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A bigger basket for Godrej

Why Nature's Basket has taken it slow and steady till now and how it plans to widen its footprint

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Ritwik Sharma New Delhi
Last Updated : Nov 06 2016 | 11:03 PM IST
As Godrej Nature’s Basket plans to expand its offline retail footprint in southern and western India, the gourmet retail chain is looking to add to a list — of five cities where its stores are present — that has remain constant since 2011. A store format involving redesigning, and heavy investments on people, supply chain and the brand itself are also on the anvil, but the company’s emphasis on consolidation in its existing markets at the same time reflects an unhurried approach focused on profits and sustainability.
 
The company, which was started in 2005, has 37 stores in Mumbai, Pune, Delhi NCR, Bengaluru and Hyderabad. Avani Davda, managing director, Godrej Nature’s Basket, points out that various studies suggest 85 per cent of the total Indian retail trends emerge from 16 states, of which Maharashtra, Karnataka and Gujarat are the cream where consumption is significantly high.
 
“Given that we have a very strong presence in Maharashtra, with 20 stores between Mumbai and Pune, we believe in the next three to four years we should be able to consolidate and focus on south and west to grow and explore new cities. We will expand to other cities in the next three to five years,” she says. She adds that the company enjoys a cachet of extremely loyal consumers in the five cities where it is present. The acquisition of online grocer ekstop.com last year helped the company to fast-track its omni-channel strategy and reach out to cities where the mother brand (Godrej) as well as its products are well-received.
 

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While the omni-channel approach offers countrywide reach, the company sees huge offline growth opportunity in the existing cities. Davda says, “There has been a huge penetration in Mumbai and Bengaluru over three years, and from there I think any hub-and-spoke model helps us in satellite cities around them. We think over the next four years there is ample scope to expand in Mumbai, Bengaluru and Pune. This will be through our growth levers in adding stores and increasing their penetration in the catchments.” She explains that a catchment analysis in Mumbai would throw up 25-plus sub-markets, whereas the company has 14 stores thus leaving room for lot more penetration. Mumbai and Bengaluru are also the hubs of food innovation in terms of product and changing customer preferences, she argues.
 
The Indian gourmet food market is valued at US $1.3 billion (Rs 86.78 billion) and is growing at a compound annual growth rate of 20 per cent, according to the India Brand Equity Foundation. Davda mentions that Godrej Nature’s Basket has crossed Rs 300 crore this financial year in terms of revenues.
 
Ankur Bisen, senior vice-president, retail and consumer products, Technopak, points out that gourmet food is a nebulous category in India. “Premium food, organic food, imported food etc. all comprise gourmet food and are spread across multiple categories. If I were to include functional food (staples), oils, condiments and additives and exclude beverages then the size of premium foods will be in the range of Rs US $2 billion (Rs 133.5 billion),” he says.
 
He adds that the play of premium foods is largely confined to the top 20 cities in India, with organic and wellness categories emerging as big trends creating new incremental demand and offering opportunities for gourmet players.
 
“There is a lot of polarity when it comes to consumption especially in the organised retail form, not just gourmet or luxury retail,” Davda says, while agreeing that the top 20 cities also cover 90 per cent of the overall retail market in India.
 
Although consumers, especially millennials, today are ready to experiment with food, Godrej Nature’s Basket is in no hurry to launch new products. “We are very conscious about how and what we sell to our consumers. When we talk about organic or other kinds of niche segments, I think there is a whole level of supply chain and supplier base development that we are intending to do because the space is exciting and growing triple digits every year. I think conscious consumption is a very important thing that has happened in the consumer’s mindset. We can capitalise on it because we have a mother brand which enjoys a lot of trust and resonates with Indian consumers,” Davda adds.
 
The company also intends to steer clear of developing its own brand in categories where national or international players are present. Whether it’s conscious consumption in the healthy alternatives bracket or indulgent consumption in the exclusives, Godrej picks categories that “speak to our strength and allow us to provide unique products” without being merely “category fillers”, Davda says.

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First Published: Nov 06 2016 | 10:55 PM IST

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