There are possibly few retail professionals in India — especially those in the grocery business — who have not met or heard of C Gopalakrishnan, a third generation scion of the pioneering family that established the path-breaking Nilgiri’s supermarket chain back in 1905.
The grandson of Sri. Muthuswamy, founder of Nilgiri’s, Gopalakrishnan joined the family business in 1974 as a maintenance engineer (he was a a qualified refrigeration and air conditioning engineer). In 1993, he was appointed Director, Nilgiri Dairy Farms, and in 1994, he started Nilgiris Franchise (P) Ltd., as the company’s Managing Director — a position he held until 2006 when the company was sold to UK-based investment firm Actis.
The family decision to divest was much against Gopalakrishnan’s wishes. “I was painted as the ‘black sheep’,” he laughs. “But I was absolutely sure the family was making a mistake in selling a business that my grandfather had dreamt of and built so painstakingly. Sadly, there was only so much I could do to reverse their decision.”
Actis further sold the company to Kishore Biyani-led Future Consumer Enterprise Ltd (FCEL) , which bought a 97.97 per cent stake in Nilgiri’s, in November 2014 at an estimated cost of Rs 300 crore. Post the sale of the family-business , in 2008, Gopalakrishnan launched a new company — N Dairy Farm (P) Ltd. — perhaps riding on Nilgiri’s unsurpassed brand recall and his rich and diverse expertise in the back-end and front-end of dairy products’ retailing. “I wanted to prove to my family that the supermarket model was very viable and profitable, and that they had perhaps made an error in exiting it,” he says.
Since then, he has set up an enviable back-end infrastructure in bakery, staples, dairy and confectionery and has also initiated franchising of the N Supermarket chain.
[“I firmly believed — and still do — that a food/ grocery retail business in India cannot be left to external professionals. By its very nature, it demands that the investor be intensely engaged in running the operations. There simply aren’t enough professionals who know as much as an entrepreneur does.”]
With five stores already in operation, the chain has signed up seven more locations in Tamil Nadu and Karnataka. “We have also appointed a master franchisee in Chennai with the mandate to open 20 stores in three years’ time in the city,” Gopalakrishnan informs.
Among his many achievements — including franchising a supermarket and introducing barcodes on products at retail — the first game-changing move would be establishing the first private-sector self-service retail format in India back in 1974. And this came about from Gopalakrishnan’s previous hands-on retail experience at Neil’s Supermarket in Oklahoma city. “I worked part-time at this store in evenings, while earning my degree in refrigeration and airconditioning engineering at Oklahoma State University,” he elaborates.
“Before 1974, Nilgiri’s was a regular grocery store, although with a strong offer of product quality and customer service. I think we were the first retailer in India to introduce a self-service format.”
Twenty years on, after a sustained campaign to convince his family on the merits of expansion, Gopalakrishnan started Nilgiri’s Franchise Pvt Ltd, which would take Nilgiri’s to a 30-store chain across south India by 2006.
Gopalakrishnan’s strategy to franchise a supermarket was path-breaking, and not just in India. “It may have been a first-ever expansion model then in the world,” he states. “Apart from Seven-11, — which was a convenience format, not a supermarket — I don’t believe any other supermarket anywhere had been franchised until then.”
Gopalakrishnan’s modus operandi to appoint and nurture franchisees was based on his strong belief in an ‘investor-operator’ model. “I firmly believed — and still do — that a food/ grocery retail business in India cannot be left to external professionals. By its very nature, it demands that the investor be intensely engaged in running the operations. There simply aren’t enough professionals who know as much as an entrepreneur does.”
In addition, Nilgiri’s Franchise also drew up detailed protocols for franchisees to operate profitably. “The fact that Nilgiri’s private labels were such a strong anchor at our stores (with 30 per cent sales contribution), allowed us to dictate terms on merchandise mix, and on retaining the Nilgiri’s product quality and service offer,” he points out.
And that is the strategy he is continuing with in his ‘second coming’ as a food & grocery retailer. “Our private label — ‘N’ — is a key part of N Supermarkets’ mix with over 700 products. In fact we also supply ‘N’ products to Nilgiri’s,” he says.
But Gopalakrishnan’s ‘re-birth’ has occurred at a time when the world has changed, especially for retailers. “Yes,” he admits, “it is a very different vibe now.” His biggest problem, though, is not where you might to expect to find it. “It is in finding the right people; now, youngsters don’t talk about learning, they only talk of salary packages, and that is a challenge in my kind of vertically integrated business,” he says, adding that one of N Supermarkets outlets has been set up just to train and develop human talent.
By Nupur Chakraborty