The journey of modern retail in India is still in its early chapters. In some parts of the country like Odisha, the industry is still in its diapers. While it will take a few more years for the industry to bloom and blossom in all its glory, the roots are taking a firm hold and growing stronger by the day. A strong indication of the prescient changes slowly aborning even in the backlands can be found in the lengthening footprint of regional retailers. In this story, we share with our readers the charysalis-to-moth- to-butterfly like evolution of ‘The World Retails Private Ltd’, a modern retail chain in Odisha, which is a part of The World Group.
Starting off with one store in 2007, the company today operates eight stores in various parts of the state – with three stores in Bhubaneshwar, two stores in Berhampur and one store each in Cuttack, Dhenkanal and Angul. The chain’s retail footprint covers 85,000 sq. ft., which brings in average monthly turnover of Rs. 5.7 crore. The stores are all rented and belong to the Value Superstore Format kind, with their sizes varying from 2,600 sq. ft. to 19,000 sq. ft. With growth coming at 10 per cent annually, World Retails is looking forward to a steady and reassuring business ride in the days ahead and has a target of reaching Rs. 100 crore by the end of FY2017-18.
“Since inception, The World Retail Group has been striving to provide a retail experience on a par with the national and international standards. We have been seriously pursuing qualitative development over the years and the same is now visible in our stores and products,” affirms Chairman of The World Group, Srinibash Sahoo.
Over the past eight to nine years, the group has gone about its task of becoming a regional retail power brand with grit and determination. What has given more puff to the company’s ambition and made its prospects more appetizing is that there is not much of competition to ruffle its feathers. “We enjoy a specific edge in the segment we are in and in our kind of business within the region. To a certain extent, V-Mart and Reliance Fresh can be called our competitors. Since we have the privilege to offer both FMCG and Fashion as our retail package, we have been able to take the advantage of combining both businesses and that too under the value format,” says Rajesh Patnaik, COO of this fast growing regional retail powerhouse, which is at the forefront of bringing modern and innovative retail practices in food and grocery in an otherwise predominantly traditional retail market of Odisha.
The unique blending of FMCG and Fashion in a value retail format has allowed World Retails to pack a greater punch to its business. Customers enjoy the privileges of adequate store space, good ambience, excellent service standards, all of which coupled with value pricing not only offers a bigger bang for the buck but also whips up the kind of competitive advantage that is hard to ignore. “We have been able to build a strong brand image within the state of Odisha. Being a regional player we have focused on regional products / assortment, which are make-in-Odisha products. This is part of our regional strategy and it allows us to cater to most of our customer requirements,” says Patnaik at whose stores the food and grocery range extends to categories across processed food, loose staples, packed pulses, cooking ingredients, detergents, personal care, beverages, diary and frozen.
Regional strategy for products and suppliers
The regional strategy as formulated and executed by World Retails deserves special mention and holds a salutary lesson for regional retailers everywhere.
For World Retails, the strategy is one of the most potent weapons in the company’s armoury, and one which gives it enough dry powder to fight the odds with poise and confidence. The strategy is based on stitching a formidable alliance with the local and regional brands. The collaboration has helped World Retails to reap handsome dividends – not only by way of distending sales but also by way of developing and building a strong retail platform, which has helped the retailer to forge a symbiotic and deeper relationship with brands and suppliers in the region.
“We believe in promoting regional trade by way of reaching out to small entrepreneurs and sharing our shelf space with their products. This has helped us develop a synergistic relationship, which has become a source of mutual strength between the small entrepreneurs and our retail chain. They have stood with us at all times as by virtue of this relationship they have become the dominant players in their respective assortment in the regions. Hence we promote trade regionally,” confides Patnaik.
In a small market like Odisha, where the distribution business is limited to a few hands and instances of irregular stock supplies by stockists / distributors at peak times and even the availability of products on time is a recurrent issue, what can retailers do to ring fence their business from such abrupt disruptions?
“We always try to keep our master data of products short and sweet. In fact, we do not believe in maintaining a large data base and then find it difficult to maintain it. Our endeavour is to ensure that whatever we keep and introduce into our system is available to our customers on regular basis. So apart from the products that drive the market, we select the products based on a certain criteria before making it a part of our master list. Once a product is available on our shelves, its availability is more important to us than the product’s introduction itself,” explains Patnaik.
The product basket at World Retails, with an SKU count of 20,334, is fairly diverse and eclectic to suit a wide swathe of tastes and preferences. In the fast growing emerging categories, International foods, organic foods, and frozen, especially non-veg, high fiber and multi-grain foods are the star performers. “The people of Odisha are fond of eating various kinds of foods having regional flavours. Hence it has been our effort to provide ample and better varieties of flavours and a range that caters to their needs,” says Patnaik.
For delivering on the promise of catering to regional flavours, World Retails has tie-ups with local and regional players in the ready-to-eat department and for products such as pickles, pappads, diary, spices, cooking ingredients and flour. “These tie-ups have helped us to reap the benefits of achieving higher volumes, strengthening the bottom line, and enhancing our brand equity as a retailer known for catering to the flavours and tastes of Odisha,” states Patnaik.
As far as brand preference goes, while products from FMCG majors such as HUL, Britannia, Amul, Yummies, ITC, Duke’s, Bisk Farm, Grihasti, Fortune, Sundrop, Coke, Grihani, Haldiram’s, Nestle, and Dabur enjoy an upper hand with customers, categories like processed food, cooking ingredients, staples and frozen enjoy more favourable winds at their backs.
Syncing location with the store format
Though all retailers inherently understand the importance of location in making business tick, few have so successfully managed to align their location strategy to the drawing power of their store format. At a time, when there is a profusion of malls in even smaller cities and towns, it might perhaps make better business and location-wise sense for bigger grocery stores to operate from the cocooned precincts of a mall. After all, there are powerful lures such as parking facility and the probability of a higher footfall with the mall itself acting as a big receptacle for shoppers.
For the advocates of this line of logic, the stance of World Retails could appear seemingly contrarian. Almost all its stores are standalone properties but have nevertheless become shopping destinations over the years. The footfall numbers speak for themselves: the average daily/weekly footfall at World Retails stores stands at a very brisk 5,506 visitors daily and 38,542 on a weekly basis.
“We believe in having the right location that can strategically cater to all segments of people at large. Since we are in the value format space, our location strategy takes care of almost 70 per cent our sales strategy. Hence we are very specific about choosing the exact property – preferably a standalone property with all basic amenities like parking, visibility and, of course, the viability factor,” avers Patnaik.
Another factor, which has helped World Retails in wooing customers and attract higher footfall numbers is its clever use of “pleasure-value quotient” that it has brought to its three bigger stores. Basically, these stores come with the added advantage of having an eat-in opportunity courtesy their food joints. In more mature grocery markets of the West, foodservice in convenience stores is the industry’s fastest-growing category and the most cogent reason why consumers choose one channel over another when purchasing food and beverages.
As part of a well-thought out strategy to convert the retail stores into destinations and hangout zones, World Retails created an internal division called Food Trick. This strategy has been very successful in all the three outlets where it has been deployed sa far. It has, over the years, created a niche for World Retails in a market like Odisha, where having a food joint inside a store holds an exotic value for customers.
Currently, Food Tricks adds up to Rs. 1.8 crore annually to World Retails overall revenue and it is expected to reach Rs. 3 crore by end of FY 2017-18. Catering to multi cuisine recipes, the joint serves specific signature dishes such as onion cheese dosa and Chinese recipes, which have enabled the stores to draw a huge number of footfalls. Also, the south Indian Thali during the lunch hour has been a focal point of footfall attraction.
“Food Trick is one of the USPs and a marked differentiator for the customers, and has helped us maintain footfalls and thereby achieve our desired goals. To a certain extent Food Trick has helped in its unique way to add value and footfall during these years. The weakness for good food for the people of Odisha has added to our strength,” says Patnaik.
Food joints inside grocery stores are still a novelty in the Indian context and in places where such stores are a rarity, the concept can work like a magic siren song. While the customer mix at World Retails stores across Odisha is largely dependent on the location of the store – usually a mixture of both family and youth – the ones with food joints have seen a much higher incidence of youth visitors. “The youth factor is quite pronounced at such outlets and these numbers have been growing,” discloses Patnaik.
Collaborations and programmes for retail edge
Devising innovative programmes and schemes to benefit regular customers and burnish the brand image is an art that World Retails has emplyed to good effect. “Since we are still operating in a traditional market, we believe in educating our customers to reap the benefits of our loyalty programme and encourage repeat visits of our customers.” The stores employ trained staff who engage with customers by highlighting the features and benefits of the products as well as by enlightening the customers on the products’ usage and any value addition they might offer.
“During the festive periods and on specific occasions, special events like cookery shows and treasure hunt kind of programmes are organised to test the effectiveness of our efforts in educating the customers,” informs Patnaik.
For implementing the latest trends in category management, display and merchandising, World Retails has TOTs in place with all leading brands like HUL, P&G, Britannia, Nestle, Coke, Duke’s, Parle, and Dabur to name a few. The arrangements have helped World Retails acquire an edge in terms of offers and promotion excellence during every buying cycle, and in times of festivities and special occasions like Valentine’s Day, Mother’s Day, Teacher’s Day, among others. The tie-ups have also proven effective in promoting sampling exercises sponsored by various brands, especially on the occasion of product launches and during promotional events.
The chain also runs a monthly unique scheme for customers called FMCG Sanchaya Hafta (Saving Week), which has helped it to develop trust and drive interest among its customer base. “The scheme is our USP and is unique within our competition wherein the customer is entitled to free products like atta, sugar and arhar dal based on specific slab purchases during the period that the scheme is in force. We also accept payments in all modes like Sodexho, credit / debit cards and NEFT mode of payment, apart from providing discounts to corporates based on the strategic tie-ups we have,” informs Patnaik.
In an environment where loyalty programme administration can take a backseat to sales, World Retails has ensured that its house is in order for driving loyalty opt-ins and maintaining loyalty relationships. The chain runs its loyalty programme in the name of “Family Card”, which offers customers loyalty points, which they can redeem on their purchases. “Currently, the impact of our loyalty programme is 18 per cent to our sales. The programme has been redesigned recently and we expect better returns as we have planned to link it with several other activities as part of our promotional strategy to achieve the desired goals,” avers Patnaik.
World Retails has earmarked the current fiscal year for strengthening and expanding its business. “First and foremost, we need to be present in more cities within Odisha, which has been our limitation as of now. Now that we enjoy brand value, the time is right for us to ensure presence in all potential cities of Odisha. We have already worked out the modalities and the process and systems are ready to take off on the back of franchise owned company operated model,” reveals Patnaik, emphasising on the fact that the chain is now geared to expand at a faster pace.
The retail chain intends to move ahead using the company owned and company operated and FOCO model formats for its expansion mode. Depending on the city it decides to move into, it will weigh its options for the right model to choose. “We need to be careful on the FOCO model since we need to maintain our standards, which we have built over these years. But at the same time, in our kind of business, we believe the right combination of both COCO & FOCO models will help us to achieve our mission,” points out Patnaik.
Over time, the chain has long term plans to expand to the neighboring states of Bihar, West Bengal and Andhra Pradesh in the second phase of expansion.
Read the full story with detailed facts and figures, insightful quotes and several pictures of the stores in May 2016 edition of Progressive Grocer.