W Power 2024

Vinod Sawhny: Walmart helped figure out the science behind retailing

Vinod Sawhny, president and chief operating officer, Bharti Retail talks to Forbes India about the retail business, learnings so far and also what it is like to partner a biggie like Walmart

Published: Oct 22, 2009 12:30:48 PM IST
Updated: Oct 31, 2009 01:16:53 PM IST

Bharti Retail has had a slow start. How far have you reached?
We have been around for 16 months now. We believed in “go slow but be sure”. We wanted to get our model right. We had begun our work before 2007 in terms of consumer research etc.

In what way did it help to have Walmart as a partner?
Once we signed up with Walmart, they helped us [figure out] things like the science behind retailing, how to modularise the stores, and how things are laid out. While a few things are standard all over the world little nuances vary in terms of how women shop etc.

What is Bharthi Retail’s differentiator in the market? Why should a consumer come to your store?
There are three or four things [among] our differentiating strategy: We wanted to be the most trusted leaders and offer the lowest prices as a retailer. We will not just promise but also deliver. So our prices at the retail store are two to seven percent cheaper than other retail stores and it’s a promise. We have the plank of best price and we follow that.

Two, our people make the difference. We invested heavily to train them. We brought in training modules from Walmart – and customised [them for] India.

Vinod Sawhny, president and chief operating officer, Bharti Retail
Vinod Sawhny, president and chief operating officer, Bharti Retail
The other thing we asked ourselves is – why would somebody come to organised retail. They want a good experience but they also want to save time – this meant fast check out time was critical. As we researched the shopping habits we realised that 50 percent sales happen after six pm. Mornings and afternoons are typically lean. We planned our checkouts based on the busiest time of the day. Typically if the industry average would have two cash tills to cater to a particular number of people, we would have three cash tills. We know that we have the fastest check out times in the industry.

What about merchandising and your sourcing strategy?
We also focused on the depth and width of merchandise – the spread in our stores is by far the best. With a very good back end, our replenishments are 90 percent plus as against industry average of 50-60 percent. It helps us keep our inventory and hence inventory costs down. It ensures high in-stock level and hence gain revenues. Retail is a low margin business – especially if it’s a value business. Anything that saves you money on the cost front is critical. A typical 7/11 store which is 500 sq ft does 52 turns in a year. The global best for an average retailer like us would be 15-18 times. The industry average my sense is 10-12 turns here. We do 15 turns a year right now.

Did you see any gaps in the market which you tried to exploit?
One gap we found was a clear absence of fresh meat and wherever it was it would throw such a bad odour that it would put off customers. Typically, we also know that fresh meat is bought by men in the households. But we knew since women do most of the shopping there isn’t any reason why they should not do this. That’s one area of big difference vis-à-vis our competitors. In our fresh meat product section, layout is such – its more hygienic manner. To prevent the odour we have a glass door. We have very good spread of meat products. We have a butcher who is neat and clean and it’s a pleasure to buy meat from our stores. We want to be a one-stop shop.

The other big differentiator is our private label strategy. Many products have been developed by them [Walmart] in-house. 20 percent of our sales currently come through them. Private label dominates grocery and apparel. We offer it at lower prices and better quality. We typically have a 5-10 percent price difference in these categories. Internationally in Walmart stores private labels account for 40 percent of the sales.

Looking back, what are some of the learnings?
One, we thought we will provide lot of stuff for pets – we had four sections. Now we have cut it down to 1 section. Two, for our compact store we kept in mind consumers in a 5 km radius. But we saw at least 20 percent of our consumers were coming from beyond 5 km radius. Three, customers hate long queues. So even though it meant increase in capex, we have invested at the check out end to process fast checkouts. We have the fastest check outs in the industry.

What is the difference between super markets and compacts?
In smaller stores 70—80 percent of the stuff is grocery and fresh. In compact there is greater emphasis on general merchandise, soft lines like apparels and hard stuff like electronics. Things that people pick up fortnightly or on a monthly basis.

Tell us about the staffing etc at Bharti Retail?
We have around 1400 people. All the retail stores are owned by us. In terms of people and staffing – a super market which is 3000 sq ft would have 12-14 people whereas a compact would have 100-120 people. There is typically one store manager, two team leaders and rest are associates. Leaders typically go through two months of training with us. Initially people from Walmart came then we had train-the-trainers program now we have people here in India who can train them. The training is around knowledge of the products, delighting customers and maintaining stores clean. Training is all about building an attitude. On a monthly basis we have a hi-five where we give out certificates and recognise good work.

What does it mean to partner a biggie like Walmart?
Let me give this example. We are value retailers. We could not communicate to our consumers well that we offer the best price. So we reached out to them about how we should communicate about the soft discount. They told us the closest you can see it work is China so we went to check out how they do it in China and how it worked. Biggest thing we learnt is how we put communication inside store so that our customers see and believe that we are the lowest prices.

And they can compare and see for themselves.  So show it clearly to compare and save at our stores. Walmart also taught us where to emphasise on our low prices, where it works the best for the consumer – products like beverages…

We sent our marketing team and JV merchandise team to learn from UK Asda on the private label George

How do you see the roll-outs going forward?
We will double our number of stores in the next six months. We will remain north focused. We already have three in Delhi. We will focus on the top 25 towns in the north.

Post Your Comment
Required
Required, will not be published
All comments are moderated
  • Atanu Banerjee

    I want to work in your company

    on Oct 29, 2009
  • V.Suriya Narayanan

    Good and very practical article.Spoken the basics of good retail.

    on Oct 23, 2009