Spencer’s, the oldest modern retail brand in India, is the pioneer in hypermarkets in India, having introduced the first one in 2001. The brand, which owes its success to its customer-centric approach, has not failed shoppers even during the pandemic. Amidst a global health crisis, Spencer’s worked towards initiating innovative, out-ofstore efforts to ensure customer safety and convenience.
Going forward, the brand aims to transform into an omnichannel retailer which can cater to evolving customer requirements and also be innovative and agile enough to respond to customers in a timely fashion.
In an interaction with Progressive Grocer, Shashwat Goenka, Sector Head (FMCG & Retail) at RP-Sanjiv Goenka Group, talks about the journey of his brand and how it has won over customers in times wrought with fear of contagion.
Excerpts from the Interview:
The first ever hypermarket in India was launched by Spencer’s. It is a pioneer in its own way. What are the other milestones that the brand has achieved?
In 1980, Spencer’s launched the first supermarket in India. In 2001 the first hypermarket was opened and after that it has always been an ongoing legacy for us. For example, in 2007, we launched the first hypermarket in Durgapur, Lucknow and Vijaywada.
We also pioneered app-based grocery ordering in the year 2015, becoming India’s first omnichannel retailer in the true sense.
What is the major customer value proposition of Spencer’s?
Spencer’s is known for its wide range of assortment, trusted quality, and strong focus on differentiated offerings in food and non-food alike.
Our company’s target customer base is upwardly mobile SECs as well as the more evolved consumers with a primary focus on literate women who are looking for a wide variety of choice at competitive prices during their shopping.
We are also a one-stop retail destination for different categories such as fresh produce (fruits, vegetables, fish, meat), bakery and staples with a keen focus on promotion-driven products in FMCG.
We also have a strong presence in providing experiential retail in gourmet food, imported food, uniquely sourced items as well as wine and liquor.
What is the range of products that you offer and which of these are the fastest moving? How many SKUs do you have on offer?
We offer fruits, vegetables, fish and meat, bakery, staples, FMCG, general merchandise, electronics and apparel. In each segment there are sub-segments to cater to our customer base.
For example, our range includes unique propositions such as hydroponics and greenhouse-grown fruits and vegetables, bakery products made fresh-in-store, wide range of organic produce and staples, a section which celebrates the different regions of India, and of the world, and uniquely designed own-brand of apparel under 2Bme brand. Each of our stores has an assortment ranging from 35,000 to 50,000 SKUs.
Tell us about your private label products. How much do they contribute to the overall revenue?
Private brands is a large part of Spencer’s strategy. They straddle across staples, FMCG, general merchandise and apparel. Our biggest brand is Smart Choice, which encompasses products across all food categories. Our other brands are Bath & Beauty Co, Hands On, Kitch, Inscapes, DoubleTick, and 2Bme.
Different private label brands serve different purpose – footfall drivers, margin drivers, range-expansion for customer, etc. The private brand products follow a win-win proposition for consumers as well as for us. Consumers get the advantage of lower prices and help us in lower costs.
The contribution of private label varies from category to category and is about 14 percent of overall format mix.
Strict quality checks and a plethora of small business owners make the private brand supplier base spread out across the country. Our private label products give more importance to MSMEs and Make In India.
Food or non-food category – which is a winner at Spencer’s and why?
Spencer’s is a destination for food categories across various parts of the country. With the efflux of time, the format has moved to build apparel with a key focus on seasonal merchandise and fast fashion under our private brand.
Similarly, in general merchandise, we are working on adding relevant brands across various sub-categories and in electrical & electronics, our focus has been on playing in electricals and accessories segment. Non-food mix is a key driver for margins for us and our work here has been on differentiation across categories. Overall, while we are a food-first retailer, our endeavor is to increase the proportion of our non-food mix and thereby improve our profitability.
How would you describe the distinguishing features of Spencer’s and how are they different from others in the category?
Spencer’s is a preferred retailer for customers looking for a shopping experience – new products, trusted brands, differentiated assortment, clean and hygienic shopping environment and customer-friendly service. A majority of our competitors are discount-led, with and EDLP strategy, limited range and assortment.
For us, the focus is on providing customers with a wide range of products across categories at very competitive prices, along with providing a unique experience which allows for discovery during the customer journey. With omnichannel now as major element in our strategy, the expectation is also for quick delivery and a seamless ordering experience.
What is the location strategy for your stores? Which locations do you prefer and what part do they play in your store sales?
We have a multi-pronged strategy for our store locations:
– In shopping malls, we are usually one of the anchor tenants.
– On high streets, we look for dense residential catchments.
– In upcoming neighbourhoods, we have also expanded via a single-story structure with adequate parking as standalone stores.
– For our smaller format stores, we look for busy high streets within residential catchments.
We prefer to expand in geographies where we already have our distribution centres and hence servicing the store is convenient and economical. Expansion in existing areas is the real estate strategy as we have the knowledge of the catchment and customer buying habits.
What is your marketing strategy and what steps are you taking to promote the brand?
We are clear that we want to promote and establish ourselves as an ‘Omnichannel Retailer’ and we are doing that with a media presence across all channels. Like during the pandemic we increased our presence heavily in digital media and channels to acquire new customers, but simultaneously we are the only brand who has been doing print ads and activations as well. We adapt as per market requirements and keep topicality as the major driving force to cater to the dynamic market situations and celebrate all festivals/ buying occasions at regional as well as national level.
Share some key learnings that you have gleaned over the years in this business.
Some of the key learnings from a customer point of view, which we have had over the past few years are:
– Customers want consistency in offerings.
– In- store service is a big differentiator.
– Earning the trust of customers by offering assortment of goods and relevant brands is important for customer retention.
– Adequate choice of products makes the customer loyal.
– And above all, proper training of our associates on products and handling customer queries has proved to be a great boon.
Can you share some insights into your sourcing strategy?
Our sourcing strategy is different across all categories. For FMCG, we work with all major brands and they supply to our distribution centres; we also work to grow new and nascent India FMCG start up brands. For fresh, it is a combination of direct farm procurement and source from local mandis. For staples, it is a mix of origin sourcing from mills as well as traders.
We have our own re-packing centres to clean, sort and grade commodities before they reach store shelves.
For non-food categories, we work with leading Indian brands as well as MSMEs and start ups to bring unique offerings to our customers.
Which are the new emerging categories at your stores?
The new categories that are emerging as a result of consumer demand are hygiene, sanitizers, organic, frozen snacks, health beverages, convenience foods, ayurvedic products, earthenware, work-fromhome apparels, hydroponically grown fruits and vegetables, and personal electronic accessories.
Any noticeable consumption trends for the products in your store?
During this pandemic, we have seen a spike in ready-to-eat foods, immunity boosting products in staples and processed foods, hygiene and sanitization as a category, and organic fresh have seen a sharp rise in demand.
Personal grooming products such as razors, epilators, clippers, and the entire household cleaning range have seen a spike as well.
Restaurant quality food ingredients is another major consumption trend noticed now – with a lot of consumers experimenting with cooking different cuisines at home. Home meal replacement SKUs are also gaining traction.
What are the retail channels you are using during the pandemic – stores or e-commerce or both?
During the COVID-19 period, we have been using both physical in-store and online channels.
How has COVID-19 impacted footfalls at stores?
The pandemic was unprecedented, something none of us expected. While footfalls have dropped, our out-of-store sales have grown exponentially, compensating the overall sales.
Customers are making lesser number of trips to the store, but their average spend per visit has increased significantly. They now buy for the entire month instead of buying for 10 days. Any top up requirements are catered through our out-of-store offerings – online, phone delivery, chatbot, WhatsApp, etc.
Post-lockdown we have seen a revival in footfalls. Out-ofstore sales have increased significantly due to the pandemic and lockdown compared to last year.
How do you propose to tackle the concept of contactless deliveries?
For us, the health of our customers is very important. Prior intimation to customers is given about the time of delivery at their home. The rider is equipped to place the packages at a safe spot and move after intimating the customers about the delivery. Post confirmation of customers’ actual pick up, the rider is instructed to move ahead.
Temperature checks of associates at stores and riders throughout the day is now mandatory across all stores.
We are also piloting click-and-collect model where customers can order online and do curb-side pick-up from our stores.
How are you maintaining hygiene and sanitization in the supply chain?
In the midst of COVID-19 pandemic, we are taking various steps and following prescribed guidelines to maintain hygiene and sanitization to ensure business continuity.
Here are the strategic steps that we are taking:
– Usage of personal protective equipment and following social distancing guidelines, mandatory use of face masks and gloves. Entry inside premises is not allowed without face mask.
– Hand sanitization is done at all entry points and all stakeholders (staff, labour, drivers, vendor representatives) are trained to practice social distancing. Regular hand washing with soap is preached and practiced amongst the entire team including labour and drivers.
– Temperature check during entry followed by hourly temperature check at work locations by security staff.
– Periodic sanitization of DC’s, delivery vehicles, and stores by professional agency and internal sanitization team.
– Documents coming in along with inbound consignments are fumigated by security at entry gate.
What are your plans and targets for the future? Going ahead, will you concentrate on growing online or improving your store count?
Our focus will be on a judicious mix of opening new stores in prime catchments and investing on our Omnichannel strategy. We will continue to focus on improving the mix of higher margin non-food categories.
What is the next big change that you see in grocery retail in the wake of the pandemic?
Retailers who have invested in hygiene, cleanliness and staff training will experience rise in footfalls as these are now a priority for customers.
There is a bunch of customers, especially millennials, who will switch to online for their grocery needs. Therefore, the focus will be to become an omnichannel retailer.