How supermarket specialist Damodar Mall, Chief Executive Officer, Value Formats, Reliance Retail Ltd. is helping the business meet the aspirations of India’s unique, assertive and emerging consumers with a cart loaded with experience and customer orientation.
New Delhi: As the chief of Reliance’s value formats, Damodar Mall is responsible for the company’s entire grocery consumption basket—physical and digital. This includes FreshPik, Fresh Signature, Smart, Smart Bazaar, and Smart Point. In addition, he also oversees 1P Grocery on the e-commerce platform JioMart and subscription-based platform MilkBasket.
While Smart Bazaar, Smart Point, and JioMart are on the value spectrum, Signature Fresh and MilkBasket are premium and FreshPik is gourmet.
“Any business that approaches an opportunity as large as India and as diverse as India has to have a multi-format play because while every consumer is promising in India, everyone’s starting points are different,” said Mall explaining the brand’s broad-based offerings.
The company’s overall agenda is to serve anyone who is an aspirational customer in India. “So, I’m selling, the world’s best strawberries to the strawberry-eating customers in FreshPik. I’m also selling strawberries to people who are eating bananas in my Smart Bazaar stores. That’s how we can address the fuller India opportunity in modern retail, both physical and digital,” explained the SupermarketWala.
The add-ons
To help the company serve every customer segment across diverse geographies, RRL’s approach involves acquiring a strategic interest in grocery businesses that are doing well in their region such as Mumbai-based Sahakari Bhandar. RRL’s recent acquisitions of this kind include Coimbatore-based Shree Kannan Departmental which operates 29 stores across the region, and Namakkal-based Jayasurya stores. Another acquisition that is in process is that of Kerala-based electronics and grocery retailer Bismi, which runs 30 large format stores in the state.
While some of the acquisitions get a Reliance branding, others continue to maintain their independent identities. Speaking about the strategy the CEO said, “Regional or otherwise, acquisitions keep coming to our fold as opportunities and we integrate them into the operation. There are different trajectories for different acquisitions. So, the Shri Kannan Stores now are Shri Kannan Smart Stores and Sahakari Bhandar is presented to the customer as Sahakari Bhandar or Smart Sahakari Bhandar, depending upon what size the store is.”
Decisions concerning brand identities are dependent on the role that the formats play in their catchments and their legacy.
Explaining this further he said, “The overall picture is that India needs an omnichannel play for all habits and preferences of all income and segment strata across all catchments, all regions of the country and all town classes—tier 1, tier 2 and tier 3. We would like to serve that comprehensive opportunity through our various platforms, whether physical or digital.”
Performance wise
For RRL, grocery is a significant contributor to its business. It operates over 2700 grocery stores and sells over 200 metric tonnes of fruits and over 300 metric tonnes of vegetables every day, as per its website. In the first quarter of the current financial year, the grocery business recorded a 59% year-on-year growth, while in the second quarter, it delivered a 33% year-on-year growth, led by Smart and Smart Bazaar formats.
While Smart and Smart Bazaar Bazaar were the top performers in terms of revenue in the second quarter of the current financial year, to Mall there are no personal favourites and each store has to perform for its catchment.
The company has a steady focus on premiumisation in assortment, which has helped it push order size and improve shopping experience, it said in its recent annual report.
The emphasis is on ensuring that every store does well and delights the customer, irrespective of its format or target audience.
Adding experiences
Enhancing experiences has different meanings in different formats. For instance, at FreshPik, which caters to a more evolved customer, for whom replenishment shopping is delegated to service providers, providing experience involves providing design elements with a higher touch, feel and interaction.
However, the gourmet customer is only half a per cent of India. For the largest bulk of Indian customers, shopping for groceries and saving money for the family is a positive way to use their time, involvement and energy.
For such customers, adding experiences means adding involvement. “It is for people to discover new things. So, if you are buying a toothbrush in our store, we want to help you touch and know what a hard toothbrush feels like, what a medium toothbrush feels like, and what a soft toothbrush feels like. And that itself is an experience. It does not have to be too esoteric,” explained the SupermarketWala.
He shared that at this end of the spectrum, all Smart Bazaar stores are designed to answer two questions which are in the minds of customers: What’s new this time? And what’s on offer this time?
“We are continuously working to increase choices for this customer and keep the shopping interesting because the customer is telling us that she’s there to explore, learn, discover new things and take home things that add small, everyday joys for the family,” the veteran said.
Adding technology to the cart
Mall shared that technology both at the back-end and the front-end, plays a crucial role in enhancing experience at RRL’s grocery platforms. For instance, JioMart offers customers the convenience of ordering from their homes as well as while at the stores, as all orders are serviced by the stores.
Furthermore, every manager on the shop floor has an app on their phone which fetches details of a product scanned, informed Mall, whose focus on integrating technology and data analytics into retail operations has been instrumental in enhancing the efficiency of supply chains, inventory management, and customer engagement.
In addition, some RRL stores offer tech-enabled features like self-checkouts and scan-as-you-go. However, to Mall, these are add-on features. To him, making interesting products discovered by the customer, and helping the customer interact with the products even before she buys are all ways where Smart Bazaar facilitates the experience. “Some of them are directly digital, some of them are both digital and physical, but all of this works towards being multi-sensorial and engaging,” Mall explained.
Partner play
Offering the kind of experience and choice that our stores deliver, is not possible without a robust and extensive partner ecosystem. The company invests in developing an end-to-end value chain for fresh produce, for example, to ensure product quality, supply stability and sourcing efficiency through a network of collection centres and processing centres.
On the vendor side, it has partnered with thousands of small and medium-scale entrepreneurs in the food and home segment, which helps them grow their presence across India.
“I think the number of startups that are doing consumer brands in India is more and more interesting. Modern retail and e-tail platforms like ours solve the distribution problem for new brands. We are the flyovers over the distribution hurdles of pan India operation,” he said.
Such collaborations don’t just benefit brands and startups but are also good for consumers because they get more choices on the company’s various platforms.
Private label strategy
“From staples, food, fashion, and FMCG, to home, personal care, and general merchandise, Reliance Retail caters to more than 90% of daily needs of Indian households,” revealed Isha Ambani in her speech at the Reliance Industries Ltd.’s 46th Annual General Meeting (Post-IPO) held in August.
Private labels form an important part of the bouquet of choices RRL offers its food & grocery consumers across a range of product categories. “Over 20% of our business comes from own brands,” shared Mall.
Noodles and snacks brand SnacTac, cola brand Campa, and basic foods brand Good Life are among some of the brands it offers at its stores.
Explaining the company’s strategy, Mall said, “Our approach is that India needs more brands. So, our approach is not like the conventional retailers elsewhere in the world. We have a large portfolio of powerful brands. People buy Good Life atta or Enzo detergent or SnacTac because of their reliable quality and not because it comes from a retailer,” he said adding that these are channel-independent and have been crafted as brands.
Expansion plans
While the exact number of grocery stores is unavailable, the company added 471 stores during the second quarter of FY24 taking its total store count to 18,650, which includes food and grocery.
According to Mall, this is a pace which nobody else in the world has been able to achieve and the expectation now is to open stores faster than before.
“I want to reach the number of stores that the Indian customer wants. So, I will discover my store ambition at each stage, in tune with my shoppers,” said Mall sharing the company’s aspirations for the business.
Next step in evolution
According to Mall, the Indian consumer is an emerging and asserting customer who he feels will make sure that retailers learn to do things like e-commerce with video, with voice, with no language barriers and offer even more seamlessness between physical and digital stores.
“That’s what I see happening and that’s what we are working for. Retail has an everyday feedback loop with the customer and we keep evolving,” he said.
Selling to the Indian customer
Mall is known for his deep understanding of the Indian consumer and her preferences. In fact, in his preface for Mall’s book, Kishore Biyani himself has acknowledged this. This customer-centricity often tickles down the line and results in customer loyalty. This is evident from the fact that about 94.5% of all sales for Reliance’s food & grocery business come from its loyalty program customers.
According to the SupermarketWala, sometimes the problem is, that many of us still try to copy-paste from Western markets. The message from the Indian customer has been clear; we just need to hear it better. “I do not like frozen food. My bread is made at home for every meal, and when I consume bakery-made bread, it’s only for breakfast. Such are things that the Indian customer has been telling us,” he explained adding that therefore, while the live bakery is a large part of all food stores across the world, it does not work in India. “But I wonder why none of us ever thought of setting up tandoors in our store, for example!” he said.
He observed that despite the acceptance of green and other tea variants, the Indian customer still likes to have her masala chai with pride. This is an assertive customer, who will have her way.
And because it’s such a large domestic market, whatever works with the Indian customer becomes global scale without having to step beyond the domestic market.
He said it’s a much bigger opportunity to help this customer when she wants to migrate from having Panipuri on the streets to multigrain and mineral water Panipuri in a mall. “One has to keep in mind this ‘size of the prize’ when chasing opportunities like branding and premiumising chaat or promoting the adoption of new snacks like Nachos,” he said.
“Customer orientation more than anything else is what will differentiate retailers who win faster from those who win slower with this consumer,” he said giving an insight into his approach to taking Reliance’s food and grocery business to the next level.
