Wadhawan to revamp supply chains

Wadhawan Food Retail (WFRPL), a closely-held unlisted company promoted by the Wadhawan group, is planning to revamp supply chain operations in its outfits in order to lower costs and achieve better margins and delivery schedules.

The group owns the Spinach convenience store chain. Fresh from its recent acquisitions, WFRPL currently manages 100 stores of Sangam Direct, a direct-to-home online grocery format it bought from Hindustan Unilever; Sab Ka Bazaar, a 42-store food and grocery chain based in the National Capital Region; S Mart, a 14-store strong Bangalore-based grocery retailer and a management contract to run Maratha Co-operative based in Maharashtra.

As part of the integration, the company will set up a uniform vendor management and combined distribution centres, which will supply products to all stores and take care of Sangam's front end needs. Sangam has four regional distribution centre (DCs), Spinach has two DCs in Mumbai and Sab Ka Bazaar has a couple of DCs in Delhi.

"We are in the process of integrating our brick and mortar formats and online format. We will beef up our logistics and supply chain, which can cater to all our formats to achieve greater efficiency. If there is a value preposition, it is easier to integrate them with little investment," said WFRPL Director Kapil Wadhawan.

The company is planning integration in merchandise buying, private labels, HR interface, IT infrastructure and store designs.

"With the number of stores increasing and higher need for merchandising, we felt we can negotiate with larger companies for better margins and commit higher offtake," a company official said.

WFRL has also lined up expansion plans for all the companies it has acquired.

The company is planning to build the Sangam network in cities where WFRL's outfits have a presence and later enter new territories. When Sangam was under HUL, it was restricted to Mumbai.

The company is planning to offer more FMCG products and services under the Sangam platform. It is also planning to set up a desk for institutions so that they can order products online. "Currently, we are drawing the back end of Sangam and trying to understand the customers for this kind of format. It is a challenge to integrate the front end of Sangam with the back end of other formats," Wadhawan said.

Wadhwan is also in the process of consolidating its presence in south India with S Mart Retail, which has a strong presence in Bangalore. WFRL has plans to set up 25 new stores by March 2008. It is also planning to add 25 new Sab Ka Bazaar outlets, which are now present in Delhi and western UP.

Wadhawan said the company was planning to invest Rs 1,500 crore to open nearly 1,400 stores in the next 4 years. Spinach has stores under Local, Super and Express formats. He said the company was looking at various options such as specialty stores, cash-and-carry outlets and so on. The company was planning to set up 30 hypermarkets in a couple of years and the first one would be up by mid-2008.

Though the share of modern grocery retailers account for only 2 per cent of total grocery retailing, it is expected to increase to 5 per cent by 2011, says a recent study from researcher Euromonitor International. However, modern grocery retailing in India grew at 48 per cent in 2006, the fastest among the Asia-Pacific nations, the study said.