Q&A

Progressive Grocer (India) - - Cover Story -

across the coun­try from Kash­mir to Ker­ala, and also through var­i­ous im­porters in the coun­try.

In the last fis­cal, the chain grossed a turnover of Rs. 82 crore, which is im­pres­sive tak­ing into ac­count its Rs. 57 lakh rev­enue in the first year of op­er­a­tion. “We are quite bullish on our off­line model for at least an­other decade or so. But si­mul­ta­ne­ously, we are also ramp­ing up our on­line pres­ence and would also like to grow in that seg­ment if it is com­mer­cially vi­able,” re­veals Sanklecha. “We do not in­clude other prod­ucts (in e-com­merce). The mar­gins are lim­ited and it be­come a lit­tle dif­fi­cult for us to man­age the en­tire sup­ply chain as lo­gis­tics is al­ready very ex­pen­sive,” he ex­plains. He con­fides that he re­ceives mul­ti­ple en­quiries on fran­chis­ing his brand, but says he has no plans of ven­tur­ing into it.

In a nut­shell, please share the ex­cit­ing phase of the growth jour­ney of Nuts ‘n’ Spices over the years and how you see its growth tra­jec­tory going for­ward?

The jour­ney of Nuts ‘n’ Spices started with its first store of 600 sq.ft. open­ing in Nungam­bakkam, Chennai, on 16th June 1999. To­day, there are 33 Nuts ‘n’ Spices stores – 32 in Chennai and one in Coim­bat­ore. An­other store is sched­uled to open in Pondicherry by this month’s end. With a mere INR 57 lakh as the first year turnover, we clocked INR 82 crore in the pre­vi­ous fi­nan­cial year. I see both the turnover and store count in­crease ap­pre­cia­bly going for­ward.

Which are the el­e­ments that have be­come the iden­ti­fi­able hall­marks of your brand?

The con­cept of Nuts ‘n’ Spices is its strong­est el­e­ment. The kind of prod­uct mix that we carry is our USP.

What is the brand po­si­tion­ing of your stores?

The brand po­si­tion­ing of Nuts ‘n’ Spices has been in the pre­mium seg­ment from the be­gin­ning. We never wanted it to be rec­og­nized as an­other su­per­mar­ket. Hence, all our mar­ket­ing strat­egy has been geared to­ward strength­en­ing the pre­mium brand po­si­tion­ing of Nuts ‘n’ Spices.

The store’s value ad­di­tion comes from its gourmet range of im­ported food prod­ucts – pas­tas, noo­dles, sauces, fruit spreads, juices & syrup, frozen foods and ice creams. Also, the ex­otic range of im­ported biscuits, choco­lates and con­fec­tionery tempts peo­ple from all age groups to visit the store again and again.

What is the lo­ca­tion strat­egy for your stores? Which lo­ca­tions do you pre­fer?

As a pre­mium brand, we al­ways pre­fer to be lo­cated in places with a cos­mopoli­tan char­ac­ter and with a mix of res­i­den­tial & com­mer­cial es­tab­lish­ments.

What is the av­er­age store size? How much in­vest­ment goes into set­ting up each store?

The av­er­age store size is about 1200 sq.ft., and a Nuts ‘n’ Spices store re­quires about INR 60-75 lakh in in­vest­ment, de­pend­ing on the lo­ca­tion.

Which are the new and emerg­ing cat­e­gories at your stores and what do you think is driv­ing the de­mand?

We deal only with food prod­ucts and don’t carry any non-food prod­ucts. Even in the food cat­e­gory, we don’t carry sta­ples, gro­ceries, fresh & other daily needs su­per­mar­ket prod­ucts. Our pri­mary fo­cus is on value-added prod­ucts like dry fruits, nuts, spices and all other pre­mium food prod­ucts as­so­ci­ated with health and well­ness.

What are your pro­cesses and cri­te­ria for iden­ti­fy­ing new man­u­fac­tur­ers, prod­ucts and cat­e­gories, and what are your bench­marks for ty­ing up with new man­u­fac­tur­ers and sup­pli­ers?

We en­ter­tain any prod­uct, whether In­dian or In­ter­na­tional, only if it can add value to our prod­uct line. Our cri­te­rion for in­tro­duc­ing a new prod­uct or sup­plier is that it should com­ple­ment and gel with our prod­uct line. There are about more than 200 brands wait­ing to get an en­try into our store. But since we are not in­ter­ested in mass mar­ket prod­ucts, and also due to the space con­straint, we can’t place them in our store.

What is your pri­vate la­bel strat­egy?

Ever since we started our busi­ness in 1999, on a prin­ci­ple ba­sis we haven’t en­ter­tained any branded prod­ucts in some cat­e­gories where we al­ready have our own pres­ence. Dry fruits, nuts, spices, tea & snacks are a few cat­e­gories where we have our pri­vate la­bel prod­ucts and they ac­count for about 45-50% of our over­all sales.

Our pri­mary fo­cus is on value-added prod­ucts like dry fruits, nuts, spices and all other pre­mium food prod­ucts as­so­ci­ated with health and well­ness.

As a spe­cial­ized re­tailer, what have been your valu­able learn­ings and ex­pe­ri­ence?

Some of the learn­ings based on my ex­pe­ri­ence gath­ered over the years as a spe­cial­ized re­tailer in­clude:

• Iden­ti­fy­ing our core strength with right kind of prod­uct mix

• Not to un­der­es­ti­mate or over­es­ti­mate the mar­ket

• Right po­si­tion­ing of the brand with­out di­lut­ing the iden­ti­fi­ca­tion/strength of the brand

• Not to de­vi­ate/ di­ver­sify on the ba­sis of any mar­ket temp­ta­tions

Any no­tice­able con­sump­tion trends for the prod­ucts in your store that you would like to men­tion?

The mar­ket is al­ways pre­pared to pay a nom­i­nal pre­mium if only we can de­liver qual­ity prod­ucts con­sis­tently. Thanks to the coun­try’s rapid eco­nomic growth till 2014-15, con­sumer spend­ing and con­fi­dence was no­tice­ably buoy­ant. How­ever, we have ob­served, es­pe­cially in the past three years that the pur­chas­ing power of the peo­ple has come down as the ear­lier pace of eco­nomic growth has slowed down.

Which are the interesting con­cepts or in­no­va­tions you have in­tro­duced at your stores in terms of mer­chan­dis­ing strat­egy, in­ven­tory man­age­ment, etc?

Since our av­er­age store size is about 1,200 sq.ft. and about 30-35% of the prod­ucts are pri­vate la­bel, there is not much scope of in­no­va­tion in terms of floor plan, merchandise and dis­play. Our real in­no­va­tion lies in the prod­uct mix and as­sort­ment that we sell. We al­ways try to sell prod­ucts that are nor­mally not avail­able in the su­per­mar­kets and we don’t stock the kinds of prod­ucts that shop­pers would find on su­per­mar­ket shelves. We carry only prod­ucts that of­fer a value ad­di­tion to our cus­tomers and nor do we carry mul­ti­ple brands in each cat­e­gory.

Can you share some in­sights about how you push the bound­aries of price-value-qual­ity equa­tion?

Since our strength is re­tail, to a cer­tain ex­tent we know at what price bracket a prod­uct can sell vol­umes. From time to time we or­ga­nize pro­mos by giv­ing a price off on prod­ucts or undertaking wet sam­pling of the prod­ucts.

Our real in­no­va­tion lies in the prod­uct mix and as­sort­ment that we sell. We al­ways try to sell prod­ucts that are nor­mally not avail­able in the su­per­mar­kets and we don’t stock the kinds of prod­ucts that shop­pers would find on su­per­mar­ket shelves.

What’s in store for the fu­ture by way of your ex­pan­sion? Will you con­cen­trate on grow­ing on­line or tak­ing your store count up?

We are quite bullish on our off­line model for at least an­other decade or so. But si­mul­ta­ne­ously, we are also ramp­ing up our on­line pres­ence and would also like to grow in that seg­ment if it is com­mer­cially vi­able. As far as our store count is con­cerned, we do have plans of going to Hyderabad & Ban­ga­lore later this year.

Tell us about your ef­forts and ini­tia­tives to beef up your omni-chan­nel pres­ence?

So far we haven’t spent even a sin­gle ru­pee on dig­i­tal ads, but going for­ward we may start with some small ini­tia­tives and go for a few ex­per­i­ments and take a call on re­view­ing our on­line strat­egy.

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