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Subhiksha's incredible growth story

October 01, 2007
With 157 of them scattered across the capital, you are more likely to walk into a Subhiksha store in New Delhi than into a post office. Mumbai isn't too far behind: at last count, there were 120 outlets of the food and grocery chain in the city.

The pace of Subhiksha's rollout -- more than 750 stores since March 2006 - has been breathtaking. But, in its hurry to grab space, the retailer has slipped up in some critical areas: bare shelves are a common sight in many stores and private label quality isn't consistent.

Meanwhile, as more convenience store chains ready to set up shop across India, competition will only get keener.

Think middle class

Subhiksha's target clientele is the middle class: households with incomes in the 50-90 percentile range. The logic is simple, explains Ramaswami Subramanian, who founded the food and grocery chain in Chennai in 1996.

The top 10 per cent don't spend very much more on food and groceries than those in the income categories below them, nor do they account for large numbers.

But they do expect more in terms of ambience, variety and service. Catering to this group, then, isn't really worthwhile for Subhiksha. Instead, with functional outlets no bigger than 1,200-1,500 sq ft - and no frills like air-conditioning - Subhiksha has set itself up in direct competition with the kiranas.

It may not be easy, though. As Damodar Mall, CEO, innovation and incubation, Future Group points out, the kirana is a high-service format with social capital the organised sector will find hard to match.

"Price and range will be key elements," he adds Mall, explaining that in India the small store model works altogether differently from the way it does overseas, where convenience stores actually charge a premium over supermarkets.

Of course, Subhiksha is prepared to take on the kiranas, and not just on price and range. A basket of goods at its stores is about 10 per cent cheaper than at most corner stores and it offers about 1,500 stock-keeping units (SKUs) at its stores, compared to 750 SKUs at most corner stores.

But where it hopes to score more is with its home delivery option. And then, unlike kiranas, customers at Subhiksha outlets can browse through the offerings - stores are designed such that the exit is reached only after walking through most of the aisles -which will help in impulse purchases.

Text: Shobhana Subramanian

Subhiksha founder and CEO R Subramanian (inset)

Photographs : Rediff Archives
Also read: Success story of Subhiksha


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