Gourmet retailing is the new wave in the Indian retail industry. Modern retailers are adding menus, wine lists and dining tables to their old standbys like the produce aisle, deli and express cashier line. But is all well at the exotic food front?
Going with the flow, last year in 2008, big box retailer HyperCity Retail (India) Ltd extended its portfolio to offer a gourmet food store called ‘GourmetCity’, at Malad’s Inorbit Mall in Mumbai. The offerings at the standalone store included foods such as speciality cheese, exotic snacks, pre-packaged meats, sauces, vegetables and fruits; bakery and confectionary products and dining accessories sourced from across the world.
Unfortunately, however, the format failed to generate satisfactory offtakes, leading to HyperCity’s decision to discontinue its gourmet retail unit – GourmetCity – within just one year of the format’s launch, in October 2009.
In light of HyperCity’s claims to have brought together an assortment of superior quality, authentic delicacies from across the world in a fully interactive environment in the form of GourmetCity, the question that remains is: What went wrong with a format that had been appreciated – and indeed, awarded -- by even global retail watchers?
The reason for the failure as cited by the retailer is that it was an unviable business. B S Nagesh, vice-chairman, HyperCity said in a statement, “We have experienced tremendous success with the HyperCity format, and have decided to consolidate our GourmetCity business. GourmetCity was a futuristic store concept created as part of our innovation and expansion plans, but the return on investment does not make this business feasible.”
However, on the contrary, revolution is taking place across the nation in the eating habits of consumers, and also the growing popularity of gourmet food in India is largely due to the increasing number of people venturing abroad to exotic places for vacations and business reasons.
The growth of the retail sector in India is also a huge boost to the gourmet food sector and the growing cadres of food importers bears testimony to the popularity and demand for access to global gourmet specialities at equally enticing retail environments. So is a standalone gourmet retail format truly a futuristic concept for India?
Speaking on the failure of GourmetCity format in India, Nikhil S Asrani, proprietor, Suresh Kumar & Co (Impex) Pvt Ltd – leading importers of food products into India – says, “Gourmet is like any conventional food and grocery product, but carries upscale packaging and is premium-priced and positioned for the elite consumers. HyperCity has always been a retailer that provides good quality food items at a good price. But when it came to gourmet selections, the retailer was over-priced according to the quality of the food products they were delivering at GourmetCity and hence the retailer was not able to generate sufficient sales.”
Bringing Home the Exotic The range of gourmet foods has expanded over the last few years with constant product innovation and growing consumer awareness. Many gourmet foods that would be consumed only for special occasions a few years ago are gaining popularity and making their way into consumers’ everyday diets. This promises a huge growth in gourmet food retailing, not only in the fresh produce segment but also across all other segments.
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“Of course, SIS is a thumbs-up format for gourmet retailing in India. It’s proven that the gourmet counter within HyperCity is doing a much better job as compared to what GourmetCity did as a standalone store.” – Sumit Saran, director, SCS Group |
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However, the need of the hour is to come out with a feasible model to tap the existing potential of this segment. Therefore, primarily the retailer needs to move on further with this business with the correct cost-revenue equation. Most industry watchers believe that the shop-in-shop (SIS) – as opposed to standalone stores – is the most suitable format to experiment and move further with gourmet retailing in India.
Confirming the same, Sumit Saran, director, SCS Group, India’s leading agribusiness consulting firm says, “Of course, SIS is a thumbs-up format for gourmet retailing in India. It’s proven that the gourmet counter within HyperCity is doing a much better job as compared to what GourmetCity did as a standalone store. Right now, modern retailers’ main aim should be to cater to diverse customer demands. And with a standalone gourmet store, retailers scare away the middle class consumers, who may actually go around the gourmet shelves in a SIS present in a supermarket.”
According to Nikhil Asrani, Spencers, Gourmet Food Bazaar, HyperCity, Nature’s Basket and Spar are the top five modern trade retailers who seem to be doing a good job in gourmet retailing.
On the same note, Saran opines, “HyperCity, a few stores of Metro (the cash & carry chain), Spencer’s Retail, Nature’s Basket in Mumbai and not to forget Gourmet Food Bazaar are the few retailers who know their locality and consumers, and hence, are slowly grabbing their market share in this segment.”
Sharing his views on the success factors for gourmet retailing, Khattar reveals, “To the extent that there are relatively few people and organisations that understand the gourmet business and some of them have also closed down this format, we genuinely believe that as long as the retailers are being able to sustain consumer focus and carefully build upon differentiation, the chances of failure stand minimised.”
“Nature’s Basket has grown by over 70 percent over the previous year in terms of same store sales. The customers also admire the store merchandise and their tribe is continuously growing. Hence, it is natural that there is a bright future for speciality retail in India,” he adds.
Concluding his thoughts on the future of gourmet retail formats in India, Saran observes, “There is a huge potential in gourmet retail in India, but it can be explored only when modern retailers enhance the standards of this segment by doing more promotions instead of merely placing products on retail shelves. Also, success in this segment depends on certain macro factors that the producers have to control. They need to work upon the Indian infrastructure angle – a high-value produce always needs temperature control – and they also need to make sure that they are running an efficient supply chain system. Consequently, keeping all these factors in mind, in my view, the Indian gourmet industry will take three to five years to arrive at the right model.”