Anil Nanda wants to take his supermarket chain to satellite towns
I got a desperate call from one of the boys telling me to do something. But before I could galvanise my lawyer the MCD demolition squad had razed portions of our store to the ground. And every photographer in town got a picture of our pathetic, broken billboard against the Delhi skyline, says Anil Nanda, chairman of Nanz Food Products Ltd, with a wry smile. Exactly the kind of advertisement a corporate house doesnt need, especially when youre trying to set up Indias first supermarket chain.
Three years down the line, Nanda has emerged with both his sense of humour and his billboards intact and a tendency to read the fine print very, very carefully. Nanz had earlier invited the wrath of the Municipal Corporation of Delhi by unwittingly taking leases in residential areas. We have learnt the hard way. Now we go to great lengths to make sure our Nanz stores are situated in authorised commercial areas.
As chairman of the Escorts Group company, Goetze (India) Ltd, Nanda is the local partner in a three-way joint venture between Nanz (Germany) and Marsh (USA). Imagine having to tell my friends, Helmut Nanz and Don Marsh, about the sudden disappearance of an entire supermarket which until a moment ago was up and running, says Nanda, drawing hard on his cigarette.
After our experience with our first store in Delhis South Extension, we insist on crystal clear lease deeds. But Delhi is not designed that way, says Joe Lee, CEO, Nanz Food Products Limited phlegmatically.
But after its early setbacks Nanz has learnt how to cope with the existing business environment. Since Indian land prices
are amongst the highest in the world, location becomes an entry barrier. Nanz has realised that acquiring real estate is the key to staying ahead in the business. Nandas gameplan is simply to invest in property in satellite towns, where land prices are still low enough to set up major shopping complexes.
Starting with an initial investment of Rs 15 crore, Nanz now has three supermarkets in Delhi and Punjab, nine Nanz Lobill stores and ten franchisees. We hope to add four to six Lobill discount stores every year, says Lee. The real growth will come from increasing our franchisee business in the metros.
This year our projected turnover is Rs 20 crore, but our objective is to cross the Rs 150 crore mark in the next five years, says Nanda. We plan to buy tracts of inexpensive land in places such as Gurgaon and Mathura Road and develop the shopping mall concept. We will throw in everything from cinema halls to restaurants. This is similar to the Japanese model, where supercharged urban land prices have led to the growth of suburban supermarkets and malls.
Analysts say this could allow Nanz to establish a significant retail presence. Supermarket promoters in the West typically earn a significant part of their profits on real estate. They buy land, announce their plans to build a supermarket and resell or lease parts of that land to other businesses interested in the customers that the supermarket attracts, says Pankaj Vohra of Webel Consulting.
Large global supermarket chains always have a real estate division, points out Nanda. In fact, the RPG Groups Foodworld enjoys a big advantage because it owns prime real estate in Bangalore and Chennai under its real estate arm Spencer.
Apart from the central issue of real estate, Nanda has also pipped to the post his competitors in Delhi such as Giants in Noida and DMart in Green Park over the issue of store timings. This year, Nanz tied up with the first of BPCls Delhi-based convenience stores that can promise to be open till very late at night.
The petrol pump convenience store-route is the only way we can stay open late in places like Delhi where the government forces shops to down shutters
at 8.30 pm. It is ridiculous to have to close so early when most people get out of office only after 7.30 pm. In the west, super-markets stay open till 10 pm so that people can shop peacefully with easy car parking facilities, says Nanda.
Nanz has also formed alliances with HDFC Bank for ATM facilities just outside the entrance to its supermarkets. We offer cellular phone services, free home delivery, internet cafes all those bells and whistles, says Lee. Nanz has also bought 10-year-old Aditi Sinhas soul by offering free elephant rides at its New Delhi Lajpat Nagar store. The chain plans to start its own delicatessen and the chairman goes into raptures over blue cheese. We are planning to import Swiss technology so that we can make high quality cheeses. Now we have the volumes to do these things, says Nanda.
Both his American and German partners approve of these plans to spoil the Indian palate. In fact, Helmut Nanz, a friend of the Nandas for 35-odd years, is convinced that the supermarket concept will work in India as the country reminds him of post Second World War Germany with its fragmented retail trade.
Nanz who is also the Councillor General of India in Stuttgart, also enticed Don Marsh, the supermarket king of Indiana, to test the large Indian market. In Ohio, Marsh was first off the block in setting up highly popular Village Pantry convenience stores and has encouraged Nanz to replicate the model in India.
Were all very bullish. Nanz and Don are not discouraged despite the problems we have had regarding real estate, slow growth and acceptance of the supermarket concept in India, says Nanda. What about competition from the Dutch chain Makro which has tied up with the Godrej Group? As early birds we have a distinct advantage over late entrants. We have already made our mistakes.
With 23 outlets in Delhi and Punjab, perhaps Anil Nanda can afford to say that he has more in store right now than his competitors.
