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The sweet spot in grocery retail is to take the middle path, says Modern Bazaar’s Kunaal Kumar

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owns the store chain in Delhi-NCR. He is a passionate grocer with almost 28 years of hands-on experience running modern grocery retail outlets in some of the toniest locations in Delhi-NCR. It currently operates nine stores over a total retail area spanning 40,000 sq. ft.. stores stock about 15,000 SKUs across a product range that covers all home care products, Indian and imported food products including groceries, staples, fresh ready to eat, bakery, chocolate, inhouse products of nuts, dips, sauces, and personal care products.

We are perhaps one of the few modern trade retailers in Delhi-NCR to be operating profitably,” says Kumar with a hint of pride at the success of his stores, and letting in sideways that he runs a business that is now 48 years in the reckoning and going strong.

“I have been in this trade since I was a kid and I learned my lessons watching my father run the operations and take it forward.”

He lets on that he has friends who are board members at very high-end retailers and they consult him informally about how he manages to make the business tick loud and clear.

“I believe that the sweet spot in grocery retail is to take the middle path–neither position yourself as being very high-end nor become very downmarket. This way you have a catchment that is very broad and diverse and includes both the well-heeled and the better-off .”

“Our stores are a reflection of this kind of positioning where a customer walks into a store with a nice lay-out and can get to pick his choice from a wide assortment of products and brands – from the basics to the upmarket–which are all priced very competitively and come with various deal offers.”

“And interestingly”, he cuts in to make a brownie point, “most of the goods that the high-end retailers stock are available at our stores but none of the basic stuff that we offer can be found at their stores.”

“I have a store in Vasant Vihar, which is close to a very high-end grocery retailer. But our business volumes must be over four times what they do on a daily basis,” he says pointing to the retinue of customers entering and walking out of his store next door. They are an eclectic lot: hipsters in trendy jeans and tops to middle-aged dowagers, soccer moms and stodgy pops to even the odd firangis sauntering in and out.“I am always close to my stores and never far away from my customers,” he says matter-of-factly.

“I don’t believe in giving directions sitting in an ivory tower and acting like an armchair pundit. I am usually the first to know of any important requirement or development at my stores and I deal with them upfront.”

Not that his stores don’t have trained managers and skilled staff to deal with situations. In fact, there are over 900 people working for Kumar directly or indirectly. But it’s his compulsive grocer’s itch to scratch consumer habits and behavior that keeps him in the thick of things always.

“Though I have professional managers who are in-charge of all my stores, I take a keen interest in the day-to-day operations and offer them guidance in all important matters,” he says, adding that it is important for owners to keep their ears to the ground by staying in direct touch with the stores and consumers.

“I also know each one of my suppliers directly and deal with them personally and not through my managers. In this line of business, the supply chain and the suppliers are very critical components and one must ensure that the system runs like a well-oiled machine,” he let out.

Many decisions have to be taken on the spur of the moment and in the field, so Kumar makes it a point to visit all his nine stores every day to get a first hand brief on what is happening and what needs to be done on a priority basis.

“The maximum ‘ghapla’ in this line of business happens in the purchase and procurement transactions so I keep a hawk eye on supply orders, which ensures that business transactions are well vetted and above board.” Smart money management and store operations over the years have brought in a bouquet of dividends. From three stores till some years ago, Modern Bazaar is now pushing nine, with plans to add at least one store every year. “By god’s grace, I have never had to shut down a store in all these years of business and I will continue to open stores if I am convinced of its profitability,” he says, adding that his stores’ turnover touched Rs 150 crore last year and the business itself is worth Rs 500 crore now.

Progressive Grocer sat down with Kunaal Kumar to discuss his approach to retailing and the hallmarks that have made Modern Bazaar a great shopping destination in Delhi-NCR.

Which retail format do your stores come under?

Our stores are a mix of outlets selling basic and gourmet products.

What is the customer proposition and marketing positioning of your store?

We offer our customers personalized service within a large store offering them a unique shopping experience plus the availability of their favorite brands and fresh foods. Our marketing strategy revolves around increasing the footfall in each of the store as well as increasing our share of wallet. A key element in our marketing effort is to constantly keep on top of our product mix to meet the requirements of customers in each of our store, based on analysis of shopping trends and what the customer needs. Our motto is ‘love all, serve all’ and our tagline is ‘largest variety of imported and Indian goods and groceries”. We believe in serving our customers in accordance with our motto and ethos, which is our USP.

What is your location strategy? Which locations do you prefer and what part do they play in your store sales?

Store locations are carefully chosen based on the demographics of each area. Other factors that influence the choice of a particular location are competition, cost, ease of access and visibility. Our stores are mainly located in areas that are in the midst of our target market segment and are located on main streets / high visibility areas. This has enabled us to not only reach and serve customers in the immediate vicinity but in the adjoining areas through our home delivery platform and the online application.

Which are the broad categories and range of your merchandise?

We have products in various categories, viz personal care, staples, health care products, delicacies, meats, bakery, Indian and imported groceries, processed foods and many more items.

What is the sales contribution from each of these categories?

From meats it is 15 percent, from bakery 15 percent, from imported goods 15 percent as well, from fruits and vegetables 10 percent, and from FMCG 15 percent.

Which are the new and emerging categories and why do you think they have market potential?

The new categories are superfoods and organic foods. They have potential due to the growing awareness of healthy eating among consumers.

What is the SKU count in your stores?

At any time, we stock not less than 15,000 SKUs.

What is your strategy for merchandise display and category management?

We display the brands that we believe in the most, and the brands that do well in terms of sales.

What is the average size of your stores?

The average size is about 4,500 sq.ft., but there are larger stores as well. We have 40,000 sq.ft. of retail area under operation.

How many stores are currently in operation and where are they located?

We currently run nine stores in Delhi-NCR. These are located in Vasant Vihar, Gurgaon, New Friends Colony, Punjabi Bagh, Saket, and Greater Kailash-1 and Noida.

Who are your competitors?

Our competitors are Godrej Nature’s Basket in the offline business and Grofers in the online business.

What is the average monthly turnover of your stores?

It is about Rs 15 crore.

Please describe the customer base of your stores?

It is a large mix comprising the middle class, upper middle class, the elite, VIPs and expats.

How much have you been growing y-o-y in terms of store count?

We add an average of 1-2 stores per year. We have no franchises and no partners. It is purely organic growth.

What is the average weekly/monthly footfall at your stores?
We get about 35,000 people who visit our stores every week.

What has been the growth in same store sales?

It is 20 percent increase per annum.

Which are your products in the private label category?

We have our private label products in categories like bakery, meats, health products, dips and staples.

Which are your top-selling PLs in food? What are your plans to augment and expand your PLs?

Dips, nuts, meats, and bread are our top selling PLs. We are looking to widen our offerings and expand our PL brands to include more products such as sauces and more variety within our existing categories.

What are you doing to promote your private labels?

We do regular in-store promotion such as posters and sampling to promote our private labels. How much of sales turnover do they contribute?

They contribute 20 percent to our overall sales. What is your online retailing strategy?

We are looking to target the middle class, and spread our network throughout NCR. It will make it easier for consumers to shop for our products.

What kind of incentives and deals you offer for your online customers, a majority of whom look for better deals and discounts when buying online?

We offer a 10 percent discount on the products.

What back-end and front-end infrastructure have you put in place for online sales?

We have a front-end website and an online portal. We already have a committee and an office in place for managing the back-end operations.

How do you plan to manage ‘delivery’, which is attracting critical focus these days?

About 15 percent of our orders are already home delivery, so we do have some experience. We also guarantee 90 minute delivery as our logistics are very strong.

Do you plan to introduce mobile app as well considering that shoppers are increasingly moving to ordering products via mobile? Yes, we will.

What are you doing to rope in more quality suppliers for the different categories of products?

We focus on giving suppliers good and long-lasting contracts, which are a sure shot way to forge loyal relationships with them.

How do you ensure that suppliers stick to quality standards and efficiency norms?

We have in place a committee to check the quality of products and report on the efficiency of our suppliers. We also strictly adhere to all regulatory norms and product deadlines.

What is the extent of your direct sourcing?

We do direct imports and we directly source our organic and bakery products.

Are there specific product categories which you feel are better to tap through direct sourcing?

Organic is one such category. The quality of organic products is verified if we take the supplies directly.

Financially, which is a better approach – direct sourcing or sourcing through suppliers?

Sourcing through suppliers is a better approach.

What new steps and measures have you taken – ATL-BTL activities – to promote your stores?

We have been promoting our stores through newspaper ads, through posters, and have been promoting our products through our shops.

Did you carry out any major course correction or make-over of your business in the past? If yes, what has been the result of such reformatting?

Change is an ongoing process at Modern Bazaar. We are constantly innovating to ensure that we meet customer expectations both in terms of the product mix and service delivery. We have changed the format of our new store in Select Citywalk to include a café and a fresh food counter, which is a concept that we will be adopting in our future stores as well. This change has established us as a premium retail store focused on enhancing the customer shopping experience.

Which have been the successful instances that you have partnered with brands and there was a measurable favorable impact?

There have been many instances where partnering with brands has also helped us. Our collaboration with organic and health-conscious brands such as Wingreen Dips and Raw helped us to develop our organic product offering mix.

Why it is important for retailers and brands to work collaboratively?

We feel that if these two main players work together, sales can be improved and so can the service to consumers and the quality of products.

How you are using technology to enhance customer experience and improve operational excellence?

We initiated self-checkouts, with sign catch, in our Cyber Hub store in Gurgaon and we are working on making it easier and more efficient to use. We are also piloting mobile scan and pay technology with Unishop in our Select City store. The technologies not only add convenience for the customer but also cut checkout waiting time and don’t require labor.

Were there any major breakthroughs, milestones, achievements in the past one year?

During the past one year, we have relocated our store in Select Citywalk to a much larger location within the same Mall. The new store is spread over 6,000 sq. ft. and has been specifically designed to enhance customer shopping experience. The store offers the customer a wide range of products across different price points. We have added a live bakery, fresh foods counter and a café that are comparable with speciality stores in developed markets overseas.

Tell us about your strengths and achievements so far?

Our strength is our committed workforce, which is passionate to serve and provide quality products. And our achievement is our satisfied clientele. Good local knowledge, efficient inventory handling and an excellent and a wide product mix are the strengths and forte of Modern Bazaar.

What is your roadmap for the future and how do you look at the future potential of your store format?

My vision is to open 15 new stores in the next 2 years and develop systems and processes to scale and enhance customer satisfaction across all our stores.