Shashwat Goenka, chairman of Spencer’s Retail and Nature’s Basket, is confident that the RP-Sanjiv Goenka Group will be able to turn its consumer business profitable in the next two to three years. In this interview, Goenka talks to Christina Moniz about his plans for the group’s consumer brands and its renewed focus on e-commerce. Edited excerpts.
What is scope for growth for a concept like luxury grocery in India?
It is important to recognise that Indian consumers are largely aspirational. Those who are shopping today in value stores will want to shop at a store that offers elevated experiences and more premium products. In the aftermath of the pandemic, we observed that consumers were upgrading their preferences and experimenting more with cuisines and foods. Urban Indian consumers in particular are well-travelled so they want access to products and gourmet food they’ve tried in other countries. You can see how Indian consumers’ preferences have evolved by the example of a fruit like avocado. Until five years ago, people had to go to great lengths to locate stores that sold avocados. Today you can buy them off the streets, so clearly Indian customers are willing to sample new foods and ingredients.
Our country also has a very young demographic dividend, with a sizable population that is upwardly mobile, with high disposable incomes and a willingness to spend on luxury experiences. So there is definitely an immense growth potential, which we want to capitalise on.
Describe the typical customer for your different brands?
The customers we’re targeting for the new luxury stores, Artisan Pantry, are broadly people who are exposed to different food trends and cuisines, and who enjoy experimenting with new products and ingredients. So the focus will be on metros and tier-I markets only. Our Nature’s Basket stores are present in Mumbai, Bangalore, NCR, Pune and Kolkata and we plan to grow further in these cities and then enter new cities. For Spencer’s Retail, our focus is to drive top-line growth, e-commerce and to improve profitability. The brand is aimed at the value shopper and is present in more than 30 cities largely in Uttar Pradesh, West Bengal, Andhra Pradesh and Telangana. We plan to penetrate deeper into these markets; for now we are not planning to take the Spencer’s brand into new states .
You just spoke of India’s “young demographic dividend”. Have you given enough attention to the e-commerce channel to target them?
When it comes to Nature’s Basket, the e-commerce business honestly has not got the kind of attention it really needs. So that is a key focus area for us over the next three months. Our customers may walk into our stores two or three times a month but they shop a lot online too. We have re-launched the Nature’s Basket website with a new consumer interface and are working on improving the backend and operations for the site.
For Spencer’s in comparison, we have been able to create a robust omnichannel presence over the last seven years or so and the online business is about 15% of our revenue. Comparatively, for Nature’s Basket online business is under 5%, so we have a lot more work to do here.
What is the USP of the new Artisan Pantry brand?
If Nature’s Basket is premium, then Artisan Pantry is luxury. That, in a nutshell, is the brand positioning. It is probably the only luxury grocery brand in the country currently. The key difference is in the customer experience, where our trained staff will interact with customers and offer a deep understanding of our products and where we source them from. For example, in a category like coffee, we are walking customers through the variety of coffee we have, the brewing processes and more. Similarly, there are varieties of cheeses, made-to-order chocolate, different kinds of honey, chillies and spices. We also have a café as part of the luxury store concept, offering healthy versions of comfort food. Everything we make in the café is from ingredients that we also sell at our stores.
While there is some overlap in the two brands, Artisan Pantry has a wider range of offerings, many of which you wouldn’t see in a Nature’s Basket store. The other key difference lies in the size. These stores are larger than 8,000 square feet compared with Nature’s Basket stores that are around 2,000 to 2,500 square feet.
Nature’s Basket is still carrying a debt of Rs 100 crore…
We’ve had a great year by way of top-line growth and want to build on that. The Artisan Pantry brand, being a more luxurious brand, involves 15-20% higher investments than a regular Nature’s Basket and as always, the investment cost depends on factors like the size of the store, city and location. That said, the Artisan Pantry stores are profitable within the first three months of operations.