Pi­o­neers of Mod­ern Re­tail in North Ma­ha­rash­tra

Progressive Grocer (India) - - Editor’s Note - By San­jay Ku­mar

Nav­jee­van Su­per Shop, which has been in busi­ness for over 70 years now, is widely re­garded as the su­per­mar­ket pi­o­neer in north Ma­ha­rash­tra. Be­gin­ning its jour­ney from a hum­ble ki­rana store in Jal­gaon in 1946, it opened its first self-ser­vice store in the city in 1993 and since then, it has taken im­pres­sive strides in mod­ern food and gro­cery re­tail­ing. From 2007 on­wards, the firm has been on an ex­pan­sion drive. As of date, there are seven Nav­jee­van su­per­mar­kets in op­er­a­tion, all in Jal­gaon, with a re­tail area span­ning 21,000 square feet, which bring in a monthly rev­enue of about Rs. 5 crore.

Nav­jee­van Su­per Shop, which has been in busi­ness for over 70 years now, is widely re­garded as the su­per­mar­ket pi­o­neer in north Ma­ha­rash­tra. Be­gin­ning its jour­ney from a hum­ble ki­rana store in Jal­gaon in 1946, it opened its first self-ser­vice store in the city in 1993 and since then, it has taken im­pres­sive strides in mod­ern food and gro­cery re­tail­ing. From 2007 on­wards, Nav­jee­van has been on an ex­pan­sion drive and opened five stores in quick suc­ces­sion. As of date, there are seven Nav­jee­van su­per­mar­kets in op­er­a­tion, all in Jal­gaon, with a re­tail area span­ning 21,000 square feet, which bring in a monthly rev­enue of about Rs. 5 crore. How dif­fi­cult and chal­leng­ing was it to open and ex­pand mod­ern re­tail out­lets in the back­wa­ters of Ma­ha­rash­tra?

Ini­tially, it was te­dious and a some­what dif­fi­cult task to start and op­er­ate a mod­ern day self-ser­vice re­tail shop in a city like Jal­gaon. Get­ting ac­cess to fund­ing re­sources was a prob­lem. The co­op­er­a­tive banks here re­fused us the loan for the new store as they did not

For the peo­ple in Jal­gaon, Nav­jee­van is the go-to neigh­bor­hood store for buy­ing the best qual­ity gro­ceries, dry fruits and spices. – ANIL KANKARIYA Pro­moter, Nav­jee­van, Su­per Shop

un­der­stand the con­cept of mod­ern re­tail. Even we had our doubts then as to whether the cus­tomers would adapt to the new set­ting. As it were, our first su­per store in 1993 opened to a huge re­sponse from the pub­lic. But af­ter the ini­tial eu­pho­ria, sales plum­meted and it took us two years to reach the break-even point. For the first two years of our su­per­mar­ket op­er­a­tions, the sales were even less

than the his­tor­i­cal level of our old pro­vi­sion store (which closed af­ter the open­ing of the new store), which had clocked an­nual sales of Rs. 10.8 mil­lion in the year 1992.

The less-than-ex­pected sales forced us to de­lib­er­ate on the is­sue. Till the time we had re­mained as tra­di­tional re­tail­ers, there was no vis­i­ble com­pe­ti­tion. But af­ter con­vert­ing to the su­per­mar­ket for­mat, about 600 other tra­di­tional re­tail­ers in Jal­gaon turned out to be our com­pe­ti­tion. This hap­pened be­cause the mes­sage that got con­veyed to cus­tomers was that our new store was ex­pen­sive be­cause such a big set-up re­quires quite a large ex­pense to main­tain and run the op­er­a­tions. From whose pocket would Nav­jee­van earn it? For us, it took a lot of ef­fort to break this pricey im­age of our store and reestab­lish the brand im­age as be­ing pocket friendly to the cus­tomers.

A de­cline in sales for the newly opened Nav­jee­van su­per­mar­ket must have been dis­heart­en­ing. What kept you go­ing and re­tain your faith in mod­ern trade?

By this time, our younger brother Su­nil, a qual­i­fied CA, had also joined the busi­ness and to­gether (with el­der brother Kan­ti­lalji Kankariya and younger brother Su­nil) we held our nerves. Even though it was a dif­fi­cult pe­riod for us, we some­how kept the faith that mod­ern re­tail­ing was the fu­ture and the right thing to do. Our be­lief in mod­ern trade was re­in­forced by two in­ci­dents. The first was when our loan (with­out mort­gage) got ap­proved in a day by Bank of Bar­oda. Its Re­gional Man­ager ap­pre­ci­ated the pioneer­ing path we had em­barked on and re­marked that we were fol­low­ing the right trend. The sec­ond in­ci­dent was when I saw Jal­gaon’s top physi­cian Mr. Gupta pick­ing up the shop­ping bas­ket and en­joy­ing the shop­ping ex­pe­ri­ence in the store. To see him shop at our store spoke vol­ubly of our shop’s con­sumer ap­peal. Such is the rush of pa­tients at his clinic that peo­ple have to wait for long hours to get an ap­point­ment and here he was – in per­son – shop­ping at our store for a length of time! Our in­tu­ition that mod­ern re­tail is the fu­ture and that we were on the right track got bol­stered. We un­der­stood that what we were do­ing was quite in­no­va­tive and it would take some time for the con­cept to fil­ter down the pub­lic con­scious­ness and gain mass ac­cept­abil­ity. The sense that we were do­ing some­thing path-break­ing in a tra­di­tional city like Jal­gaon gave us great sat­is­fac­tion and that feel­ing kept us go­ing.

Till the time we had re­mained as tra­di­tional re­tail­ers, there was no vis­i­ble com­pe­ti­tion. But af­ter con­vert­ing to the su­per­mar­ket for­mat, about 600 other tra­di­tional re­tail­ers in Jal­gaon turned out to be our com­pe­ti­tion.

What ex­actly did you do to re­store the cus­tomer faith in the brand?

We adopted a three-pronged strat­egy to dis­pel the mis­con­cep­tion in the cus­tomer’s mind about Nav­jee­van be­ing a more ex­pen­sive place to shop than at the tra­di­tional re­tail­ers. Our first strat­egy was to or­ga­nize a house-to-house sur­vey and of­fer dis­count coupons to the con­sumers. Our su­per­mar­ket had now been run­ning for two years and we ex­e­cuted this strat­egy in 1995. About 18,000 house­holds were sur­veyed and were of­fered Nav­jee­van Su­per Shop dis­count coupons on spe­cific pop­u­lar items. The scheme proved to be an in­stant suc­cess and sales in­creased by 25%. More­over, the sur­vey pro­vided us great in­sights on cus­tomer re­quire­ments through their feed­back, which was in­valu­able. Peo­ple who had never stepped in the shop or were hes­i­tant or those who were to­tally un­aware of this mod­ern re­tail con­cept started en­ter­ing our self-ser­vice shop.

Our sec­ond strat­egy was to in­tro­duce a money de­posit scheme – de­posit Rs. 5,000 and earn a monthly dis­count of Rs. 125. This strat­egy too paid off and eased the pres­sure on our loan in­stall­ments, apart from also at­tract­ing and re­tain­ing a high num­ber of cus­tomers. The third strat­egy that we im­ple­mented was to in­tro­duce the con­cept of sales girls and lady cashiers in our shop. Women em­ploy­ees were also en­gaged for clean­ing/ sort­ing op­er­a­tions (gro­cery, etc). They ef­fec­tively be­came the front-line staff in our re­tail busi­ness. This helped us in build­ing trust with our cus­tomer base and it also helped the pub­lic to un­der­stand the con­cept of self­ser­vice eas­ily.

Once sales bounced back, how did you keep the mo­men­tum go­ing and build on the gains?

Af­ter the ini­tial tu­mul­tuous days had passed by, we planned and more ef­fec­tively ex­e­cuted the tech­niques of mod­ern re­tail and store man­age­ment. For in­stance, we started of­fer­ing fes­ti­val schemes with free gift of­fers, which be­came a big hit with the con­sumers. The first such ex­er­cise was car­ried out in

Twenty five years ago, the chal­lenge was to con­vert the peo­ple over the counter to shop in a self-ser­vice su­per­mar­ket. That chal­lenge is still there in the new mar­kets at the tehsils of Jal­gaon or in the neigh­bor­ing ar­eas. Peo­ple still per­ceive OTC to be cheaper as com­pared to shop­ping in a su­per­mar­ket.

the year 1996. Nav­jee­van dis­trib­uted free bone china mugs with the shop’s logo em­bossed to all cus­tomers that shopped for goods worth Rs. 555. We be­came the first F&G re­tailer to in­tro­duce the bar­code sys­tem in north Ma­ha­rash­tra (year 2000). In the year 2005-06, we in­tro­duced an­nual lucky draws with of­fers for free shop­ping. Cus­tomer Meets were also or­ga­nized on a few oc­ca­sions. Thanks to such ini­tia­tives, our sales climbed to Rs. five crore an­nu­ally. In a 1500 sq. ft. shop, we reached this fig­ure (Rs. 2800 sales per square feet) in the year 2005. To­day, our seven stores com­bined pull in monthly sales of Rs. five crore.

Apart from th­ese mea­sures, we also went for some in­ter­est­ing col­lab­o­ra­tions with brands. In the year 1995, we con­vinced P&G to of­fer an at­trac­tive dis­count of 20% on Vicks Va­porub dur­ing the rainy sea­son. It sparked an in­stant re­ac­tion from all the medicine shops in the town. In protest, they banned P&G prod­ucts for 15 days! This had hap­pened for the first time in the re­tail­ing his­tory of north Ma­ha­rash­tra – lo­cal play­ers com­ing to­gether to ban the prod­uct of a global player!

There are quite a few other in­ter­est­ing in­stances in­volv­ing Nav­jee­van. Once, an en­tire mo­halla (colony) in the city trooped into the shop af­ter they came to know about some great of­fers. In gen­eral, our re­tail­ing strat­egy is to fol­low and im­ple­ment Wal-mart’s sun­down rule, which is to make the un­avail­able prod­ucts avail­able to the cus­tomer in an hour and we con­tinue to im­ple­ment this strat­egy to this day. Our shop has been vis­ited by the head hon­chos of many global and na­tional brands, all of whom have been gen­er­ous in of­fer­ing us the for­mal guid­ance to bet­ter re­tail­ing prac­tices and also mo­ti­vated the fam­ily to ex­pand. Thanks to our adop­tion of those new tech­niques and armed with a re­tail ex­pe­ri­ence of span­ning decades, Nav­jee­van’s ex­pan­sion over the years has been suc­cess­ful and ex­tremely ful­fill­ing for us.

How would you as­sess the im­pact of your re­tail­ing suc­cess in a small tier city?

Nav­jee­van launched its sec­ond su­per store in 2008 and it has been a suc­cess from the first month it­self, quite un­like our ex­pe­ri­ence with the launch of the first store way back in 1993. This sec­ond store is lo­cated near the high­way and at a dis­tance of 3 km from the first store. On its launch, we had in­tro­duced tempt­ing in­au­gu­ral of­fers and the store was branded as the first mall in Jal­gaon city. As part of our unique brand­ing ex­er­cise, Nav­jee­van had dis­trib­uted Rs. 50 notes en­dorsed by “Bank of Nav­jee­van” in var­i­ous lo­cal­i­ties of the city. This shop was an im­prove­ment over the first one in many ways. Var­i­ous new life­style cat­e­gories were now added such as ready-made gar­ments, crock­ery, steel uten­sils, etc. There was a huge rush on the in­au­gu­ra­tion day and it was re­ally tough to man­age such a huge crowd. Barely 12 hours into the in­au­gu­ra­tion and the store was empty. All of us – Nav­jee­van staff, Kankariya fam­ily and friends – had

worked for days to fill the shelves and present the store to cus­tomers on the in­au­gu­ra­tion day. Whereas it was a great sen­sa­tion to see such a stag­ger­ing foot­fall on day one and find the shop shelves emp­ty­ing out within hours, all of us also learned some great lessons in store plan­ning, the power of word-of-mouth pub­lic­ity and cus­tomer man­age­ment.

How­ever, I will also ad­mit that along with our suc­cess, we have made quite a few mis­takes too. Our ex­pan­sion took place a bit late in the day. With the ben­e­fit of hind­sight, I feel that we should have opened our sec­ond store ear­lier. Im­me­di­ately af­ter the open­ing of our sec­ond branch, Vishal Mega Mart opened in Jal­gaon. That de­vel­op­ment be­came a real test for us as Nav­jee­van was fac­ing na­tional level com­pe­ti­tion for the first time. But de­spite the tough com­pe­ti­tion, the de­vel­op­ment has helped to grow the over­all mod­ern re­tail pie/ share in the town! We have con­tin­ued of­fer­ing var­i­ous new schemes such as Happy Hour shop­ping, Min­i­mum MRP Dis­counts, etc. At the same time, just a year af­ter the open­ing of our sec­ond store, we launched our third branch – a com­par­a­tively small store of 1200 sq. ft. – in the vicin­ity of Vishal Mega Mart (just 50 me­ters away) in the year 2009.

Big Bazaar and D-mart both started in Jal­gaon in 2010 and 2011 re­spec­tively. As a planned ex­pan­sion, Nav­jee­van Su­per Shop added its fourth branch in 2012. This branch is sit­u­ated near D-mart though this time the aim was to serve the cus­tomers of Ma­ha­bal and the sur­round­ing colonies (the grow­ing city limit of Jal­gaon sit­u­ated at the north of town). Com­pe­ti­tion was in­tense but the share of mod­ern re­tail in Khan­desh (north Ma­ha­rash­tra re­gion) grew enor­mously. It was now easy to con­vince FMCG com­pa­nies to con­sider Nav­jee­van at par with the na­tional level com­peti­tors (in Jal­gaon) and pro­vide us with bet­ter terms of trade. Ear­lier, FMCG com­pa­nies used to think of Jal­gaon as Tier IV town. Now, it was up­graded to Tier III.

It was a great learn­ing ex­pe­ri­ence from all th­ese na­tional level play­ers. D-mart taught us the value of of­fer­ing ben­e­fit and dis­counts and Big Bazaar taught the value of con­duct­ing var­i­ous in­ter­ac­tive cus­tomer events. Now, our aim was to dif­fer­en­ti­ate from th­ese gi­ant na­tional play­ers and we be­gan do­ing so by com­bin­ing the strate­gies of th­ese na­tional play­ers. We came up with our own schemes and events that were quite rev­o­lu­tion­ary in the sense that no one had im­ple­mented them be­fore!

With your long ex­pe­ri­ence of op­er­at­ing a su­per­mar­ket in a Tier III city of Ma­ha­rash­tra, how do you look at the chal­lenges to­day?

Twenty five years ago, the chal­lenge was to con­vert the peo­ple over the counter to shop in a self-ser­vice su­per­mar­ket. That chal­lenge is still there in the new mar­kets at the tehsils of Jal­gaon or in the neigh­bor­ing ar­eas. Peo­ple still per­ceive OTC to be cheaper as com­pared to shop­ping in a su­per­mar­ket. To some ex­tent, it is true be­cause of the much lower op­er­at­ing costs of ki­rana shops. On the other hand, we have the most suc­cess­ful na­tional player D-mart com­pet­ing against us. How­ever, thanks to our USP, we have sus­tain­ably grown over the past decade.

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

Our thumb rule is that wher­ever our stores are lo­cated, it should have a catch­ment of at least 8,00010,000 house­holds within a two kilo­me­ter range. The city’s mar­ket area is also an at­trac­tive lo­ca­tion pro­vided the rent is com­pet­i­tive.

Our shop has been vis­ited by the head hon­chos of many global and na­tional brands, all of whom have been gen­er­ous in of­fer­ing us for­mal guid­ance to bet­ter re­tail­ing prac­tices and also mo­ti­vated the fam­ily to ex­pand.

Over the years, what mar­ket­ing po­si­tion­ing have your stores achieved?

The mar­ket po­si­tion­ing of our stores is that of ‘un­der one roof sat­is­fac­tion for all your home needs’. We sat­isfy our cus­tomers with their es­sen­tial shop­ping needs. Sec­ondly, we fol­low lead­er­ship pric­ing and deep dis­count­ing as well to keep the cus­tomers loyal to the stores. We also fol­low the prac­tice of ‘one day su­per low price’. We or­ga­nize reg­u­lar shop­ping events on a month-on-month ba­sis, de­pend­ing on the oc­ca­sion or fes­ti­vals. Re­cently, we or­ga­nized and cel­e­brated ‘Face of the Women’s Day’ com­pe­ti­tion on 8th March. We clicked pho­tos of our cus­tomers us­ing a pro­fes­sional pho­tog­ra­pher and a copy was pro­vided to them. We had cre­ated the back­ground of our logo as prop for the photo shoot.

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

The Nav­jee­van brand is fore­most known for its qual­ity. Peo­ple in the re­gion know that if they want to buy the best qual­ity gro­ceries, dry fruits and spices, it will be avail­able at Nav­jee­van. Our top qual­ity pri­vate la­bel prod­ucts have be­come our stores’ hall­marks and have gar­nered wide cus­tomer af­fec­tion. In the past three years, we have started in­creas­ing the va­ri­ety of our pri­vate la­bel prod­ucts. The move has paid rich div­i­dends as it has helped to in­crease our cus­tomer base. Sec­ondly, Nav­jee­van has be­come ‘your go-to lo­cal neigh­bor­hood store’ as our stores cover the en­tire Jal­gaon city.

In gen­eral, our re­tail­ing strat­egy is to fol­low and im­ple­ment Wal-mart’s sun­down rule, which is to make the un­avail­able prod­ucts avail­able to the cus­tomer in an hour and we con­tinue to im­ple­ment this strat­egy to this day.

Which are the cat­e­gories that have your pri­vate la­bel prod­ucts?

Food has been our strength for the past 50 years. And it will re­main our strength go­ing into the fu­ture as well. Our pri­vate la­bel prod­ucts span all fast mov­ing gro­ceries, dry fruits and spices. We are im­prov­ing the pack­ag­ing of our pri­vate la­bel prod­ucts in the ear­lier men­tioned cat­e­gories.

What has been the growth rate of your pri­vate la­bels?

Our pri­vate la­bel has the same growth rate as that of our stores – 6-7%. In par­tic­u­lar, the dry fruit cat­e­gory has seen ex­cep­tional growth in the past few years. We will be grad­u­ally in­creas­ing our pri­vate la­bel prod­ucts and we re­cently launched our pri­vate la­bel in wheat, which we di­rectly source from the pri­mary pro­ducer. Which­ever pri­vate la­bel in food that we have launched or im­proved the pack­ing of, all have seen a tremen­dous off-take.

What are your cri­te­ria for ty­ing up with new man­u­fac­tur­ers and sup­pli­ers?

We take th­ese de­ci­sions based on cus­tomer feed­back, feed­back from trade ex­hi­bi­tions and mar­ket in­tel­li­gence. The gen­eral bench­mark for adding a new prod­uct is that it should add value or must match the qual­ity of the ex­ist­ing brands in the mar­ket. Qual­ity as­sur­ance and re­li­able con­sis­tent sup­ply is the key for ty­ing up with new man­u­fac­tur­ers and sup­pli­ers.

Can you share some in­sights about your sourc­ing strat­egy?

We gen­er­ally keep 2-3 sup­pli­ers for a sin­gle cat­e­gory. The qual­ity of the prod­ucts to be sup­plied is pre de­cided and also each lot of prod­ucts is checked. Feed­back on prod­uct qual­ity is shared with the sup­pli­ers all the time. We try to main­tain a win-win part­ner­ship with the sup­plier. How­ever, it’s been get­ting dif­fi­cult day by day to main­tain a proper sup­ply chain with FMCG com­pa­nies. The process has be­come too com­pli­cated and time con­sum­ing.

Which are the new emerg­ing cat­e­gories at your stores?

Cat­e­gories like in­stant food and nam­keens have been wit­ness­ing good growth in re­cent years. The emer­gence of mod­ern trade is a pri­mary rea­son for driv­ing this de­mand. At the same time, con­sump­tion pat­tern too is chang­ing and cus­tomers want to have in­stant so­lu­tions re­gard­ing their es­sen­tial needs.

Any no­tice­able con­sump­tion trends for the prod­ucts in your store?

Dry fruits have seen tremen­dous growth over the last few years in our stores. Peo­ple have started spend­ing freely on dry fruits as an es­sen­tial item of their monthly needs.

The gen­eral bench­mark for adding a new prod­uct is that it should add value or must match the qual­ity of the ex­ist­ing brands in the mar­ket. Qual­ity as­sur­ance and re­li­able con­sis­tent sup­ply is the key for ty­ing up with new man­u­fac­tur­ers and sup­pli­ers.

Which are the in­ter­est­ing con­cepts that you have in­tro­duced at your stores?

Mer­chan­dis­ing is done con­sid­er­ing the daily sched­ule and shop­ping pat­tern of cus­tomers. We as­sort the cat­e­gories that we need in the morn­ing first. For ex­am­ple, we start with tooth­paste, tea, bis­cuits, bath soaps, hair oil, de­odor­ants, etc. We keep food and non-food sep­a­rate. For in­ven­tory man­age­ment, we sim­ply cut down on the prod­uct that sells less than five pieces in vol­ume a month.

Will you con­cen­trate on grow­ing on­line or tak­ing your store count up?

Our fo­cus is off­line. We see a tremen­dous op­por­tu­nity as a re­gional player to grow off­line. Mod­ern re­tail is still in a nascent stage in In­dia. We plan to ex­pand in Tier IV towns/ talukas near Jal­gaon and give those small towns a mod­ern touch.

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