How Chennai-based professionals-turned entrepreneurs Madhusoodhnan K and Thendral Madhusoodhanan built and grew a profitable and popular organic retail business
By Sanjay Kumar
By early 2010, Madhusoodhanan K felt his instincts and impulses strongly drawn in the entrepreneurial direction. In April 2010, he decided to “call it a career” and bade goodbye to his role as an investment manager with a venture capital firm. “I felt bored with my corporate life and so I quit in 2010,” admits Madhusoodhanan, founder & director, Dhanyam Organic Superstores.
But he had an idea simmering within and felt driven by an inner force to figure a way out to make life more exciting. “Right from my childhood days, I had a keen interest in the grocery business and it was something very close to my heart. While working on a project as a consultant, I came to know all about organic farming, what it means, why it is beneficial for farmers and how it’s a good solution to many underlying problems that beset Indian farming in general,” explains Madhusoodhanan.
He was lucky that wife Thendral came more than halfway forward to pave their entrepreneurial journey together in organic retailing.
Just three months after giving up on his corporate career, in July 2010, Thendral and Madhusoodhanan launched their maiden organic store in the Thyagaraya Nagar (known locally as T. Nagar) locality of Chennai – a 1,100 sq. ft. retail establishment called Dhanyam Organic Superstore.
“Around the time the first Dhanyam store opened, even in a metropolitan city like Chennai, there were hardly 3-4 organic food stores around then,” said Madhusoodhanan.
The location proved to be a trump card for its organic retailing creds. As an affluent commercial and residential neighborhood, T. Nagar provided a ready catchment of rich, discerning, and upwardly mobile consumers who did not crimp on paying a slight premium for organic offerings.
With its growing reputation for being an organic specialty store selling fresh produce and groceries, the store soon became a driver for higher consumer awareness of organic food and started drawing a good traffic.
Apart from that, the store also successfully ticked the right boxes for drawing positive consumer receptivity and market response. Madhusoodhanan said, “For a long time, organic and natural food lovers in the locality suffered from a lack of choice and non availability of a good range of items. Dhanyam came to offer a huge range of finest natural and 100% organically grown food, made available in a pleasant modern retail format and with the option to shop online.’’
Product mix and staff
“We offer a variety of fresh produce, pantry staples, snacks, beverages, personal care items, and specialty products sourced from local farmers and suppliers. We ensure that all products meet the required organic standards and carry appropriate certifications. says Thendral Madhusoodhanan, co-founder and director, Dhanyam Organic Superstores.
As a single-brand store, Dhanyam focuses on our own-branded products because our customers want unique stuff that is not available elsewhere. Though we source our organic produce from a network of organic farmers, we also have our own production unit and our own kitchen where we do very unique formulations for people who have some special food needs and for certain products like baby food. “Focusing on our products has helped us build a more loyal clientele and offer uniqueness to our customers,” said Madhusoodhanan.
As Dhanyam’s products offered a distinct organic and farm-fresh texture, aroma, and flavor, first-time customers turned into regulars and they came to form the store’s loyal core base of shoppers. At the same time, as first-time buyers turned faithful converts, they also helped to broadcast the store’s identity to their family and friends, thus augmenting the store’s following and reputation.
Customers also appreciated the fact that the store employed a team of knowledgeable staff members who were well-versed in organic products and could meaningfully engage with customer queries and concerns.
Apart from staff, engaging with the local community through various organic-related initiatives has also helped Dhanyam to burnish its credibility. The retailer organizes regular workshops, seminars, and events related to organic farming, healthy cooking, and sustainable living. For instance, Thendral hosts Dhanyam Organic Kitchen, which showcases wholesome dishes and recipes using Dhanyam’s organic ingredients.
Within a couple of years, the store came to acquire a sterling reputation for stocking and selling more than 60 varieties of vegetables and 500 varieties of cereals, pulses, nuts & spices, processed foods, snacks and beverages, thus providing an extensive and eclectic variety of organic foods. And it sold all of these products with a clear and laser-sharp message: “100% Organic Good’’ & ‘‘Good Food to People’’
Challenges
Offering his insights on the organic food business, Madhusoodhanan says that specialized organic retail is a very different ball game from the garden variety supermarket retail, which has better longevity genes. While the success and failure rates of all food stores in general depend on numerous factors, including location, competition, management, market demand, and various other business-specific considerations, the odds are loaded heavily against organic retailers. “It’s a niche market but for retailers who play their cards well, it’s a profitable niche.”
With the mortality rate for organic stores having a lower ceiling, the challenge for retailers boils down to the stark imperative of keeping their heads above water and work toward cracking the code of profitability.
“Making ends meet is a huge existential challenge for most organic stores. Retailers must ensure that their stores are located in specific urban micro-markets or among certain demographics with a high demand concentration for organic products. Organic food stores located in areas with limited demand or lower consumer awareness find it difficult to attract a consistent customer base, affecting their survival and profitability,” said Madhusoodhanan.
The peculiar consumer and business dynamics of organic retailing and sales explains why all nine Dhanyam stores are located in upscale neighborhoods, which tees them up perfectly to cater to a customer base that values organic food and is more likely to make repeat purchases.
“All our nine stores spanning some 9,000 sq.ft. are located in places where there is a good market for organic food and where there’s a well-paying clientele who understand what organic food is and remain perceptive about their consumption choices,” pointed out Thendral.
She says that organic stores are dealing with a unique type of customer base and need to ensure that they provide a certain kind of service level. “When you walk into a normal supermarket, you go and pick up the product you want to buy from the shelf. But when a customer enters an organic store, she will not pick any product off the shelf. She expects a certain premium kind of service. If you are charging a premium price for the product, the customer too expects premium service.
Organic retailers also have the onus to draw out the necessary evidence that underline their organic credibility and reposes customer trust in their products. However, getting certification that identifies your product as authentically natural, organic, alongside other clean-label identifiers racks up the cost. Another reason for the high price is that organic products belong to a niche category, and they don’t enjoy high volume sales.
“For organic products, the volumes being sold and the throughput is much lower and therefore the margins are higher or otherwise it’s not economically sustainable,” said Thendral.
Future plans
“We have nine stores in Chennai and I don’t think we can have 90 stores. The market is not that big in Chennai. But we will very well have 15 stores, probably,” said Madhusoodhanan. The retailer is looking at new places to slowly expand its presence in Chennai. In the next couple of years, it also has plans to take Dhanyam store footprint to Bengaluru, Coimbatore and Hyderabad.
The retailer is also looking to ramp up its marketing focus. “So far, all the brand visibility has come to us through word-of-mouth publicity and by way of our exceptional customer service at the store. But we have not done any systematic marketing work,” said Thendral. Leveraging the Dhanyam organic brand on social media is among the various options that the retailer is looking at.
“We have a very active WhatsApp group, which allows us to communicate with our customers regarding our new products and what new is cooking in our kitchens. Other than that, we were also using Facebook a lot but the returns on that have been dipping actually. Currently, we are still evaluating what is the best way to go forward. These are some plans that are right under the radar now,” said Thendral.
This article first appeared in the June 2023 edition of Progressive Grocer
