How Reliance Retail turned around a sleepy cooperative chain
That’s music to the ears of Vinay Adhye, vice president and business head at Reliance Retail. Adhye, who manages the 22-store Sahakari Bhandar chain, says the new managementhad to overcome a number of challenges to transform the sleepy, heavily unionised co-operative retail chain.
The co-operative had a strong customer connect due to its legacy of 40 years, strategic locations, and a fair price image, but the challenge it faced was how to turn around the chain where employees were not motivated and supply chain was not developed.
“The reason why most of the co-operative retail chains went down was that they did not change with the times and could not face the marketing blitzkrieg from modern retail,” says Adhye. “Hence we decided we bring the store to certain standards and build the backend,” he adds.
All stores were air-conditioned with glass facade. Almost every aspect on the shop floor—shelves, racks, freezers, chillers, cash counters and hygiene — were upgraded. Reliance brought in enterprise resource planning (ERP) software, SAP, to manage the front end and back end operations of the chain.
Another challenge was to offer all the products customers want within stores, some of which were as small as 900 sq ft. Hence the chain conducted studies in neighbourhoods of stores to find out what customers want.
Accordingly, new sections such as pharmacy, bakery, fresh fruit and vegetable and DVD sections were introduced. Sahakar Bhandar has also included a number of shop-in-shops. For instance, its store in Agar Bazar area has one by The Moble Store. Colaba store has Monginis cake shop while Chembur store has that of Furniture Bazaar.
After Reliance took over operations, the chain changed its logo of two hands joining with a new logo — a ticket, which signifies assurance of good quality and service. Besides a new tagline ‘Sahi quality Sahi price (right quality-right price) was put in place.
Though Adhye do not want to talk on financials and expansion plans, he says except one, all 22 stores have broken even and the chain is seeing 25 to 30 per cent growth annually.
“Wherever, we renovated stores, we saw trebling of customer entry and sales have doubled,” he says. The chain also added 4-5 new stores after Reliance started running the show.
But some wonder whether Reliance is building equity with shoppers for a brand which has no connection with Reliance/Reliance Fresh. But Reliance Retail executives say it has given them good exposure to retailing in Mumbai city and optimum use of its own supply chain.
Powered by Reliance’s supply chain network, the stores get around 90 per cent of the items from the distribution centres at Bhiwandi and Juinagar, while 10 per cent are obtained from direct store delivery. “The idea is that customers should never go back empty handed,” says Adhye.
Says Arvind Singhal, chairman of Technopak Advisors, a management consultancy: “Retail is nothing but buying, moving and selling. It takes anyone to finetune this and see the results. I think they have done a good job with product mix, improved supply chain and employee motivation.”
The most important differentiator from the past was changing the mindset of employees. It took the chain almost two years to sensitise staff about the need for involvement and better customer management. “We made them understand the importance of job satisfaction, their children’s future and more importantly that it is their chain and they have to make it work,” says Adhye.
Besides training staff in personal grooming, the chain started giving scholarships to students of staff and laundry allowance so that staff can wear clean and neat uniforms every day.
The chain also took employees to its distribution centre in Bhiwandi and packaged pack house in Juinagar in Mumbai and show them how it works.
The chain has reached almost zero attrition at the shop floor at a time when major retailers such as Big Bazaar and Reliance Fresh are facing high attrition at the front end, say retail consultants.
“The biggest thing is that Reliance Retail did not force its stamp on Sahakar Bhandar nor did they fire any employees after it took over operations,” says Badhe.
With modern retail stores mushrooming and shoppers spoilt for choices, Sahakari Bhandar wants to establish as a strong neighbourhood store format and continue to connect with customers;.The chain has set up ‘talking boards’ wherein regular customers can paste their personal publicity materials like yoga classes, car for sales etc.
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