Pioneers of Modern Retail in North Maharashtra
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.