Spencer’s Retail, the multi-format retailer within the RP-Sanjiv Goenka Group, is launching a luxury version of Natures Basket stores to achieve higher profit margins.
Natures Basket (NBL), a premium gourmet retailer, operates as a wholly-owned subsidiary of Spencer’s Retail.
“Traditionally, Natures Basket is in the space of gourmet retailing, but it is slightly ultra premium. Now, we are redefining that into a luxury grocery. It is going to be a very different experience altogether,” Spencer’s Retail chairman Shashwat Goenka said. This concept is new to India, he added.
The retailer is launching its first luxury Natures Basket store in Mumbai. In contrast to the average Natures Basket store size of around 2,500 square feet, this new format store will occupy approximately 12,500 square feet.
The company will be introducing two additional new-format stores: a 7,000 sq ft store in Kolkata in December and a 9,500 sq ft store in Mumbai in January of the upcoming year. These stores are strategically located in prime localities.
“The new concept stores are much larger in size, and therefore you can give a lot more experience to the consumers. It redefines what gourmet grocery retail really is,” Goenka said.
He noted that, given the larger size of these new concept stores, the company can generate “significantly more revenue” from a single store. He emphasized that this expansion will contribute significantly to overall profitability.
The retailer anticipates that these new stores will reach break-even within the second month of operations. The investment in each store is estimated to be in the range of INR 3-5 crore.
“In Natures Basket, we have a very healthy margin. These new concept stores will add to the margins because in this large format stores, we will have scope for higher margins. But on the pricing front, these stores will be competitive,” Goenka said.
Presently, the retailer operates 32 Natures Basket stores. Following the inauguration of the three new concept stores, the total store count will reach 35 by the end of this fiscal year. In the subsequent financial year, the company intends to introduce three to five additional luxury stores.
In the second quarter of this fiscal year, Spencer’s Retail experienced a 65 basis points improvement in gross margins. Natures Basket, considered independently, achieved an 8 percent growth and enhanced its gross margin percentage by 241 basis points on a quarter-on-quarter basis.
Spencer’s Retail disclosed an expanded net loss of INR 70.12 crore in the second quarter of this fiscal year, compared to INR 53.78 crore in the corresponding period of the previous fiscal. The company’s revenue from operations declined to INR 574.04 crore in the current period, down from INR 649.27 crore in the same period the previous year.
