If you are a connoisseur of gourmet food, you needn’t wait to visit Agata & Valentina in New York, Harrods in London, or Fauchon in Paris to tickle your taste buds. Luxury retail in India is looking beyond apparels, bags and watches into experiences such as food. Last weekend, Sarah Todd of MasterChef Australia fame gave cooking lessons at the newly launched Nature’s Basket Artisan Pantry, the luxury food retail format of the RPSG Group (which owns Spencer’s Retail and Nature’s Basket). The sprawling 12,000 sq.ft. store in Mumbai’s Phoenix Palladium Mall boasts of unique gastronomic experiences from across the world – The Cheese Room, where consumers can taste an array of artisanal cheese from the world over, Spice Souk, inspired by the spice market in Turkey, and Nibbs, a live artisanal chocolate brand. Its wine cellar not just has the best of wines, but wine accessories as well.
“We are selling caviar for the first time in India, it’s not just fish but also vegetarian caviar. Our truffle bar not just has packaged truffles, we have a wide assortment of fresh truffles as well. Almost everything that you get would be artisanal in the store, unique to the store, which is uniquely sourced,” says Shashwat Goenka, chairman, Spencer’s Retail. When the RPSG Group acquired Nature’s Basket in 2019 (from Godrej Industries) it had moved from its original gourmet positioning to becoming a neighbourhood store which sold Indian grocery as well as a small segment of aspirational grocery. Goenka decided to go back to the premium positioning and revamped the stores.
“While Nature’s Basket is premium gourmet, we found an opportunity in luxury gourmet too. Affluent consumers were looking for experiences. We worked closely with our priced consumers and understood what they looked for in each category, that’s how we developed this format,” Goenka further explains. While Nature’s Basket Artisan Pantry may be the newest entrant, the premium/luxury food retail market over the last one year has seen the entry of the likes of Reliance Retail’s Freshpik and more recently Food Square, a 25,000 sq.ft. gourmet luxury food store in Mumbai, run by entrepreneurs, Mayank Gupta and Lalit Jhavar. The other popular premium food retail brand was the beleaguered Future Group’s Foodhall, which was forced to shut down due to the group’s financial woes. Both Nature’s Basket Artisan Pantry and Food Square, happened to have opened in the same retail space which was once occupied by Foodhall.
Gupta and Jhavar first got together in 2017 to launch an aeroponic farming initiative. They also forayed into soil-based farming and grew vegetables and fruits which they sold to organised retailers. “We had access to historical data by supplying to all the food retail stores. We got an idea of what makes a great supermarket chain, what is the assortment that works, the price-points and how one could sell,” says Mayank Gupta, co-founder, Food Square.
“We are using this data-based analytics to decide how we design the store, the assortment mix, price point and the experience we want to offer consumers and that’s the way we would be differentiated compared to other supermarket chains across the country,” adds Lalit Jhavar, co-founder, Food Square.
The Strategy
The Food Square duo was confident that there was indeed a set of consumers who were seeking premium food experiences. But unlike Nature’s Basket Artisan Pantry which is out and out luxury, the Food Square founders decided to get consumers to walk into their store to buy everyday food products and in the process offer them a bunch of exotic offerings which enables them to make additional margins. The everyday offerings be it atta, dal or veggies are also premium and not the mass brands available in regular stores. “They buy the six items they need to consume on an everyday basis and then we upsell them some exotic truffle or chips. This will make us a store which people will frequent,” explains Gupta.
Goenka’s focus is on uniqueness. “Be it chilly, nuts, spices, chocolates, tea or honey, each one of them is unique to us and this store. We have looked for the best in every corner of the world. Sourcing the right product mix has taken us over six months. We have the best baklavas from Turkey, honey from the Middle East and chocolates from Switzerland. We have worked with specialists to develop each concept.”
To maintain uniqueness Goenka has also made sure that a large portion of his SKUs are private brands, owned by Nature’s Basket. “People may talk about Sprungli or Laderach chocolates, but there’s no homegrown brand of artisanal chocolates which is at that level of luxury. This is where Nibbs comes in. Similarly, people want fresh humus which is difficult to source. We have 7-8 flavours of hummus. It’s a store which helps you when you are entertaining people as well. You could get cheese platters and grazing tables made.”
While Food Square also promises similar experiences, the entrepreneur duo has chosen to partner with global brands to create experiences. Their live chocolate bar for instance is curated by Entisi; its health counter, ‘Handfull of Health’ has Brazil nuts from Bolivia, pine nuts from Afghanistan and hazelnuts from Turkey, but sourced from well-known brands. “White-labelling is in our mind, but that is a 12-24 month journey,” Jhavar.
Profitability
Food retail is a difficult business and most organisations have burnt fingers. The luxury food retailers are however confident of being profitable within a year of launching their operations.
“This store (Nature’s Basket Artisan Pantry) is poised to break even in the second month of operations, which will be faster than our other stores, which take three quarters to breakeven. Most of Nature’s Basket stores are 2500 sq.ft, this is 12,000 sq.ft. The consumer's average bill value is also higher because of the kind of products we sell. So, we can make better margins as well,” explains Goenka.
The erstwhile Foodhall store which Food Square has now taken over, used to do a revenue of Rs 2,000 per sq.ft., every month. The Food Square Founders are confident of doing Rs 5,000 per sq.ft. revenue. “Doing Rs 5,000 per sq.ft. per month, will make us profitable and we will be able to build a model and scale-up. What we have done consciously is on the same floor plate, we have opened 15% more shelf space,” explains Food Square’s Gupta.
However, when it comes to expansion the Food Square founders have chosen to be conservative. Here, they are inspired by the king of value retail, Radhakrishna Damani. “He ran one store for 4-5 years and after making his playbook, he decided to open the next store. In retail you need to iterate frequently, create a formula that works and only then take it forward,” explains Jhavar. Food Square has rented real estate at Rs 1 crore (25,000 sq.ft. store) per month, therefore it is prudent to have a conservative approach to expansion.
Goenka doesn’t plan aggressive expansion of Nature’s Basket Artisan Pantry either. While FY-24 fiscal would see the opening of three stores (one more in Mumbai and one in Kolkata), in FY 25, the brand would open 3-5 stores in Delhi and Bangalore.
The Indian gourmet food market is valued at $1.3 billion, expected to grow at 20% every year. Despite food retailing being a challenging segment, these young retailers are bustling with confidence.
