The RP Sanjiv Goenka Group’s retail flagship Spencer’s Retail in May acquired the premium Nature’s Basket chain from the Godrej Group for about Rs 300 crore.
Spencer’s Retail is aiming for profitability of its recently acquired food and grocery retail chain, Nature’s Basket, in two years by shutting down unviable stores, trimming costs and streamlining sourcing and supply-chain operations with itself, group’s sector head for retail and FMCG Shashwat Goenka said.
The RP Sanjiv Goenka Group’s retail flagship Spencer’s Retail in May acquired the premium Nature’s Basket chain from the Godrej Group for about Rs 300 crore. According to Goenka, Nature’s Basket has losses of about Rs 60 crore last fiscal.
“Even since the deal was completed, we have been working out on how to get the business model right for Nature’s Basket since it is a loss-making business. It will take at least two years to make Nature’s Basket EBITDA (earnings before interest, tax, depreciation and amortization) positive,” said Goenka.
Goenka said the retailer will shut down couple of stores in Mumbai which are not in the right locations and hence incurring losses. The back-end synergies for Spencer’s and Nature’s Basket will also be integrated. He said the Nature’s Basket format is different since it’s a premium retailer with huge presence in gourmet food, while at the same time, it has to maintain price parity with competition.
Nature’s Basket operates as a wholly-owned subsidiary of Spencer’s Retail Ltd with 36 stores in Mumbai, Pune and Bengaluru. The group on Wednesday rolled out the format in Kolkata with one store and has plans to open another 5-7 outlets over the next 8-10 months.
“We will continue with our expansion of Nature’s Basket in Mumbai and Kolkata and plan to roll out 12 new stores over the next 12 months. Eventually, we plan to expand Nature’s Basket in markets like Delhi-NCR where there is a strong presence of Spencer’s chain to ensure lower overheads,” said Goenka.
Natures Basket had clocked sales of Rs 338 crore in 2018-19. Around 10% of Nature’s Basket sales are from its own ecommerce operations and Goenka said it will expand ecommerce in newer markets such as Kolkata and wherever the store expands.