Secret to Success: Gourmet brand Nuts ‘N’ Spices records 18 pc growth in pandemic times

Nuts ‘n’ Spices was founded in June 1999 with its first store measuring 600 sq.ft. in Nungambakkam, Chennai. With over three generations of experience in the food and grocery business, the retailer currently operates a chain of 33 outlets.The current owner of Nuts ‘n’ Spices, Sunil Sanklecha, had envisioned a store that had a lucrative business in the country considering the evolving consumer behaviour. Though he had thought of the idea of a specialty store during the early 1990s, his vision only became reality by 1999. Once he knew what he wanted to do, Sanklecha launched a specialty store, choosing to move away from the traditional grocery business model established by his ancestors.
The Inventory
Besides nuts, dry fruits and seeds, Nuts ‘N’ Spices also offers a range of herbs and seasonings such as oregano, basil, thyme, parsley, mixed herbs, etc. The varieties of spice powders and condiments include Kashmir chilli powder, coriander seeds powder, cardamom, clove, cinnamon, nutmeg, among others. The store also stocks syrups and juices from International and Indian brands. From Pringles to Doritos to Mumbai’s sukhi bhel, low calorie namkeens, oil-free papads, mixtures and other diet snacks for the fitness freaks, the store serves as a one-stop destination for a whole lot of snacking ideas.
Nuts ‘N’ Spices also sources and blends the very best orthodox tea. Oolong, black, green, white and black pearls from Darjeeling, Nilgiri and Assam are available in their in-house label, Cup ‘n’ Saucer. These are available in attractive gift packs in velvet bags, wooden boxes and zardosi pouches. Similarly, their variety of nuts, mouth fresheners and churans add attraction to the entire range. Apart from all this, the store’s value addition comes from its gourmet range of imported food products – pastas, noodles, sauces, fruit spreads, juices & syrup, frozen foods and ice creams. Also, the exotic range of imported biscuits, chocolates and confectionery tempts people from all age groups to visit the store again and again.
“By the end of the day there are statistics to help us, take a call on whether to chase any of the products on sourcing, or whether we need to upgrade certain categories. 99 percent of our products have a long shelf life. We do not deal with groceries at all or any fresh products. The only short shelf life categories that we have are curd, ice-cream, etc.,” explains Sanklecha.
All products are sourced from across the country from Kashmir to Kerala, and also through various importers in the country.
The Location
“As a premium brand, we always prefer to be located in places with a cosmopolitan character and with a mix of residential & commercial establishments,” he says.
In a freewheeling chat with Progressive Grocer, Sanklecha talks about the key learnings from his brand, and how he and his brand are coping up with changing trends in the face of the pandemic.
Excerpts from the interview:
Tell us about your brand in detail and its journey so far.
Nuts ‘N’ Spices is a combination of a convenience store, a gourmet store and a specialty store. We do not deal in the essential commodities like fruits and vegetables. Our stores complement the supermarkets in the nearby vicinity. We are a B2C brand.
The journey of Nuts ‘n’ Spices started with its first store of 600 sq.ft. opening in Nungambakkam, Chennai, on 16th June 1999. Today, there are 33 Nuts ‘n’ Spices stores across 3 cities – Chennai, Coimbatore and Pondicherry. Starting with a mere Rs 57 lakh as the first-year turnover, we have now clocked Rs 82
crore in the previous financial year. We started this business with 5-6 employees and today we have 300+ employees. I see both the turnover and store count increase appreciably going forward. At present, we have a customer base of 2.6 lakh customers.
From last 1.5 years, we have been trying to get into the other markets like Bengaluru and Hyderabad. The Hyderabad store was on the verge of completion but got delayed due to the COVID-19 pandemic.
What is the major customer value proposition of Nuts ‘N’ Spices?
Initially, our customers were generally higher income people but in the last 5-6 years a lot of middle-income level group consumers have also started frequenting our stores. Slowly, we are getting in to the mid of the pyramid.
What is the range of products that you offer and which of these are the fastest moving? How many SKUs do you have on offer?
Our speciality range mainly comprises of dry fruits and spices. We also deal in speciality teas, imported and gourmet products like chocolates, biscuits and ice-creams, sauces, pastas, premium sherbets, churans and variety of suparis.
Dry fruits and spices comprise of our private label and it contributes 55 percent to the overall revenue.
We have around 3,500 SKUs.
What is the location strategy for your stores? Which locations do you prefer and what part do they play in your store sales?
We began with both shopping centres and high streets but of late, in last 5-6 years, we have stopped getting into shopping centres anymore and we have even closed our few stores in the malls.
Today, we have stores in the high-streets and IT parks. In high-streets also, we do not go beyond B-category segment. We prefer a mix of commercial and residential locations.
What is the average store size? How much investment goes into setting up each store?
The average store size is about 1,200 sq.ft., and a Nuts ‘N’ Spices store requires about Rs 60-75 lakh in investment, depending on the location.
Share some key learnings that you have gleaned over the years in this business.
Some of the learnings based on my experience gathered over the years as a specialized retailer are:
– Begin small
– Improve incrementally
– Work towards sustained progress
These are the 3 factors which will contribute towards the success of any business.
Which are the new and emerging categories at your stores and what do you think is driving the demand? Any noticeable consumption trends for the products in your store?
We deal only with food products and don’t carry any non-food products. Even in the food category, we don’t carry staples, groceries, fresh and other daily needs supermarket products. Our primary focus is on value-added products like dry fruits, nuts, spices and all other premium food products associated with health and wellness.
We have categorised our stores as health stores. In the health segment, we are observing a lot of shift happening right now. From sugar free and soya products, consumers are shifting to immunity boosting products.
What are your processes and criteria for identifying new manufacturers, products, and categories, and what are your benchmarks for tying up with new manufacturers and suppliers?
We entertain any product, whether Indian or International,
only if it can add value to our product line. Our criterion for introducing a new product or supplier is that it should complement and gel with our product line. There are about more than 200 brands waiting to get an entry into our store. But since we are not interested in mass market products, and also due to the space constraint, we can’t place them in our store.
Which are the interesting concepts or innovations you have introduced at your stores in terms of merchandising strategy, inventory management, etc?
Since our average store size is about 1,200 sq.ft. and about 30-35 percent of the products are private label, there is not much scope of innovation in terms of floor plan, merchandise, and display. Our real innovation lies in the product mix and assortment that we sell. We always try to sell products that are normally not available in the supermarkets and we don’t stock the kinds of products that shoppers would find on supermarket shelves. We carry only products that offer a value addition to our customers and nor do we carry multiple brands in each category.
What are the retail channels you are using during the pandemic – stores or e-commerce or both?
Due to pandemic, many of our customers have shifted back to their hometowns in North and West India. There was a huge
demand from these customers and our e-commerce portal, which we started 6 years back, is catering to these customers’ needs.
However, the sale from e-commerce website was 1 percent of the total sale till the pandemic hit upon us. In the last 4 months, the sales have increased 8-9 times as even the local customers have started buying online.
Currently, out of 33 stores, only 21 are functional. 12 stores are yet to open. The main challenge is that we do not have enough manpower to open the stores.
How has pandemic impacted the footfalls at the stores?
The stores which are opened, we have not seen any difference in footfalls during the current crisis. In fact, we have acquired a lot of new customers during this period.
Share with us the sales percentage – both online and in-store – in comparison to the same period last year.
We have grown at least 15-18 percent in the last few months.
How are you maintaining hygiene and sanitisation in the stores?
We do periodical santisation at our stores and warehouse is also sanitised in every 2-4 days. At stores and warehouse, we ensure that all our employees are wearing masks and gloves. We are strictly following the SOPs issued by the government.
What are your plans and targets for the future? Going ahead, will you concentrate on growing online or taking your store count up?
The first target is to make the brand national in next 3 years. We want to take up one market at a time. In another 5-6 years, we will also plan to go international.