively a new entrant in organised modern retail providing wide range of food items like fruits, vegetables and groceries, personal and home care products, home furnishing, sports items, cookware, etc. It is touted to be the first retail chain to introduce the wholesale model in India through which the customers get wholesale rates on all products on all days. .
Through its unique business positioning, Savemax aims to cater to both retail customers as well as institutional customers. Having said that, the focus is on addressing the entire basket of home makers and providing quality products to them.
Savemax’s parent company, BSRK Group, has over 60 years of experience in Rice Exports. It has export tie-ups in several countries including USA & European Countries.
At present, Savemax has three retail stores in Delhi, two are located in Dwarka and one in Kalkaji. The company’s vision is to provide efficient management and environment friendly solutions to the customers. The company also plans to launch 100 per cent green stores in India. Aligning with the vision and expansion plans, Savemax is investing in both time and capital to firm up its business model and systems to increase its share in the market.
Savemax Wholesale had a approximately Rs.125 crore in last fiscal last year and is targeting a Turnover of over 200 Cr in the current fiscal We are on track to open more stores this year by entering UP and Haryana.
What is your reach in terms of the total number of outlets and cities?
At present, Savemax has three multi brand retail stores in Delhi, out of which two are located in Dwarka and one in Kalkaji. The store in Kalkaji is spread across 30,000 sq ft area. We plan to open 15-18 new stores in Gujarat, Maharashtra, Chhattisgarh, Madhya Pradesh, Delhi, Haryana,Punjab, Uttarakhand and Uttar Pradesh by 2017 with a capital expenditure of around Rs. 300 crore. All stores are company operated, as we believe that we can serve our customers better this way. Also this model cut middle layers and put more money into the wallets of our customers as we pass on the benefits of wholesale to them. With our 3 stores we are touching 300,000 lives monthly.
How big is the market for the wholesale retail in India and what is the growth rate? What are the factors propelling the industry’s growth?
The Indian retail sector is buzzing as more players enter, new stores open up and operations spread to hinterland. This sector can become a key beneficiary of India’s growth story. The last few years have seen rapid expansion as changing lifestyle and more cash in wallet fuel demand for wide range of products. Major domestic players have entered the retail arena and have ambitious plans to expand in the future across all verticals. International players in organized retail are also expected to make an entry in not too distant future. Little wonder then, despite the current spell of slowdown, the domestic retail market is poised to touch USD 1.3 trillion by 2020 compared with USD 500 billion currently.
In this phase of retail revolution, the primary focus of retailers is to capture consumers’ attention and provide a new shopping experience that goes beyond the ordinary. To achieve this, retailers are focusing on restructuring the supply chain and improving logistics to enhance productivity and meet consumer satisfaction. The retailers are also developing strategic and operational efficiency by managing supply chain, recruitment and training of high quality personnel, calculating share of wallet, conducting catchment area analysis, strategizing marketing functions and implementing IT in the back and front-end of core operations. The retailers need to adopt technology in every step like supply chain management, data analysis, POS, self service checkout, etc. This will help them streamline their operations and enhance their business efficiencies. Also, technology implementation at the store level will help the customers spend least time at the billing counter and easy guidance through the merchandise apart from providing value for their money.
Adoption of new improved customer service programmes is on top priority for our industry and we are finding ways to enhance our customer service. Now days, retailers are more focused towards customer demands & needs and to achieve this they are creating customer profiles and strategizing the marketing function accordingly. Also, the retailers are adopting new technology to entertain customers, keep them informed as they browse store details or any product information and helping them to make purchase decisions.
What is your market positioning and customer profile? How are the customer profile and the tastes and aspirations of your customers changing over the years? What are the various initiatives you have taken to look after your customer better?
At Savemax, we believe that the customer should have more money in his wallet after shopping at our place. Hence, we have adopted a wholesale positioning which means to say that we give wholesale prices to our customers on all products on all 365 days. We do not confine discount schemes for particular days or festivals. All our customers get the wholesale price advantage, whether they buy a single piece or buy in bulk. They get the price advantage of shopping at Sadar market without having to face the dust and grime. Our stores are in effect the future of wholesale market in India.
The same has been communicated to the customers through various media as well. While currently we are consuming only the print and outdoor media space, we also plan to start a programme for direct communication with customers to understand their need better and position ourselves to serve them better.
Our primary sets of customers are retails customers. We focus on our catchment and try to fulfil the needs of customers living in that catchment. Our secondary customers are the small shop owners, restaurants, hotels, kiosks in our catchment who find it easier and profitable to buy from our stores. This is in line with our core vision of providing wholesale rates to all customers.
Since we, launched, our customers have evolved and have started asking for more range and more products, given this we have plan to make our general merchandise offering lot more interesting and exhaustive. This will ensure that customers get a wider choice of products at competitive rates. Further, we continue to focus sharply on the quality of products that we sell and service standards so that customers have a satisfying experience and that makes them come back to Savemax for their purchases. When we talk about changing customers’ aspirations, we have observed that customers buy larger packs once convinced about the value (price and quality) it brings to him or her. Today the customer is willing to stock more though the degree varies from location to location and the trick lies in cracking this maze. Hence, this becomes a win-win situation for us as well as the customers. We are still evolving thus today customers’ feedback is even more valuable for us. We are trying to put in place a mechanism where in the customer freely expresses themselves. We understand the importance of having that bond of warmth with the customer in an Indian scenario.
Moreover, we are looking at more innovative packaging for each SKU in order to make it more appealing and easier for customers to shop.
Please provide details about brands, product range and services available at your stores.
We are present in all categories that a regular large format store or wholesale market should deal in. Being a multi brand retail store, we provide wide range of food items like fruits, vegetables and groceries. Apart from providing food items, we also offer personal and home care products, home furnishing, sports items, cookware, etc. Also, we have added apparels and plan to further expand into electronics and lifestyle products etc. in length. We have started making our general merchandise offering lot more interesting and exhaustive. We are building our international gourmet range along with the regional food category, like authentic rasjasthani and gujrati namkeens, Karachi biscuits from Hyderabad etc. The focus is always to give a wide range of products to the customers and delight them with our price-product combination.
What is the location strategy for your stores – malls or high street? Which locations do you prefer?
We have a very simple location strategy – be near our customers. We try to be as near as possible to our catchment with ease of access and ample parking.
What is the average size of your stores? How much investment goes into setting up each store? What is the ROI expected? What are your various store formats?
We tested water with our first two stores in Dwarka. Our store at Kalkaji is the biggest and all our future stores will be of similar size 30,000 sqft atleast. We have found that this size is an optimum and sustainable size for our kind of product and price offering. Investment for setting up one store is Rs. 10 crore.
We are a wholesale format which functions in the domain of B2C primarily with no direct team focusing on B2B as of now. We pass on the wholesale benefits to the end consumer. In hindsight we are more organized wholesale markets which have existed in India since time immemorial and have blossomed into a hub and spoke zones with city expansions. We merchandise our store little different with all major categories getting representation though each sub category would be represented by the leading products / brands in respective markets only. This is to ensure that customers are not confused with shadow brands and schemes which add to convenience of shopping.
What are the typical retailer margins in this business? How much time does it take for a store selling these products to break even? How many of your total stores are profitable?
Typical margins that most big retailers earn in this business range anywhere between 20-25%. Since we are a wholesale retail and we offer good prices to all our customers, we have passed on a lion’s share of this margin to our customers. Despite this, through better buying and managing our resources well, we are operationally profitable on all stores. Its our customers who have helped us achieve this objective.
What is your marketing strategy? Please provide details of promotional activities that you have carried or keep carrying at your stores.
So far, our main medium of communication has been through Print media and street hoardings. We have recently tied up with Radio City and running a campaign to give a wider range of customer an experience of shopping at our stores. The marketing strategy has always been focused on communicating our wholesale essence to our customers.
Also, we do not believe in having any big or small days. For us each day is similar and we pass on the benefits to the customer on all 365 days of a year on all products.
We are in the process of building more touch points and communicating our essence better.
What is your expansion strategy to open more stores? Are you looking at other regions of India? Are you looking for franchise stores too? If yes, what
kinds of franchisees are you looking for and where in India?
At present, we have three stores, first store is in Dwarka sector-11 which was started in December 2011, our second store is in sector-10 Dwarka which was started in April 2012 and third store is in Kalkaji which is spread across approximately 30,000 sq ft area. Now we are planning to launch another 15-18 stores by 2017 with capital expenditure of Rs 300 crore. We are ready to open 4 new stores across Haryana, UP, Delhi this year and for next three years we shall focus only in North India. We are already looking at Kundli, Karnal, Ghaziabad and Moradabad. Other towns are also being considered. Work is already on for these. We have defined a Mission 2019 for us and now we have got into serious planning and on ground implementation phase now.
Are there any interesting concepts or innovations you have introduced at your stores? Please give details.
Our stores are based on wholesale-club format, which no other retail player has adopted so far in India. The format is more popular in North America with Costco. Other retailers offering this format are BJs Wholesale club and Sam’s club, owned by Walmart. We have adapted the concept to the Indian customer context. Given the intricacies of the Indian market we have to change a lot of things especially the
We are more organized wholesale markets which have existed in India since time immemorial and have blossomed into a hub and spoke zones with city expansions. We merchandise our store little different with all major categories getting representation though each sub category would be represented by the leading products / brands in respective markets only. This is to ensure that customers are not confused with shadow brands and schemes which add to convenience of shopping. Our store layouts and display further add to not only customer convenience but huge amount of efficiencies in store operations also. Some of the points which we particularly are particular about:
- We do not call ourselves a hypermarket and do not like to be called either. We are a Wholesale
- Like a wholesale market we choose our SKU / Brand assortment very – very judiciously. Especial care is taken to ensure that
- A customer does not go back with a feeling that he/she did not find a solution to his / her need
- A customer is not confused in terms of choices to make at the store for the merchandise been offered
- Brand area Per SKU demarcated is larger which is a win-win situation for the principal company, us and the customers
- Ease of movement and browsing through the aisles and locating a product is much easier with much more open areas
- In terms of value offerings, the wholesale essence is maintained to the core
- We spend more time in deciding how to increase margins of the customer than our own as one leads to the other any which ways. It is a mindset in our organization
- Quality of each offering is monitored to the core and we ensure that the best quality merchandise is offered only e.g. we prefer to retail only Pet 5 bottles as they are healthy for the public even though Pet 1 bottles are available a plenty in the market. Our endeavor is to give Pet 5 bottles in the rate of Pet 1 bottles
Have you made any mistakes in your business over the last few years? PDid you carry any major course correction or make-over of your business in the past? If yes, please provide details. What has been the result of such reformatting?
We have been continuously learning. The focus has always been on getting the right product mix for the catchment. There have been times when we have been supplied products that has not met our own quality standards. At great cost to the company, we have always taken those products from the floor and dumped them. We have since then ensured better and continuous process of quality check. This to ensure that we consistently keep our promise of quality products to our customers. We have always had customer first policy and we are still evolving. Hence, a huge database of experience and learning is slowly being built.
The biggest challenge that retail faces is setting up a supply chain which is smooth, sustainable and economical. We are trying to work out a 100% direct store delivery SCM model which will help us achieve all of the above. Along with this the right talent, retail also faces a challenge of getting the right location considering our town planning does not account well for the same.
What is your total employee strength? Please provide details about how each store is manned and how many employees are there in each store. Also, how do you ensure their training and development? What are the motivation programs that you run for the employees? Please tell us some of the prominent HR initiative you have taken over the years.
Since inception in 2011 with a team of 4 people, we have grown tremendously and have the current team size of over 300 employees, including both corporate and on-ground operations.
In our opinion, recruitment in retail sector is taking a shift from quantity to quality where industry is in search to find qualified employees who fit retailers’ needs. More areas of focus in retail industry are buying and store operational department which offers best scope of growth in retail sector. Technology in retail sector is moving towards its advance stage where various issues in retail are resolved using technology based software. However, this needs to be backed by strong functional understanding at the software development stage and execution stage for which we need to recruit highly qualified candidates. Not only technology, hiring in our industry will also be done for supply chain, accounting, finance and management positions.
Employee training and development programme plays a very crucial role in any industry. We also provide training programs at all levels to train our employees and make them perfect in retail field. Store management training programs are organised by our company where we train and motivate our store managers for long term success, employees are trained with retail marketing skills, customer service workshops are organised, management training programs are organised for them.
HR head plays a crucial role in retail sector to handle employee engagement and attrition. Employee engagement is the process where employees deal directly with customers and to train them so that they can understand how to deal with customers. This can be achieved by an individual with efficient leadership quality. HR head aims to create an environment where employees collaborate, instead of imposing verdicts on them. Employee Attrition is another major challenge for HR head to handle. Retail sector provides the largest number of employment opportunities to youth; however, many young professionals are leaving the industry as they have to face high levels of stress and lack of proper career plan. Hence, HR head needs to focus on reasons that account for employee resignations from retail industry and devise strategies to address their grievances. Third biggest challenge for HR head is to create a robust EVP – Employee value Proposition. An employee value proposition (EVP) is the unique set of benefits which an employee receives in return for the skills, capabilities and experience they bring to a company. The value proposition includes the factors that some organizations categorize as total rewards given to employees like various forms of pay and benefits, learning and development from new technologies which also provide opportunity for personal achievement, flexible work arrangements and wellness programs. Organization provides this bundle of value in return for employee contribution of knowledge, skills, talents, behaviors, time and energy.
What are your future plans and targets in terms of opening new stores and new product offerings and initiatives?
At present, we have three stores, first store is in Dwarka sector-11 which was started in December 2011, our second store is in sector-10 Dwarka which was started in April 2012 and third store is in Kalkaji which is spread across approximately 30,000 sq ft area. Now we are planning to launch another 15-18 stores by 2017 with capital expenditure of Rs 300 crore. We are ready to open 4 new stores across Haryana, UP, Delhi this year and for next three years we shall focus only in North India. We are already looking at Kundli, Karnal, Ghaziabad and Moradabad. Other towns are also being considered. Work is already on for these. We have defined a Mission 2019 for us and now we will get into some serious planning and on ground implementation phase now.
What is your private label strategy? In which categories do you have private labels? What kind of margins do these give you compared to national brands? What is the sales split between private labels and national brands? What is your pricing strategy for private labels? What are your future plans in terms of your house brand?
We believe that the private labels should be of the higher quality than the competition at competitive prices. The quality has to be consistent and price competitive. In line with this we are in talks with international vendors to provide international quality products at very competitive prices. We already are offering good quality in grocery and bakery under our own label. We have also launched Shirts and formal wear under our K3 brand. We also have plans to introduce some of General merchanise products under our brand. Consciously we have and shall not enter the FMCG private label for the next 2 years.