Nature’s Basket on path to rationalisation
Godrej’s grocery retail chain is working to build a new organisational culture before expanding to newer markets
Godrej Nature’s Basket is following a rationalised business strategy after withdrawing from two markets this year, with plans to add to the grocery chain’s store count in Mumbai and Bengaluru starting this month reflecting its focus on consolidation. With the company set to unveil a shift in brand positioning and revamped stores, how has it ensured a smooth rollback of stores in the national capital and Hyderabad that can help in pivoting its model?
Avani Davda, MD, Godrej Nature’s Basket, points out that since last year the company had been planning to change from being a “once-ina-month kind of shopping to a regular neighbourhood premium chain”. It meant effecting operational changes, in terms of running stores, design as well as employee engagement. As it worked on a defining long-term business strategy during the last fiscal year, the management decided to exit the underperforming markets of Delhi and Hyderabad. At the close of 2016-17, it had 26 stores across Mumbai, Pune and Bengaluru. However, it continued to grow revenues in double digits, achieving total income of ~310 crore, registering a 15 per cent jump over the previous year’s figure of ~269 crore. Davda says, “Since we were planning it (rollback of stores) since the start of the financial year, we knew that the growth targets both in Maharashtra and Bengaluru would be upward. We also renovated stores while we were withdrawing.”
The company engaged with employees six months in advance to understand how it could transfer them to Maharashtra and Bengaluru. The leadership teams in Delhi and Hyderabad were given separate projects and engagements. “So in terms of people, managing the environment, we were very fair in returning their economic value. The other side is our suppliers and the people in logistics. We also had a discussion with them and went ahead in a time-bound, step-by-step manner, in keeping with our values,” says Davda, adding the company plans to reach 35 stores by the first quarter of 2018 and make a comeback in Delhi and Hyderabad in 1824 months. With goals to sustain double-digit growth, the company is upbeat about clocking ~1,000 crore in revenues by 2021-22.
As the company seeks to transform as an organisation, the key considerations it looks at are — how the stores perform financially; the potential consumers in the areas they are present; and how to provide a differentiated experience for employees.
With a new value proposition, the company’s focus would be on reskilling personnel, making stores leaner, as well as the retail experience for consumers. “Right from the hardware and software, by which I mean the store layout or the categories we wanted to prioritise, we are pivoting ourselves as a neighbourhood store that is redefining the freshest and finest. The finest is always associated with Nature’s Basket as a premium brand. We wanted to play up the fresh aspect, in line with the consumer trends,” Davda adds. She cites the example of an inventory-linked app developed in-house to track inventory for a young taskforce who can adapt to mobile devices or tablets easily. The objective of the app, rolled out in March, was total visibility of the inventory (fresh and packaged products) across the chain. The company also has an NPS (net promoter score) for customers which allows buyers to rate their experience. Last week, it started an NPS to track how the support centre or head office is servicing the store employees. “This is really a mind shift — are we serving you better as a leadership and support team? These things are fundamentals of transforming the business by making it meaningful for employees,” says Davda.
Siddharth S Singh, associate professor, marketing, ISB, says it makes sense to focus in markets where a company has scale and where their internal operations and delivery services can be set up strongly. “You want to better understand markets and their business processes before expanding in a surefooted manner,” he says, adding that before staging a comeback one should be cognizant of any systemic differences, understand the consumer behaviour in the market and ensure delivery services can be met.