Godrej Natures Basket, a gourmet and fresh food store, which is a 100% subsidiary of Godrej Industries, is open to having a strategic partnership with a foreign retailer through a tie-up, stake sale or joint venture, without violating the FDI rules.
Avani Davda, managing director, Natures Basket, told Jharna Mazumdar of FE, that the company plans to add around 12 to 15 stores in FY19 and is experimenting a new neighbourhood format of around 400 sqft. Edited excerpts:
What are you plans for FY19? How many stores you plan to add?
We will add around 12 to 15 stores and the funding will be done internally. The stores will be opened in the existing markets of Mumbai, Pune and Bangalore. Also we are experimenting a new small format store of around 400 sqft which will be opened in big residential complexes. Seeing the response we will decide on expansion.
What are the changes you have done in the store to improve profitability?
We have reduced our stock keeping units (SKUs) to around 8,000-9,000 from earlier 30,000 and have rationalised our assotments. In our stores we have 70% of our products which are fresh and local products as this is the trend. We have reduced our share of product imports as most of it is available in India, and moreover, we wanted to make sure that we keep products which would be available on the shelf all throughout the year and there is no waiting period for it.
In the last couple of years you have done some consolidation in store network? Would you continue with it?
When I started With Natures Basket almost two years back, there were around 36-37 stores operational. We exited out of Delhi and Hyderabad market and our store count came down to 25, and from there, now we have 30 stores operational. We may relocate 4 to 5 stores in FY19. Further, from a store size of around 6,000 sqft, most of our stores are now of around 3,000 sqft, which has almost halved our rental costs. All these steps will help improve our performance going forward.
When do you expect to be PAT positive?
We are likely to be PAT positive in FY21 and have focused on cost cutting as well as changing product assortments within the the stores. Where required we have also shut down our loss-making stores, which failed to break-even at the operating level. Having said so, we are also open for strategic partnership with a foreign player through joint ventures, stake sale or tie-ups in the future but without violating any FDI rules. We are not actively pursuing it, but if we get a good opportunity, we are open to look at it.