Mahindra Retail has been a slow starter when it comes to store openings, but it has a judiciously chosen expansion strategy to take the ‘mom & me’ brand places...
The year gone by was a ghastly experience for those in the Indian retail industry. While paper calculations from the Retailers Association of India forecasted a happy 25% growth for the retail sector for the year, real growth during the year suggested a growth of just 2%! While on one hand, biggies like Reliance, Future Group, Shoppers Stop putting brakes on their aggressive expansion plans, on the other, smaller players (like Vishal Retail Ltd.) were forced to put locks on the host of existing stores. But as all heroic tales go, this one had exceptions too; rather ‘an exception’ in the name of Mahindra Retail. Many haven’t still walked into a Mom & Me store yet (that is the market name of Mahindra’s retail outlets) and many haven’t even heard about the brand (owing to its being in a very nascent stage), but for all we didn’t know, it was always working upon its strategy to remain stain-free during the bloody war against slowdown.
Spoken plainly, it was just a simple clean ‘slow and steady’ growth model to be worked upon, with no false promises of aggressive expansions. So when Reliance Retail had to put a stop to its publicly-announced penetration plan (of opening 40 stores per year), Mahindra Retail stuck to its tortoise-style plan of opening just two stores per year. Unlike the other blue-eyed of boys of India Inc., Anand Mahindra never believed in hypermarts being the stepping-stone to success in the retail world. Rather, he resorted to a specialised and unique retail format, after a two year-long homework and research, for which he hired KSA Technopak.
The group worked towards developing a USP of having a specific retail model for a specific group, judiciously avoiding the model of rolling-out a ‘me too’ brand. Walk into the office of Mahindra Retail, located at Bannerghatta Road, Bangalore, and you’d realise that for this venture, business is all about “mothers & infants” (Mahindra Retail calls it “from -9 to +9 years”), all thanks to its vision (‘To be the preferred destination, choice of every mom and child to delight them with world class product and services and to serve them in a personalized fashion’) written across a gigantic board that greets you at the entrance.
But at this very juncture, a doubt arises – identifying the mother and child space was good, for it sounded different, but when a host of analysts are found swearing to the tunes of the grocery and foods retailing symphony as an entry strategy, Mahindra’s plan to cash-in on a unique format is apparently found lost for justifications… However, a ‘never-say-die’ K. Venkataraman, MD of Mahindra Retail tells 4Ps B&M, “We didn’t want to open a regular store, without any specific target audience. Also, growth on an already claimed USP was also a strict no for us…” Surely, that’s swearing by uniqueness for real growth! But a recent research paper by market research agency, i-mint, titled, ‘Changing trends in retail marketing’, surely seems to be voicing out loud in favour of Mahindra Retail. The paper states that, “businesses need to focus nurturing a core customer base that is profitable to the company. Successful retailers generate majority of their profits from this core base.’ Therefore banking on a core group of customers (like ‘mothers and to-be mothers’ as in the case of Mahindra), surely calls for success in the mid-long term.
Mahindra’s first four stores that were opened in 2008, recorded a growth of more than 30%. And the strong logical acumen was displayed by the entity through the very fact that knowing its target customer, it only opened its shops in the metros, where, beckoning “expecting” couples is most definitely easier. But all is not good. A FICCI-based retail analyst feels that it was not really a wise bet to avoid treading down the time-tested model of retailing, at least in a country where organized part of this business, accounts for just 4.9% (equivalent to $16.5 billion) of the total retail pie.
A bird’s eye view of the entry strategy of the $6.3 billion Mahindra group proves that the entity has always sworn by the time-honored revenue generating model of foods and vegetable retailing. Its agri-business arm, Mahindra Shubhlabh Services Ltd., with its strategic partner Capespan (from South Africa), has been exporting grapes and other fruits to Europe. Therefore, it is not at all true that Mahindra is allowing opportunities offered by the mass market to fall on its blind spot. It’s agri-arm is paying heed to what is definitely counted as a sure-shot successful strategy in international markets.
Innovation in offerings is another point that makes Venkataraman and his team different. From providing guidance for vaccinations to tying up with global companies with unique agreements and launching private labels (in the initial year, the company rolled out three in-house brands and plans to roll out more such ten brands in 2010), it has many innovative arrows in its quiver. “We are also soon going to roll out services like educating the mother on proper feeding et al, and for all such services, our store staff will undergo a special and rigorous 21 day-long training sessions. And we won’t open a store unless we have a complete manpower-equipped store and have chosen a proper location,” says Venkataraman. Surely, it doesn’t believe in throwing caution to the winds, and seven stores across six cities in just two years is some proof! In this regard, there is some cause for concern, as competition is spreading quick and thick through town, and such pauses (like the one for a search for some El Dorado property) would only tantamount to sheer waste of precious time. Conclusively, by the time ‘mom & me’ gets ready to launch an aggressive growth plan sometime in the near future, a rival-chain like Mothercare (from the stable of Shopper’s Stop) would have already established heavy dominance in the market.
But, threats aside, for now, there is no denying that its bets have paid off well, with the cautions paying-off well. The very fact that a fledgling like Mahindra Retail, unlike its big branded rivals, steadily expanded its presence across all major metros without facing many problems due to the slowdown (Venkataraman confesses, “The slowdown did not affect us much.”), during a time when its seasoned competitors found their tails on fire, is some achievement in itself. A brand new year and grand plans to open 50 more new store during the year; now would you call that slow?!
Angshuman Paul
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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The year gone by was a ghastly experience for those in the Indian retail industry. While paper calculations from the Retailers Association of India forecasted a happy 25% growth for the retail sector for the year, real growth during the year suggested a growth of just 2%! While on one hand, biggies like Reliance, Future Group, Shoppers Stop putting brakes on their aggressive expansion plans, on the other, smaller players (like Vishal Retail Ltd.) were forced to put locks on the host of existing stores. But as all heroic tales go, this one had exceptions too; rather ‘an exception’ in the name of Mahindra Retail. Many haven’t still walked into a Mom & Me store yet (that is the market name of Mahindra’s retail outlets) and many haven’t even heard about the brand (owing to its being in a very nascent stage), but for all we didn’t know, it was always working upon its strategy to remain stain-free during the bloody war against slowdown.
Spoken plainly, it was just a simple clean ‘slow and steady’ growth model to be worked upon, with no false promises of aggressive expansions. So when Reliance Retail had to put a stop to its publicly-announced penetration plan (of opening 40 stores per year), Mahindra Retail stuck to its tortoise-style plan of opening just two stores per year. Unlike the other blue-eyed of boys of India Inc., Anand Mahindra never believed in hypermarts being the stepping-stone to success in the retail world. Rather, he resorted to a specialised and unique retail format, after a two year-long homework and research, for which he hired KSA Technopak.
The group worked towards developing a USP of having a specific retail model for a specific group, judiciously avoiding the model of rolling-out a ‘me too’ brand. Walk into the office of Mahindra Retail, located at Bannerghatta Road, Bangalore, and you’d realise that for this venture, business is all about “mothers & infants” (Mahindra Retail calls it “from -9 to +9 years”), all thanks to its vision (‘To be the preferred destination, choice of every mom and child to delight them with world class product and services and to serve them in a personalized fashion’) written across a gigantic board that greets you at the entrance.
But at this very juncture, a doubt arises – identifying the mother and child space was good, for it sounded different, but when a host of analysts are found swearing to the tunes of the grocery and foods retailing symphony as an entry strategy, Mahindra’s plan to cash-in on a unique format is apparently found lost for justifications… However, a ‘never-say-die’ K. Venkataraman, MD of Mahindra Retail tells 4Ps B&M, “We didn’t want to open a regular store, without any specific target audience. Also, growth on an already claimed USP was also a strict no for us…” Surely, that’s swearing by uniqueness for real growth! But a recent research paper by market research agency, i-mint, titled, ‘Changing trends in retail marketing’, surely seems to be voicing out loud in favour of Mahindra Retail. The paper states that, “businesses need to focus nurturing a core customer base that is profitable to the company. Successful retailers generate majority of their profits from this core base.’ Therefore banking on a core group of customers (like ‘mothers and to-be mothers’ as in the case of Mahindra), surely calls for success in the mid-long term.
Mahindra’s first four stores that were opened in 2008, recorded a growth of more than 30%. And the strong logical acumen was displayed by the entity through the very fact that knowing its target customer, it only opened its shops in the metros, where, beckoning “expecting” couples is most definitely easier. But all is not good. A FICCI-based retail analyst feels that it was not really a wise bet to avoid treading down the time-tested model of retailing, at least in a country where organized part of this business, accounts for just 4.9% (equivalent to $16.5 billion) of the total retail pie.
A bird’s eye view of the entry strategy of the $6.3 billion Mahindra group proves that the entity has always sworn by the time-honored revenue generating model of foods and vegetable retailing. Its agri-business arm, Mahindra Shubhlabh Services Ltd., with its strategic partner Capespan (from South Africa), has been exporting grapes and other fruits to Europe. Therefore, it is not at all true that Mahindra is allowing opportunities offered by the mass market to fall on its blind spot. It’s agri-arm is paying heed to what is definitely counted as a sure-shot successful strategy in international markets.
Innovation in offerings is another point that makes Venkataraman and his team different. From providing guidance for vaccinations to tying up with global companies with unique agreements and launching private labels (in the initial year, the company rolled out three in-house brands and plans to roll out more such ten brands in 2010), it has many innovative arrows in its quiver. “We are also soon going to roll out services like educating the mother on proper feeding et al, and for all such services, our store staff will undergo a special and rigorous 21 day-long training sessions. And we won’t open a store unless we have a complete manpower-equipped store and have chosen a proper location,” says Venkataraman. Surely, it doesn’t believe in throwing caution to the winds, and seven stores across six cities in just two years is some proof! In this regard, there is some cause for concern, as competition is spreading quick and thick through town, and such pauses (like the one for a search for some El Dorado property) would only tantamount to sheer waste of precious time. Conclusively, by the time ‘mom & me’ gets ready to launch an aggressive growth plan sometime in the near future, a rival-chain like Mothercare (from the stable of Shopper’s Stop) would have already established heavy dominance in the market.
But, threats aside, for now, there is no denying that its bets have paid off well, with the cautions paying-off well. The very fact that a fledgling like Mahindra Retail, unlike its big branded rivals, steadily expanded its presence across all major metros without facing many problems due to the slowdown (Venkataraman confesses, “The slowdown did not affect us much.”), during a time when its seasoned competitors found their tails on fire, is some achievement in itself. A brand new year and grand plans to open 50 more new store during the year; now would you call that slow?!
Angshuman Paul
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
IIPM Related Links
IIPM - Admission Procedure
IIPM, GURGAON
IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
Social Networking Sites have become advertising shops
