 "Private labels in Nature's Basket")
The staff at the Godrej Nature's Basket in a busy mall in Ghatkopar prod you to taste some flavoured yogurt developed by the chain of stores. If yogurt is not to your taste, there is an array of new green tea products and flavoured cheese to try out. When checking out at the cash counter, a hamper counter sports nicely-packed gift combos for an impulse purchase.
The six-year-old Nature's Basket, owned by the Godrej Group, is the largest gourmet food retailer with 28 stores. But it also means that 85 per cent of its packaged merchandise is imported - the highest among all food retail chains. The rupee's depreciation by over 20 per cent since the beginning of the year has pushed up the cost of imports.
Sampling and hampers of its own private labels, then, are important than ever for the retailer, even more so than other hypermarkets such as the Raheja-owned Hypercity and Aditya Birla's More which have their own familiarisation activities too.
Gourmet clientele
Nature's Basket regularly engages customers through tasting sessions, demonstrations by well-known city chefs such as Vicky Ratnani, Aditya Bal, Vikas Khanna and Mayank Tiwari, cooking workshops, and themed events such as one on 'amuse bouches from around the world'. It has even enlisted food bloggers and consultants such as Rushina Munshaw Ghildiyal and pastry chef Kishi Arora on a panel.
Can't say no to imports
Given such a positioning, the chain cannot decrease its imports anytime soon, if it is to cater to gourmet food hunters. But keeping a steady stock of imported food products with a finite shelf life, when importers are not able to plan their orders due to a fluctuating rupee, is a challenge.
Khattar says the chain works with a battery of 350-400 importers and even if some of them suffer, there are others who will still import. "They (importers) have to reconcile and live with the uncertainty for now," Khattar says. The chain has a set of exclusive importers who supply it regularly. "So, as a customer, you will see as big and diversified a range as you saw a couple of months ago." Khattar says.
He adds that its private labels will fill low-volume categories, which will be of good quality and priced lower. The festive season around the corner will also spur importers, Khattar mentions, who might bring in less but enough to meet its stock requirements.
Import hiccups
But some of the chain's stores are also prone to stock-outs of certain brands and products, say customers. Khattar agrees that there have been such issues. "Over 85 per cent of our products are imported where the supply chain is not consistent due to issues in freight, at the port and in local transport. Sometimes vendors delay orders. Usually we have multiple brands for consumers," he adds.
There is also the challenge of margins. An importer says the chain charges a high listing fee, sometimes even per store. A listing fee is paid by an importer/brand to a retailer for stocking its products. But Khattar says the higher fee is the premium for the ambience and people it provides. "Brands, as a result, get to enjoy a high sales throughput," he adds.
Khattar claims that despite passing on the higher prices of imported products to customers, the stores have not seen tightening of the consumers' pursestrings yet. The same-store-sale of the store is growing at 20 per cent, he claims.
Niche or growing?
Technopak estimates the Indian gourmet food market to be worth $1300 million (Rs 8,481 crore), growing at 20 per cent. Growth in organised small-to-large specialty retailers, exposure to foreign cuisines are seen as some of the factors aiding growth.
Given the 20-30 per cent gross margins and three times more sales throughput compared to conventional food and grocery stores, gourmet food retailing would have been any retailer's first love, but not many have ventured into the segment. That is because of the high ratio of imports which in turn, exposes the retailer to currency fluctuations and stock-outs.
While Kishore Biyani's Future Group has a handful of Foodhall outlets, Tata's Westside has Gourmet West in five of its stores. Besides, Spencer's and Hypercity also sell gourmet food and ingredients. Mohit Kampani, president and CEO at Spencer's Retail had said he was looking to increase the share of gourmet products in his non-grocery earnings.
Not too many
"The country cannot take more than one chain in gourmet food. It is a niche opportunity. With rupee depreciating so much, it is challenging to do business. Customers are only willing to pay so much," says Sanjay Badhe, a Mumbai-based consultant who has worked as marketing head at Aditya Birla Retail. "But Nature's Basket has strong customer loyalty and become a reference point for gourmet products," Badhe adds.
"The demand for our products is not coming down. Though, growth from new customers may have come down," Khattar says of the downturn. The chain is looking to open a dozen stores in the next two-three years. However, it has been moderate with expansion, opening 28 stores in the last six years. "We are not in a race to compete with others. We saturate cities and move on to the next," Khattar says. While half of the stores have broken even at the store level, he expects the chain to break even by 2015-16.
The six-year-old Nature's Basket, owned by the Godrej Group, is the largest gourmet food retailer with 28 stores. But it also means that 85 per cent of its packaged merchandise is imported - the highest among all food retail chains. The rupee's depreciation by over 20 per cent since the beginning of the year has pushed up the cost of imports.
Sampling and hampers of its own private labels, then, are important than ever for the retailer, even more so than other hypermarkets such as the Raheja-owned Hypercity and Aditya Birla's More which have their own familiarisation activities too.
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Its Managing Director and Chief Executive Mohit Khattar agrees that there is an uncertainty but says it is a "passing phase". He says the chain has already been working on a strategy of sourcing high-quality products domestically and developing private labels in the grocery and snacks segment since the last six months.
Gourmet clientele
Nature's Basket regularly engages customers through tasting sessions, demonstrations by well-known city chefs such as Vicky Ratnani, Aditya Bal, Vikas Khanna and Mayank Tiwari, cooking workshops, and themed events such as one on 'amuse bouches from around the world'. It has even enlisted food bloggers and consultants such as Rushina Munshaw Ghildiyal and pastry chef Kishi Arora on a panel.
Can't say no to imports
Given such a positioning, the chain cannot decrease its imports anytime soon, if it is to cater to gourmet food hunters. But keeping a steady stock of imported food products with a finite shelf life, when importers are not able to plan their orders due to a fluctuating rupee, is a challenge.
Khattar says the chain works with a battery of 350-400 importers and even if some of them suffer, there are others who will still import. "They (importers) have to reconcile and live with the uncertainty for now," Khattar says. The chain has a set of exclusive importers who supply it regularly. "So, as a customer, you will see as big and diversified a range as you saw a couple of months ago." Khattar says.
He adds that its private labels will fill low-volume categories, which will be of good quality and priced lower. The festive season around the corner will also spur importers, Khattar mentions, who might bring in less but enough to meet its stock requirements.
Import hiccups
But some of the chain's stores are also prone to stock-outs of certain brands and products, say customers. Khattar agrees that there have been such issues. "Over 85 per cent of our products are imported where the supply chain is not consistent due to issues in freight, at the port and in local transport. Sometimes vendors delay orders. Usually we have multiple brands for consumers," he adds.
There is also the challenge of margins. An importer says the chain charges a high listing fee, sometimes even per store. A listing fee is paid by an importer/brand to a retailer for stocking its products. But Khattar says the higher fee is the premium for the ambience and people it provides. "Brands, as a result, get to enjoy a high sales throughput," he adds.
Khattar claims that despite passing on the higher prices of imported products to customers, the stores have not seen tightening of the consumers' pursestrings yet. The same-store-sale of the store is growing at 20 per cent, he claims.
Niche or growing?
Technopak estimates the Indian gourmet food market to be worth $1300 million (Rs 8,481 crore), growing at 20 per cent. Growth in organised small-to-large specialty retailers, exposure to foreign cuisines are seen as some of the factors aiding growth.
Given the 20-30 per cent gross margins and three times more sales throughput compared to conventional food and grocery stores, gourmet food retailing would have been any retailer's first love, but not many have ventured into the segment. That is because of the high ratio of imports which in turn, exposes the retailer to currency fluctuations and stock-outs.
While Kishore Biyani's Future Group has a handful of Foodhall outlets, Tata's Westside has Gourmet West in five of its stores. Besides, Spencer's and Hypercity also sell gourmet food and ingredients. Mohit Kampani, president and CEO at Spencer's Retail had said he was looking to increase the share of gourmet products in his non-grocery earnings.
Not too many
"The country cannot take more than one chain in gourmet food. It is a niche opportunity. With rupee depreciating so much, it is challenging to do business. Customers are only willing to pay so much," says Sanjay Badhe, a Mumbai-based consultant who has worked as marketing head at Aditya Birla Retail. "But Nature's Basket has strong customer loyalty and become a reference point for gourmet products," Badhe adds.
"The demand for our products is not coming down. Though, growth from new customers may have come down," Khattar says of the downturn. The chain is looking to open a dozen stores in the next two-three years. However, it has been moderate with expansion, opening 28 stores in the last six years. "We are not in a race to compete with others. We saturate cities and move on to the next," Khattar says. While half of the stores have broken even at the store level, he expects the chain to break even by 2015-16.