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Fresh food and grocery chain Godrej Nature’s Basket (GNB) on Thursday acquired a minority stake in Goa-based grocery chain Magsons Group as it embarks on an aggressive expansion in tier I and II cities.
It said it will work with Magsons Group on assortment, merchandising and sourcing to bring them in line with its product strategy. The move is expected to boost GNB’s presence in the western market. The company did not disclose the size of the deal.
Last year, GNB said it will restructure its business from being a premium store with thousands of global products to a store that stocks fresh fruits and vegetables and focusses on everyday grocery needs. The company had put up a revenue target of ₹1,000 crore for 2022.
However, in a chat with BusinesLine , Avani Davda, Managing Director, GNB, said the company expects to achieve that target in 2020 itself. “For FY18, we were at ₹320 crore. We expect to close the current financial year with a ₹500-crore turnover. With this, we should reach the ₹1,000-crore revenue target by 2020 itself and will be profitable by 2022,” she said.
The minority stake in Magsons will give GNB access to the chain’s 13 stores that have a revenue of about ₹50 crore.
The Magsons Group is a family-owned grocery chain operating since the 1990s and runs 11 stores across Goa.
GNB currently runs 32 stores in Pune, Mumbai and Bengaluru and plans to add 15 more by the end of this fiscal. Davda said the company is also looking at other regional partnerships — in Chennai and Hyderabad — is already in talks with a few players.
She said GNB may re-enter the North Indian market through a similar partnership in Delhi-NCR.
Talking about the strategy to acquire a minority stake in Magsons, Davda said the company wants to grow profitably and therefore will be looking at an asset-light model.
“If I were to go and open up in Goa, it would take two-three years to set up 12-13 stores, scale them up in a different way. But with this, we add to our topline as well as improvement in the margin to our bottom line,” she said.
“Over the next two years, we’ll continue to focus on the West,” said Davda. “There are a lot of small markets that we see as opportunity.”
“We have outlined a clear roadmap for the business to become India’s neighbourhood store, providing the freshest and finest food experience, and achieving our target of 3x growth by FY20,” she added.
Online rivals
Playing down the threat from online grocers like Amazon, Flipkart and BigBasket, Avani said: “We don’t see consumers ordering fresh food online. I think a lot of hyper locals have tried it. Different models have not worked. About 15-20 per cent of our business comes from home deliveries and online. About 45 per cent of these baskets are fresh foods. If you look at other grocers, the majority of the customer baskets are dry products or ambient products.
“Yes, there is a threat from online. But I think we are well poised because every delivery that we make, we are profitable, unlike our competitors who are scaling up but at the cost of profitability.”
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