Starting from scratch, Jalan’s Retail has emerged as a top regional grocery supermarket chain in eastern Uttar Pradesh thanks to its focus on quality and range of products across food and grocery categories and its ability to connect with its customer base, including the young and next-gen shoppers.
It is not easy to become a top regional grocery retailer from scratch within a span of 7-8 years and, that too, in a crowded supermarket space where top national chains, by dint of their distribution and financial muscle, call the shots. For The Jalan Group, one of the premier business houses engaged in textile trading since 1974, the decision to foray into grocery retailing entailed a lot of ifs and buts. A Varanasi (U.P.) based business house engaged in textile trading through its wholesale & retail enterprises, the group has been running a flourishing business as a fashion retailer since the company’s founding by Deendayal Jalan in 1974.
But as it happens with any thriving business operations, the idea of diversification is never too far away and it is only a matter of time and circumstances before the business pulls ahead with new plans and expansionary forays. “Traditionally, our family has, for long years, been into fashion retailing and it’s business that we know closely. When I joined the family business, I did not harbour any notions or plans to enter grocery,” says Bhagirath Jalan, Managing Director, Jalan’s Retail, and a scion of The Jalan Group.
At a time when Bhagirath was toying with plans to further expand the business, he came into contact with supermarket and retail consultant S.C. Misra, who encouraged him to foray into grocery retailing. “Initially, we were apprehensive of entering the food business, which comes with lots of challenges around quality, distribution and procurement issues. I had my doubts about cracking the difficulties inherent in the food retailing business. But thanks to the guidance and advice I received, it boosted my confidence and I finally decided to take the plunge.”
What also nudged Bhagirath to take up the grocery business was the autobiographical book – Made in America – written by Sam Walton, the founder of Walmart. Coincidentally, Walton began as a fashion retailer and it was much later that he entered the grocery business. “It motivated me, at a sub-conscious level, to learn that it was only after Walton took to the grocery business that he was able to expand his business empire and, in fact, become the world’s biggest retailer,” admits Bhagirath.
He also came across an article in India Today, in which the total retail sales in India at that time was mentioned as INR 45 trillion and 60,000 crore out of which about 30 trillion was accounted for by the grocery ad FMCG business. Up until then, he had assumed that fashion was a bigger business but the numbers made him sit up and think about the grocery business in a new light.
“My decision to enter the grocery business was influenced by the advice and encouragement I received from a veteran consultant in S.C. Misra, the book by Sam Walton and the numbers on grocery retail that I read in an article. At the same time, I was also very fortunate to have mentors in industry veterans like Damodar Mall of Reliance, Kishore Biyani of Future Retail and others who were kind enough to share with me their learnings and guide our way forward. Getting the right guidance from the very beginning proved to be very helpful in building and cultivating our business and becoming the top supermarket regional grocery retailer in eastern Uttar Pradesh,” says Bhagirath.
Bhagirath launched the first Jalan’s grocery supermarket in 2014, which became an instant success and spurred him to open 5 more supermarkets in successive years. “We had 6 grocery supermarkets but one of them was acquired over by the government during the renovation of the Vishwanath Dham corridor. But I am happy to say that all our five existing supermarkets are doing good business. Though we did not open any new supermarkets in 2020 and 2021, we plan to open another supermarket this year in Ghazipur, near Varanasi, and we are looking to grow and expand our grocery supermarket business in the years ahead.”
Of the five Jalan’s grocery supermarkets today, which together span 9,000 sq.ft. of retailing area, two are located in Varanasi, 1 in Jaunpur, 1 in Azamgarh and another in Prayagraj – all in Uttar Pradesh. The total retailing area, including its fashion departmental stores and Jalan’s grocery supermarkets, is currently about 85,000 sq.ft. Jalan’s operates 6 departmental stores and five of these are attached to its grocery supermarkets.
Product mix and merchandise
Jalan’s stores stock all supermarket products across categories like food, grocery and FMCGs. The food category includes products such as masalas, sugar, salt, oils, dried fruits, etc; grocery primarily comprises the food grains and FMCG includes assorted products in both food and non-food categories. “While we keep and stock all products and SKUs belonging to each of these three broad categories, our focus is mainly on food and grocery categories, which I prefer to call ‘the Big Six,'” says Bhagirath.
He observes that a lot of new grocery players don’t focus on their food and grocery products, which is a big mistake to make in this business. Citing an example, he says that there are more than 20 popular basmati rice varieties but many grocers who are new to this business are content stocking just a few varieties. A responsible grocer who knows the business should stock a whole range of rice, pulses and other grains like rava, besan, maida, etc., and keep a good category mix instead of stocking just a few varieties.
“I see a lot of new grocers who are content stocking mainly the FMCG products at the expense of keeping a full inventory mix across food and grocery products. While FMCGs are an important part of the grocery business, they are easier to stock and they yield lesser margins compared to the food ad grocery products. As an experienced grocery retailer, our focus is more on the food and grocery products that we buy from the mandis, and it is these products that give us the best margins in the supermarket business and a competitive edge as a retailer,” notes Bhagirath.
Standard FMCG products, say, a Dabur honey, Coalgate toothpaste or a Surf Excel pack can be bought from any supermarket store but not good quality pulses or kaju-badam, and customers don’t trust all grocery stores for buying such food and grocery products. It is through years of retailing experience that a store comes to build consumer trust for keeping such quality products and this is what defines a good, quality-conscious retailer from others in this business. “By focusing on quality food and grocery products, one can sharpen the competitive edge as an emerging or a regional retailer and strengthen your brand’s salience in the minds of customers and over other retailers,” avers Bhagirath.
Focus on the retail fundamentals
Having straddled both the fashion and grocery retail segments, how does he look at the commonalities and differences in the two businesses?
“The fundamentals of any retail business are the same and they don’t change. Across all retail sectors, one has to take care of the customers, businesses need to be price-competitive and market themselves well and they should pay close attention to their merchandise and its mix. As far as the differences are concerned, grocery supermarkets are ‘essential needs’ business and this fact was glaringly obvious during the lockdown phase of the Covid pandemic,” says Bhagirath, pointing to the fact that while the fashion business had to close down completely and suffered heavy losses as a result, the grocery supermarkets were operational albeit with the pandemic-induced restrictions in place.
He adds that in the grocery supermarket business, one operates on a 20-25 days stock inventory while in the fashion retail business you need to stock for a whole season. “So, the stock rotation is different for the fashion and grocery business. Also, the sales graph for the two are very different – in the grocery business, it is more or less uniform throughout the year with little steep rise or spikes in the graph. But the fashion business is different ad certain months like the festive or wedding seasons see a sharp spike in the sales. The frequency of shoppers’ visit to a supermarket vis-a-vis a departmental fashion store is very different…supermarket items like milk, bread and vegetables are bought on a daily or weekly basis while other products are being bought on a monthly basis whereas a typical customer might buy clothes only 2-4 times in a year.”
New retailing concepts and practices
At Jalan’s supermarkets, there are new activities taken up regularly, which helps to retain and expand the customer base. Bhagirath says that the first 10 days of a month are the peak business period for his grocery supermarkets. “It’s a period when we get the highest sales and we put in a lot of efforts to make sure that the stores are ready and well-prepared to cater to the demand rush. During this period, our staff attendance needs to be full-roster and there are special schemes and offers for customers during the weekends when the footfall is the heaviest. We also make sure that the staff is duly rewarded for the special efforts that they put in during this peak sales period.”
Since the demand is at its highest during the first 10 days of the month, the stores double down on stocking and maintaining the top-selling SKUs. “There are close to 600 top-selling SKUs at our stores and the focus is to keep those products well-stocked. The staff is given the responsibility to maintain that none of the top-selling SKUS come down to less than 30% of the inventory stock and those employees are rewarded if they successfully maintain the availability of the products. These are the few strategies that we have developed to keep our stores ahead of the competition,” informs Bhagirath.
Citing an important lesson of business that he learnt from his grandfather, Bhagirath says it is very important to take care of your employees and associates. “We provide free meals to all employees and every Jalan’s store has a separate mess and a kitchen. It’s a very small thing but it has really helped us in creating strong loyalty in our employees. I am a big fan of Sam Walton, and one his quotes is my favourite: “If you take care of your associates, they will take care of your customers. As a business, our values are built on the edifice of strengthening the interests of our associates, vendors and customers. We never overcharge our customers or try to puff up our own margins against the interests of our customers and partner-associates.”
Similarly, the retailer undertakes regular collaborations with the suppliers and manufacturers, especially during the festive periods. “To give you one example, we carried out such an exercise as recently as during the Christmas, New Year and Republic Day holidays when sales of cold drinks and chocolates see a huge spike. Around the end of November, we wrote to all cold drinks and chocolate suppliers to extend us some extra margin on those products, which could be shared and passed on to our customers. Looking at the success of this experiment in the previous years, almost all top companies come forward to participate with us and the exercise has helped to generate more sales and revenues for ourselves as well the companies,” shares Bhagirath.
The important thing to note is that the timing of such offers is very critical in retailing. “So, we prepare in advance, talk to the food companies and take care to introduce such offers as part of our own calendar mapping throughout the year. If the food companies are convinced that the retailer’s proactive offers are good sales generators and fetch good returns and dividends, they are only too happy to come on board and participate with the retailers. So, in a way, such exercises are a win-win-win for the retailers, food companies as well as the consumers,” points out Bhagirath.
Attracting the young and new-gen shoppers
Considering the average life expectancy of an Indian to be about 70 years, the retailer tried to calculate the average age of shoppers at its stores, and it found that it was 34 years. “It means that we have customers who could remain with us potentially for the next 30 years or so if we handle and engage with them fruitfully. We have been also been doing a lot of things to appeal to the younger shoppers, and modernization of our stores is right on top of our efforts,” says Bhagirath.
All Jalan’s stores exude a modern feel and ambience, which young customers can relate to very easily. The stores have proper checkouts and announcements, piped music and merchandise and shelf displays are done very meticulously. “For young families with kids who visit our stores, there are plenty of products that are of interest to the children. This is a conscious exercise that we take to ensure that kids become emotionally attached to our stores and become our regular customers when they come of age. We also organize and conduct regular shopping and store expeditions for the young cohorts and they are encouraged to visit and walk around our stores and interact with the staff and store officials. Such activities help us in building the future customers for our stores,” notes Bhagirath.
To ensure that the stores stock such products and brands that appeal to young consumers, the retailer has put in place a robust customer feedback mechanism and shoppers can write about their experience and satisfaction level of their visits to the store in the ‘suggestions’ register. “We have also deputed certain staff members to go through the product reviews of items in our stores so that we know what brands and products young shoppers are looking for. Based on such suggestions, we keep introducing and updating new products and brands to cater to the wishes of our young customers.”
In the next five years, Jalan’s Retail would like to double its store count. “I am looking to grow to at least 10 supermarkets and ramp up our sales to 2.5X to 3X of what it is today. At the same time, being a regional retailer, we are not looking at a very ambitious break-neck speed of expansion and are looking to grow more organically by using our own resources and not at debt-fuelled growth. We are a completely debt-free company and would like to stay that way in the future even as we strive to grow and expand the business.”
In terms of the geographical distribution of stores, Jalan’s prefer a cluster-based approach to their expansion plans with the focus on eastern U.P, where over the years, it has emerged as the top regional supermarket chain.