If you are a new visitor to Sarvodaya Supermarket store, its ambience might leave you with deep furrows between the eyebrows. The shop defies many preconceived notions about what a modern day supermarket should be like. There are no security guards to welcome you with a Namaste; neither do you find any fancy props and frills that dilutes from its essence as a neighbourhood supermarket store.
And yet the store with a built-up space of 2200 sq. ft. has consistently punched above its weight ever since it opened in 2003. Located in a lane adjacent to the main road in Dadar, Mumbai, the Sarvodaya store remains abuzz with customers walking in to grab exciting offers and soak in the personalized customer service honed by the retailer over past 17 years.
The shop offers all your everyday needs and then some – be it tofu or branded tamarind packets. Marquee brands and top FMCGs – L’Oreal, Nivea, HUL, P&G – and other multinationals vie with each other to place their own set of promoters/ merchandisers at Sarvodaya, which has been giving its two bigger competitors – Sahakari Bhandhar and Big Bazaar – located barely a 100 meters away, a run for their money while laughing all the way to the bank itself. The store earns on average Rs. 2.25 crore per month in sales which, given its modest size, is an absolute cracker of a performance.
The story of Sarvodaya serves as an inspiration for small kirana/ mom-and-pop store owners who wish to take a leap of faith and embrace the brave world of Modern Trade leaving their anachronistic kirana model behind. Chetan Sangoi, the moving force behind the modern makeover of Sarvodaya from its plain kirana roots, deserves a standing ovation – not only for turning his one-time kirana store into a wunderkind modern grocery store but also for selflessly guiding many kirana shop owners to dream big and achieve a transformation they could not have earlier envisaged on their own. Along with B.S. Nagesh of TRRAIN (Trust for Retailers & Retail Associates of India), Sangoi is involved in a project that helps small kirana store owners to computerize their inventory and billing and become a part of modern trade.
When change is the name of the game
Sharing the secret behind his store’s success, Chetan Sangoi says: “Adapt yourself to the changing market needs.” And the man practices what he preaches – he dared to buck the family tradition and shake up its age-old traditional business. Just when he had started out in the business, he took a bold decision to move out of the family’s garment shop business. Th e family also ran another adjoining small kirana shop and Sangoi decided to merge both the shops and re-launch it as a modern trade grocery shop that Sarvodaya stands for today. Crediting Kishore Biyani’s Big Bazaar as the inspiration behind his move, Sangoi says: “It was Kishore Biyani’s Big Bazaar that made me think hard about my own business then and prompted me to turn over a fresh page and make a new start.”
The Sangoi family had two shops adjacent to each other – one selling pulses and a handful of other FMCG products and a garment shop. In 2002, Big Bazaar opened at Phoenix Mills, which was in close proximity to the Sangoi’s store. Th e new arrival made a dent into Sangoi’s business, arousing his curiosity about this new business intruder.
“One Sunday morning, I took my family to visit the newly opened Big Bazaar store and see for myself what it was all about. To my surprise, I saw a lot of my own customers there and what amazed me even more was to see them with their family,” recounts Sangoi.
It was both a moving and defining experience that made him realize that the era of modern format store had arrived and there could be no looking back. “I immediately realized that this format was here to stay and if we wanted to survive and also make money, there was no other option but to adopt the practices of modern trade – not only for our business to grow but also for our customers to shop in a modern environment.”
The force of this new realization propelled Sangoi to re-design his business operation. Th e garment and the kirana shop were amalgamated into one big shop on the lines of a self-service store. Modern shop racks were put in place, stocking was carried out with the focus on meeting the needs of the catchment, cash counters were put in place and other paraphernalia becoming of a modern store were brought in.
But the process of executing the makeover was challenging. “The problem with people like us who have been in the traditional trade is that we think we know it all. Th e attitude we carry is ‘humko kaun sikhayga (Nobody can teach us)’”. But the reality is different. It took us a lot of time to understand, learn, implement and execute the nitty-gritty of modern trade. I learnt it gradually and it struck me that there is detail in retail,” confides Sangoi.
Elaborating on the complex power dynamics that the younger generation brought up in traditional business families have to navigate, he says: “For someone like me, the biggest challenge was convincing my father and uncles to let go off there ins and allow me to handle the business. Th is remains the biggest challenge for many others in my business community. Th e older generation is extremely sceptical of passing on the power baton to the younger generation. And this attitude of theirs often de-motivates younger heirs to expand the business as per the changing market dynamics.”
Lessons from the expert
Going back to the antecedents of Sarvodaya, the store began its operation in the traditional format way back in 1972. Th e format was changed in 2003, and for the first six months thereafter, operations at the store were carried out on a trial-and-error basis.
It was during this period that Sangoi came across S.C. Mishra who was a private consultant to some traditional retail stores that had converted to the modern format. Says Sangoi: “I had attended a few seminars where he used to be invited as the speaker.
Th rough my business associates, I got in touch with him and invited him to my store. Th e day he visited, the first thing he said was that my store would not succeed and that my customers were unlikely to come back for a repeat visit.”
Thrown into a loop, Sangoi tried to reason that his store had all elements of modern trade. “But he brought to my notice the ramp space between opposite racks in the shop, which was about 3 feet. He said that the minimum space requirement between racks facing each other should be 5 feet and went on to explain the logic and science behind it. By and by, he came to share with me many more lessons, subtle and nuanced, that are the success sauce of modern F&G retail.”
In Sangoi, retail guru Mishra found an eager understudy who was keen to put into action the progressive ideas of his mentor. And as an avid reader and observer, Sangoi made sure to bring back all the learnings from his international visits that he undertook, and implementing many of those learnings at his store.
Manning the manpower
Sarvodaya operates on staff strength of 45, out of which 30 personnel are on the shop floor at any given point in time. Interestingly, Sangoi is of the opinion that working the shop fl oors at a modern trade grocery outlet is more a matter of possessing certain hand-on skills that are extraneous to your educational qualifications.
In fact, he feels that educational qualifications don’t count for much in those supervising the shop floor and shelves. “To work on the floor in a supermarket, why should one look for staff with qualifications. All you need to ensure is that they have good hands-on training,” he says, adding, “a well run modern trade outlet today will attract FMCG companies keen on placing their own merchandisers and promoters at your store. For e.g., at my store itself, I have four promoters from Unilever and men from companies like L’Oreal, Nivea, GITS, P&G, among others, who patrol the shelves at my store. In all, there are 13 such companies that have deputed their personnel at my store. They are in-charge of taking care of their shelves and attending to their set of customers in the shop.”
To oversee and supervise the shop personnel, a member from the Sangoi family is always present at the store. Th e presence of someone from the family helps ensure discipline amongst the team and also take care of any glitches in smooth operation of the store. However, unlike other modern trade groceries, there are no security guards to check the bags of patrons walking out of the shop, and the task of surveillance is done unobtrusively through CCTV cameras.
According to Sangoi, manpower isn’t really an issue for shopkeepers like him who want to convert their stores to the modern format. “In fact, it is more difficult to source for manpower for a traditional format. People don’t really like being called ‘bhaiya’ but change the format of the shop, have uniforms for the staff , get the racks and air-conditioning at the store and the salespersons are automatically treated differently. Th is becomes a motivational factor for manpower to work at our stores.”
More than any educational qualifications, the right training is the most important element in a shop floor personnel. “I have staff at my store who have not even completed their primary education. They can just recognize the alphabets. Based on their knowledge of recognizing the alphabets and colors, I have trained them in stocking and I make it a point to rotate their duties in different categories so that they have a holistic knowledge of each and every category to guide my customers’ right. In retail, for the floor staff , everything is monotonous after sometime. Th e challenge is to kill the monotony. Th is rotation keeps them charged up in a way,” says Sangoi.
Ask him about attrition – the workplace scourge at retail stores – and he says he isn’t worried at all if a staff member at his store decides to quit. “On the contrary,” he says, “there are two reasons for me to be content to see my staff quitting Sarvodaya. First, it is always satisfying to learn that my training has helped them look for better prospects and, secondly, if they decide to stick with my store for too long, there is the issue of increment that I need to take care of. Instead, I would be happy to train a new staff member joining in at a salary between Rs. 10,000 – Rs. 12,000 a month. I do not find it challenging at all to train my store staff as in a self=service store like ours, the only thing the staff needs to know is how to restock the shelves and attend to any customer queries if need be.”
On the systems and procedures in place for his team, Sangoi has made it mandatory for his staff to deposit their mobile phones the moment they enter their store. It is only during lunch hour that they can check their phones. The staff is granted all the applicable leaves as per the labour laws and there is strict protocol followed in terms of peer interaction during working hours so as to not cause a nuisance for customers shopping at the store.”
Sarvodaya has a monthly footfall of close to 40,000 customers. Shoplifting was an issue initially but through observation Sangoi realized that though customers would shoplift small ticket items but the majority of the shop-lifting was done by the staff . To put an end to this malaise, Sangoi brought in systems that have helped to address the problem of shrinkage effectively. ”Today, the amount of shrinkage and pilferage at my store is negligible even though the store does not deploy security-guards,” he says.
Sharing his sense of today’s grocery retail dynamics
Commenting on the changing market and consumer dynamics, Sangoi recounts: “Over the past few years, more and more people have shifted to consuming instant food instead of cooking their own food. Th is has caused the demand for instant food to grow and this trend is evident from the phenomenal growth witnessed by players like GITS. Also, dairy and frozen categories are clocking double digit growth and since the past two years, the growth has accelerated even further.”
In deference to this trend, Sangoi has introduced an additional chiller in his store. In addition to the standard chiller, the shop now has another 8 ft. chiller, which is stocked with not just butter, milk and curd but with a host of frozen/ dairy delicacies. “I am also seeing a rise in the demand for simple food items like poha and upma and more so for instant poha and upma,” he observes. Elaborating more on the consumer trends in traction, he says there is also a visible increase in the demand and sale of dips and spreads. “In the case of ketchups and jams, we are witnessing a considerable shift towards mayonnaise, dips, etc. Where I used to only stock Funfoods in this category, today I have a variety of sauces and spreads from Veeba, Wingreens, and others.
Gradually, I see jam being replaced by nutella, peanut butter, etc. Children no longer want jam on their bread/ toast. They are more into having special spreads and dips. In the case of curd and yoghurt too, there is a demand for flavoured yoghurts now. For instance, Epigama is selling phenomenally well. Surprisingly, Danone has exited from the market and I have no idea what made them do so.”
In cosmetics, Sangoi feels that the hair-care category has stagnated with flattened sales of hair oil whereas skin care as a category is doing considerably well with Unilver, P&G and Nivea launching different kinds of moisturizers, facewashes, and assorted products. “Men’s grooming too has become a strong category with new forms of styling gels being introduced to match the growth of newer hair styles,” he adds.
Giving further insight into today’s consumption trends, he says: “On analyzing the average family basket consumption at our store in 2019, we have realized that the weighted annual grocery consumption for a family has come down by 6 kg. Th is tapering is the result of the growing share of instant food, increased incidence of eating out and also the trend of skipping a complete meal for dinner and replacing it with snacks like pasta, sandwiches, dosa etc.”
Apart from the growing demand for instant food and dairy, Sangoi also talks about the rise in the demand for dry fruits. “Th e category has doubled in 3 years. Th e demand for seeds, too, has gone up. Health-conscious people want to have muesli, seeds, etc., instead of fried farsan. Th e sale of raw and flavoured makhana (fox nut) has been witnessing a steady rise as well. Today, money is no longer a criterion. It is no longer a market for cheaper products but about having convenient and the right product.”
Freshness and convenience matter more to the customers than the price. He points to the sale of Nescafe sachets, which is much higher and vastly exceeds the sale of the brand’s bigger packs. “People are more comfortable opening a fresh sachet every morning rather than have a jar of coffee powder stocked up, which due to climatic conditions may get spoilt before time. In beverages too, people want juices and not soft drinks. Premiumisation of goods is happening. Another example that comes to my mind is that of wheat fl our. People do not want the regular atta these days. Instead, they are opting for sugar free and multigrain wheat flour.”
Customer centric initiatives
Over the years, Sarvodaya has seen its monthly store revenue grow from Rs. 35 lakh in 2003 to more than Rs. 2 crore today. Th is fact alone attests to the shop’s growing customer loyalty. But the surprising part is that Sarvodaya has been able to build on its earnings and customer loyalty without even having a loyalty program in place. “I do not believe in the concept of having a loyalty card for my customers. I strongly recommend offering instant rewards/ gratification to the customers. From offering them a kilo of sugar or a litre of cooking oil free based on their billing size, I ensure that during festive time they take home something or the other relevant to the festival season.”
At Sarvodaya, based on the billing size – Rs. 555, Rs. 1000, Rs. 2000 and Rs. 4000 – each customer is rewarded instantly with a free gift. Similarly, Sangoi offers his customers the convenience of home delivery within a radius of 2 km. Talking about home delivery, he says: “I have close to 125 deliveries taking place on weekdays and about 180 on weekends. I have a battery operated two-wheeler and a normal four wheeler van assigned for making the home deliveries. Th ere is a surcharge of Rs. 30 per delivery and the minimum order value has to be Rs. 1500. But people don’t mind paying the amount and my home delivery service is expanding by the day.”
Besides placing an order at the store over the phone, a customer can place her order using WhatsApp or by logging on to the shop’s portal at www.mysarvodaya.com. As far as payment convenience is concerned, Sangoi has made it extremely easy for patrons to pay either using the COD option or any form of digital payment.
Th e savvy and at times counter-intuitive retailer is also a strong advocate of localising the SKUs according to the catchment’s demand. Given the fact that Sarvodaya is located in an area predominantly occupied by local Maharashtrians, Sangoi is particular about keeping a ready and good stock of spices used in Maharashtrian cuisine and these are available in pack sizes that the customers usually prefer. His private label in staples, spices and even wheat flour has been in demand since the inception of the store. Duringthe festive season, Sangoi also offers local festive delicacies as part of his private label offering.
Words of advice
“It is time for local kirana store owners to come out of their shell and convert their stores into self-service stores,” asserts Sangoi, who feels strongly that the changing retail dynamics make it mandatory for everyone in this business to embrace not just the self service format but also opt for computerization.
“Without understanding and sharing data, the local kirana store will find it difficult to survive.For example, you still see these local stores stocking huge amounts of dish washing bars but then data tells us that people are moving from bars to liquid wash. Similarly, people no longer use detergent bars for their clothes but detergent powder. Th ere is a lot of change and churn happening in the market. My advice to my peers is to change with the times,” says the retailer who is today the poster boy for many kirana shop owners who dream of making the cut in modern trade.