Brands behave as per store's growth

In an interaction with Retailer Media, Kunaal Kumar, Owner, Modern Bazaar – a Delhi-based chain of departmental stores, talks about how the attitude of brands change driven by the count and performance of retail stores.

How has been the market from Modern Bazaar’s perspective?

Modern Bazaar is one of the oldest supermarkets and was opened in 1971 by my father. Now we are 45-years-old and we have been at the top since we opened. In Delhi, there is no other store like this. We started our expansion spree in the last decade and now we have got six stores: five in Delhi and one in Gurgaon. All of them are in prime locations like Greater Kailash, Vasant Vihar, Select CityWalk, New Friends Colony etc.

Which is your preferred Real Estate location – malls or high-streets?

Since we deal more in gourmet food, our preferred Real Estate location has been high-streets, but following our expansion strategy, we have opened up in Select CityWalk and now are planning to open up in Cyber Hub, Gurgaon.

How have you segregated the categories in your stores?

Our shelf space comprises noticeable amount of imported brands and we are more inclined towards gourmet segment. We are not Sabka Bazaar or Big Bazaar. We do have local brands in our store but our main emphasis is on prominent brands and our target consumers are from middle class, upper middle class and upper class.

We have our own home brands for bakery products and meat, which is not available elsewhere. At present, we have 65 products packed under our own label, which is very much accepted and appreciated by the customers. The reason is quality, which is better than the rival products available in the market.

What challenges do you face from the end of manufacturers?

Now, since we are a very reputed brand in Delhi/ NCR, so big brands do offer us better promotional offers, gift ways, merchandising because they also need us for their growth. But it is difficult to deal with these guys because when we had just 2 stores, they did not cooperate much. Now since we have six stores at prime locations, and seventh one is opening shortly at Cyber Hub, Gurgaon, brands are opening up to do merchandising, display, promotional offers etc. they give us extra margin and they tie-up with us and offer us great deals.

What steps can be taken to strengthen the relation between retailers and manufacturers?

Relationships are set up with manufacturers only when they start taking you seriously. Manufacturers want to use my brand to promote their products and since we have to bear the overheads like electricity charges, rentals etc which are quite high, we need margins. Considering all this, we try to tell the manufacturers to give us good deals else, we don’t show interest in them.

What factors derive a good deal for the stores?

Manufacturers like to see growth happening regarding their products and they offer margins, incentives etc based on the growth rate. So, in a nutshell, it is the growth rate that forms the base of a great deal. However, the deal doesn’t vary for different stores. For instance, if there is some offer on a particular brand, it would be applicable for all stores of Modern Bazaar. The growth rate is a cumulative calculation and individual stores have very less to contribute.

What is the percentage of your shelf space allocation?

Grocery contributes maximum and occupies 40 per cent of the space followed by toiletries (20 per cent) Bakeries (10 per cent), meat products (10 per cent). Overall, food and grocery contributes to 60 per cent of the shelf space which includes grocery, specialty food item, and organic food items, bakery, meat products and imported food products. That’s how our overheads are met.

Are you thinking about launching an eCommerce portal of Modern Bazaar?

We will be setting up an online store by our own because no point tying up with anybody because in Delhi/NCR, we are a major brand and can reach out to customers on our own. By end of the year, we are opening a store in Noida. We will put up an online portal of Modern Bazaar in the coming years.