To turn around the loss-making Godrej enterprise, its new owners, Spencer’s Retail, have to get their strategy and execution right

Written By SALIL PANCHAL

Though Nature’s Basket grew from a single food store in 2005 to 35 stores in Mumbai, Pune and Bengaluru, it never made a profit in 14 years of operation Image: Ramesh Sharma / India Today Group / Getty Images

Nature’s Basket: Goenka’s New Hot Potato To turn around the loss-making Godrej enterprise, its new owners, Spencer’s Retail, have to get their strategy and execution right

Shashwat Goenka, the scion of the RP-Sanjiv Goenka Group, faces possibly the toughest challenge of his career. Six years after taking charge of the business of family-led premium(ish) multi-format retailer Spencer’s Retail, which he heads, he turned it profitable in FY2019. He will now need to turn on the magic, once again, for the loss-making—and once rival—gourmet retail chain Nature’s Basket, which Spencer’s bought out from Godrej Industries.

Spencer’s Retail, following shareholders’ approval, is to buy Nature’s Basket in an all-cash ₹300 crore deal, announced in May. Nature’s Basket, which redesigned its stores in 2017-18, houses products such as Spanish Toast Ham, Parmigiano Reggiano cheese, Olea Europaea’s sun-dried tomatoes and imported wines.

But the gourmet retail foods business, where Nature’s Basket competes with Future Group’s Foodhall and also grocery delivery service Big Basket, is an extremely difficult segment to operate in, characterised by high costs, long inventories, niche consumer tastes, and high real estate rentals.

What then can Goenka do differently from Godrej? Firstly, it is the intent. Though Nature’s Basket grew from a single food store in 2005 to 35 stores in Mumbai, Pune and Bengaluru, it never made a profit in 14 years of operation. In FY18 it reported a net loss of ₹62.24 crore, down from ₹95.37 crore in FY17. FY19 revenues were at ₹338.38 crore.

Nature’s Basket never became a strategic or core part of the Godrej group portfolio. “It suffered from lack of scale and lack of positive cash flow,” says Devangshu Dutta, CEO of retail consultancy firm Third Eyesight.

Announced in 2016, GNB [Godrej Nature’s Basket] Refresh 2020 strategy targeted ₹1,000 crore revenues by 2020; omni-channel expansion in the medium term and a deeper presence in southern and western India. Not much of these was achieved.

Tanya Dubash, executive director and chief brand officer, Godrej Group said in a press release announcing the sale, “Looking forward, we realised that to further unlock the immense potential of this brand and to grow it to even greater heights, we need to pass on the torch to owners who have prioritised retail in their portfolio strategy and have the relevant ecosystems to take the business to the next level.”

Nature’s Basket’s CEO Avani Davda said she was travelling and declined to speak about the sale to Spencer’s.

NO DILUTION OR RE-BRANDING
“We wanted to expand our footprint inorganically. Nature’s Basket has a strong base in western India, which we don’t. Both the brands are aspirational compared to Big Basket and cater to high-end customers,” says Goenka.

There are no plans to dilute, dissolve or re-brand Nature’s Basket, Goenka adds. “It [Nature’s Basket] is a very strong brand. As I continue to understand this business fully, I will explore whether we can have more stores and expand to those places where required.” He says he will evaluate which markets are expanding, and which of its stores are breaking even. But analysts say some stores could turn unviable and shut, or be converted into Spencer’s stores.

Goenka will also need to rethink a few issues for Nature’s Basket:

Rethink NCR: Nature’s Basket exited the NCR—considered a key market for premium gourmet foods—by 2017, where at one time it had eight stores. High rent and operating costs and logistical issues could have led to these exits. Goenka cannot afford to ignore the region. Spencer’s already has over 10 hyper stores and neighbourhood stores in this region. “NCR cannot be missing from Nature’s Basket’s map; it is a vital growth market, alongside Mumbai,” says Abneesh Roy, senior vice president (institutional equities), Edelweiss Securities. Spencer predicts that retail spending in the NCR will grow at 12.5 percent CAGR between FY17 and FY21.

Cross-selling: Goenka will be banking on cross-selling products and private labels to boost revenues for both brands. Nature’s Basket has Healthy Alternatives, L’exclusif, and Natures, while Spencer’s has Smart Choice and Tasty Wonders in the foods category, and 2Bme, Care & Esentialz, Clean Home, Maroon in non-foods; 63 percent of its revenues come from foods. Spencer’s Retail became profitable (it reported a consolidated net profit of ₹7.94 crore for the full year in FY19) as Goenka focussed on improving margins and cross-selling in specific categories. The company, which was listed in 2018, is now debt free, and has taken a cautious approach to opening new stores.

Investing more: Goenka will need to consider pumping more money into the loss-making venture. Godrej Industries was in a phase to control Nature’s Basket’s losses and cut marketing, technology and system imperative costs. These, and other costs, could resurface for Goenka. Godrej Industries’ investment at cost in Nature’s Basket was ₹200 crore.

Online strategy: Another need would be to create a new, robust online strategy for Nature’s Basket and Spencer’s Retail to boost earnings. There is scope to expand stores across geographies and even raise the topline for Nature’s Basket. But, as seen with seasoned retailers such as DMart, Spencer’s Retail will need to maintain the Nature’s Basket—or even their own—brands, understand customer choices and requirements.

Turning this venture profitable is a distance away, at least 3 to 5 years away, experts say. With execution being be critical, will Spencer’s rediscover its mojo?

Source: forbesindia

Written By Varuni Khosla, ET Bureau

The seven-year-old specialised online beauty retail venture has added fashion to their forte.

Source: economictimes

(The following is the video and the text of the Commencement Speech by Devangshu Dutta, chief executive of Third Eyesight, at the Convocation of the batch graduating in 2019 from the National Institute of Fashion Technology, Patna, India.)

I would like to just share a few learnings from my own career. I hope some of these learnings will provide you some food for thought, and if they stick, I hope they prove valuable to you in some way in your own career.

I think as a graduate of a professional institute, there are 5 life-skills or attributes or pieces of advice that could be useful to you.

1. Approach work in an integrative manner, not distributive: As you enter the industry, you will find that there is a tendency to specialize. Entry level roles are functionally specific. As an individual you need to make a special effort to not lose the larger perspective. As you grow in your career you will find that an ability to connect the dots and show others the bigger picture will be a more valuable skill than you can imagine today. So, if you are a designer, as about a hundred of you present here are, please spend time and effort understanding the intricacies of manufacturing, the nuances of marketing and the thrust of business development. If you are a merchandiser or a technologist, please make time to expose yourself to art, music, cinema – what might seem to you as entertainment (or even a waste of time) today will go a long way in preparing you for leadership roles, because you will be able to not only understand your own function but understand what makes the other parts of the organisation tick.
2. Be available to others: No matter what work you do, it is never in isolation and depends on support of your colleagues and peers, within and outside the organisation. By making yourself available to others – whether to help in a professional situation or personal – you lay the foundations for relationships that will support you through your career and your life in ways that you cannot anticipate or plan. All professional success is built on foundations laid by others. The best way to express thanks for their contributions is by making yourself available to make others succeed.
3. Learn. Learn. Never stop learning: As you graduate today, I hope you will have no illusion that you have learned everything you need for the rest of your career, and that you are set for life. The world is changing faster than ever, and so is the market and the industry. Make your skill set something that is refreshed all the time. If you don’t cultivate the hunger to learn, it is very likely that there will come a point in your career where you are feeling stuck and will not have the tools available to push yourself into a new trajectory or career orbit.
4. Have integrity: Be honest to the work that you do, be honest to the organisation that you work for, to your colleagues, to your customers, to your suppliers, to your juniors. The word “integrity” has its roots in “intact” or “whole”. When someone lacks integrity, it is as if they have a split personality – thinking or believing one way, while behaving another way. The greater the difference between the two, the more energy you will waste. If you have integrity in life, if your thoughts, words and actions are aligned, all your energy will work in the same direction. I know this could be possibly the most difficult pieces of advice I’m asking you to follow, but I think it will pay off for you in building your career.
5. Adopt a responsible approach towards the environment: As graduating students of NIFT you need to realise that you are becoming a part of the 2nd most polluting industry in the world after oil and gas! As India’s economic growth continues, the fashion, consumer products and retail sector are expected to grow as well. It is critical that today’s youth actually start questioning how this industry runs worldwide. Please don’t blindly accept that just because the global industry has worked in a particular way for the last 80-100 years, it is the right way. The fashion sector runs on planned obsolescence – i.e. products are planned to be discarded within a short time, even if physically and functionally there is nothing wrong with them. At a recent industry conference, I called fashion a “zombie industry” – zombies are supposed to be dead but they act as if they are alive, as they run about eating people’s brains. Don’t become another zombie in a zombie industry. Find ways to fight the waste created within and by this industry. If you can make it more sustainable, less wasteful, it is your own world that will be a better place to live in.

Thank you so much for patiently hearing me out. I hope some of the advice would have resonated with you, and will prove useful. I wish you all the very best and offer you my congratulations, on behalf of all the other alumni – welcome to the industry. Thank you!

While BigBasket expects to increase its revenue from the private brands to 45 percent this year, Grofers is aiming to increase the revenue share from private labels to 60 percent by the end of this year.

Written By Varun Jain

New Delhi: Online grocery players BigBasket and Grofers are betting big on private label brands as it has become one of the largest source of revenue for these companies. BigBasket and Grofers currently witness 40 percent and 35 percent of their overall revenues coming from their own brands respectively.

While BigBasket expects to increase its revenue from the private brands to 45 percent this year, Grofers is aiming to increase the revenue share from private labels to 60 percent by the end of this year.

“Private labels or as we call them ‘G-Brands’ at Grofers, contributed to almost 35 percent of our revenue last year. At present, almost half of our sales are from our own brands’ offerings and we plan to take this number to 60 percent by the end of this year,” said Saurabh Kumar, founder of Grofers.

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The e-retailer is also looking to aggressively increase the offerings and assortments of their private brands.
“There are over 800 products spread across various categories such as staples and kitchen ingredients, FMCG products, personal hygiene products like soaps, shower gels, face wash, hand wash, hand sanitizer, etc, personal care products like moisturiser and deodorants, home needs like cleaning products and furnishing items, food products and snack items, baby products and a lot more under these 8 brands. We plan to increase it to 1200 products by the end of 2020,” said Kumar.

The demand for private label brands is on a rise as consumers are seeing the value of getting the same quality product as a national brand at least 40-50 percent lesser cost, feels Kumar.

Out of 600 categories that BigBasket has on its platform, the company has private label brands in around 150 categories, according to Seshu Kumar Tirumala, national head, buying and merchandising at BigBasket.

“Every month we launch private brands in around 6-7 categories. We keep exploring when and which category we need to launch private brands. There is still a huge gap and we need to address it,” said Tirumala.



Tirumala also said around 90 percent of the agricultural commodity like rice and dal available at BigBasket is their own private brand while 100 percent of the fresh produce like fruits, vegetables, and meats are private labels.

According to Pinakiranjan Mishra, Partner and National leader, Consumer Products and Retail at EY, private brands are a good strategy for online and offline retailers provided they offer value to consumers beyond just price. This means that they should have equivalent quality, new product introductions, etc, he said.

“However retailers often underestimate the cost of private brand development,” Mishra noted further.
According to industry experts, while private label brands help in building the stickiness to the customers, it also gives the retailer control over the quality and supply chain of the product apart from ensuring better gross margins.

“Private labels can fulfill one or more objectives. They have the potential to deliver better gross margins, a critical element in the thin-margin grocery business. Retailers can address specific need gaps for their customers that are not addressed by established brands. Thirdly, retailers can pitch private label at opening price points in a category, to entice consumers.

Private labels are usually, but not always, cheaper than comparable products from established brands,” said Devangshu Dutta, chief executive of a retail consultancy firm, Third Eyesight.

In the offline grocery space, one in every five products sold at the country’s biggest hypermarket chain Big Bazaar is owned by Future Consumer, a sister concern of the Kishore Biyani led Future Group.

“While we have challenged companies, especially MNCs, the customer decides to buy products or brands at our stores eventually,” Biyani, founder of Future Group told ET earlier. “There was a void in several categories since FMCG companies were not strong or didn’t invest in building them. FCL brands have filled that gap, and our aim is to have 70% share at our stores by 2022,” he had told ET.

ET had earlier this month reported that fashion e-commerce player Voonik has decided to move to fully private label business after struggling to survive independently and scaling down and downsizing staff significantly.

“We always had the plan to increase our private labels, we are now expediting it,” said Sujayath Ali, co-founder of Voonik to ET earlier. He said the company would move to a completely private label-led business in the next 3-6 months.

Source: retail

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Juices for PMS, patches for cramps: Period care gets padded up

admin

May 25, 2019

Skincare, haircare, and now, there’s period care. While FMCG companies continue to rule the market, new players bring the promise of comfort and sustainability to women who can afford the extra buck

Written By

There are 336 million menstruating women in India, and 36% use disposable sanitary napkins, according to Menstrual Hygiene Alliance of India (MHAI). That’s 121 million women.

It’s no surprise then that the menstrual products market is growing. And fast Value.

Source: the-ken

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