Big Interview: Changing Trends

SPAR Hypermarkets is in India through a license agreement between the Max Hypermarkets of Landmark Group and SPAR International, the world’s leading food retail and wholesale chain, which has 12,500 stores across 44 countries and serves around 15 million people. Landmark Group is involved in retail  of apparel, footwear, consumer electronics, cosmetics and beauty products, home improvement and baby products. The Amsterdam-based SPAR was founded in 1932 by Adriaan van Well. SPAR promises to elevate shopping from a daily chore to a world class, value for money experience. Customers will have the option to choose from a wide variety of products ranging from grocery, fruits and vegetables, bakery, dairy, meat, poultry and fish, wine, beer and spirits, home textiles, personal care, crockery utensils, plastics and kitchen appliances, electronics, IT accessories and much more.  Rajeev Krishnan, managing director & CEO of SPAR Hypermarkets spoke to Mini Tejaswi of Financial Chronicle about a wide range of topics and what works for SPAR in India, changing trends in retail, continuous evolution happening around retail formats to keep pace with rapidly changing customer preferences and also about expected shakeups in pure play ecommerce sector. Edited excerpts:

SPAR is in India over a decade now. What’s your current positioning and market share?

SPAR is one of the fastest growing Hypermarkets in the country. As per recent Nielsen reports, we are growing much faster than the rest of modern trade. We serve over 30 million customers annually through 20 stores across Bangalore, Mangalore, Shimoga, Coimbatore, Hyderabad, Delhi, Ghaziabad, Gurgaon and Chennai. We believe that market shares are a result of delivering on a vision and a mission, consistently; and we will continue to do this. We directly employ 2,400 people in India.

Our new 55,000 sq.ft outlet at Vega City Mall will offer over 50,000 products through 25 billing counters. In our stores, approximately 60 per cent of the shelf space is allocated to food categories and 40 per cent to non food categories. We use innovative technology and our billing time --- customers standing in the queue---is almost reduce by 60 per cent.

In India, SPAR Hypermarkets operates over one million square feet area across 20 stores in nine cities. The average store size is 40,000 sq.ft.  We crossed revenues of Rs 1,000 crore last year and have been clocking double digit growth of late. We plan to increase our retail space by 40 per cent during the current financial year.
How is SPAR different from other FMCG/food retail chains in India? You keep talking about innovative formats and experiential shopping. How do you offer tangible difference to your shoppers?

Our vision is to be the most engaging and innovative hypermarket in India. We are working towards delivering this to our customers by focusing on four core pillars: Freshness, Value, Choice and Service. As part of the Landmark Group, we are deeply rooted in being customer centric and customer driven. Our format is in a state of evolution, which is a result of past ten years’ experiences with customers, products and services and this is an evolution, which will continue. Our approach towards merchandise is driven by ever evolving customer needs, which is why categories like SPAR Natural, which is about Health & Wellness are part of our journey. We have expanded into the cultural arena with Grandmas Corner, which enables modern smaller families to enjoy a bit of nostalgia. For us everything is about ensuring that our customer needs are met and that they keep coming back for more. With differentiated offerings such as Wonder Years for Kids, Beauty, Taste of India, Taste the world, Freshly, SPAR Natural and more. We have brought in technology innovation in a big way. Our stores have self-assist kiosks, an interactive digital SPAR Studio and the SPAR play pad where children are free to express themselves.

Our stores bring together EQ (Emotional Quotient) & IQ (Intelligence Quotient) to create an innovative and differentiated customer experience.   We see the results in our loyalty programme share, which is the best in the industry. We have decided that it is time to innovate beyond transactional operations to create customer experiences that are shaped by both the intelligence and emotional quotient (IQ and EQ) as one to one customer connect is lost

What kind of loyalty programmes do you run here and how are they working?

We keep listening to our customers and there are clear areas where customers have shown confidence in us. Firstly, they see strength in our assortment, with specific reference to our fresh produce with great choice in our food offering. The value offering in home & apparels is also very attractive. Secondly, we continue to deliver great value offering with our ‘Lowest Price’ super saver and private label offerings; by making the overall basket of the customer very attractive, Thirdly, customers feel confident in our service standards and have expressed their trust in us. As part of the Landmark Group, we operate the Landmark Rewards programme, which is a clear benefit driven programme where customers gain with every purchase made across the top retail brands in India - Lifestyle, Splash, Max, Home Centre and SPAR.

How is Omnichannel catching up in the Indian retailing space?

We see Omnichannel as being the way forward for most businesses. We are seeing shakeups in pure play ecommerce sector and an increased convergence based on how consumers behave. But our definition of Omnichannel is a little different. We think there is space for all kinds of channels – website, store, applications, phone & order, truck based business and more. We believe our Omnichannel is about being everywhere, because that is where the customer is. We are hearing news of collaborations and acquisitions in the Indian market towards precisely this and this is in line with our belief that a retailer cannot choose to be only one channel but needs to adapt to meet customer needs across all channels, the customer is on. We believe that India needs both brick and clicks to co-exist. With the brand connect and loyalty at SPAR stores being our differentiator, we intend to use merchandising and technology as the strategic pillars to continuously offer Omniretailing opportunities as never before.

What is Spar’s key mandate for India by 2025?

The biggest mandate that we have in India is to be the most engaging and innovative hypermarket here, making a difference in the lives of teams, customers, communities and shareholders on a daily basis. We will continue to stay invested in our markets and grow into new markets. Our biggest investments are in our people and we continue to build our business with small but sure steps.

What are the new trends in retailing and customer behaviour?

Food concepts, health and wellness range, organic, OTC, beauty, skin care are the new and emerging categories. The aspiration levels of customers are going through an upward evolution. More and more customers are becoming aware of themselves, of what they consume and impact of the products they buy on their health and on environment. They are also looking at going back to traditions and roots. The aspiration levels of customers are going through an upward evolution. Customers are increasingly becoming aware of themselves, of what they consume and impact of the products they buy on their health and the world. And this is changing the way they look at their lives and what they consume. Today’s extremely busy consumers are not only looking at shopping regular basket items but are also looking at solutions from retailers. We see ‘convenience’ shopping as a big opportunity. Health & wellness is again a very promising segment. As a consequence of the sedentary lifestyle most of us lead these days, pursuing an ‘active life’ it has become a quest. We identify ourselves as contributing significantly in this space by offering a range of products and solutions to our shoppers.

How is your farmers’ connect programme working, how many farmers in the country are part of it now?

SPAR Hypermarkets is building relationships with the farming community towards educating farmers on new methods and new technology for improvement of in-farming processes.  SPAR also adds value in terms of consistent sourcing and pricing advantages for the farmer. And most importantly, it builds a partnership between the farming community towards better merchandising and customer engagement. This means that the customer gets fresh produce everyday from the source and can cook a meal everyday with really fresh produce. As of today, there are 52 select farmers which are part of the farmer connect programme and we are very confident that our programme is going to grow from strength to strength. SPAR has access to worldwide best practices from the global farming community. Therefore, we are able to add value in terms of consistent sourcing and pricing advantages for the farmer.

And most importantly, we build a partnership between the farming community towards better merchandising and customer engagement. We believe in inclusive growth that takes the local communities into account and as such, we have partnered with farmers, fishermen and small-medium businesses in each region to source products that our customers want and need.

What kind of demand you see now for organic products, vegetables and fruits?

We are seeing a visible re-emergence of organic and healthy foods in dietary plans of our customers. A prominent trend towards healthy eating these days is the revival of interests in millets. SPAR Hypermarkets is taking the health and wellness space very passionately. We are looking at enriching the lives of customers by bringing in interactive and innovative ways to educate them on living in a healthier manner. Millets have been part of the Indian diet for ages and has been a popular choice because of its nutritional value and health benefits. While on the one hand, the general lifestyle and wellness trends for the urban populace point towards healthier food options, on the other hand, climate change is spurring a resurgence of millet cultivation in the country. In keeping with the strong growing trend towards healthy eating and living, SPAR has been encouraging organic and locally grown products in all its stores across the country. This move emphasises SPAR’s commitment to the health and wellness of its consumers and also demonstrates its focus to help farmers by making them its partners in the process. Our fresh produce categories are growing consistently. The main driver of this section is product quality and freshness, which is largely enabled by direct farm sourcing, continuous supply chain improvements, and in-store merchandising initiatives. New assortments also play a critical role here. We offer the widest range of fish and meat – both local and imported. Amongst fruit and vegetables, the organic, pesticide-free and exotic ranges are gaining good traction. Health and wellness related categories, which include low gluten, diabetic, low cholesterol, vitamin and mineral fortified, OTC ranges are also gaining momentum in our stores. Customers are becoming more discerning in their food habits and seeking out quality products for which they are happy to pay a little extra, particularly if they believe that these products are healthier options for the family.