The $3.7 billion RP-Sanjiv Goenka group, has its fingers in many a pie –from infrastructure, natural resources, carbon black, media, entertainment, sports IT, education. And then there was the retail division, with Spencer’s Retail, which has been part of the RPG Group since 1989.
Despite having over 150 stores, in the hypermart and neighborhood grocery format, across 10 northern and southern Indian states, it lacked a presence in western India to become a truly national player. That is when the company decided to take a leaf out of the books of its founder, the late Rama Prasad Goenka. Also known as the ‘king of acquisition’, he was reputed for pursuing inorganic growth strategies.
So, on 17th May 2019, the board of Spencer’s Retail Limited gave their approval for acquiring 100% stake in Godrej Nature’s Basket Limited, a wholly owned subsidiary of Godrej Industries Limited (GIL). This acquisition is subject to approval of shareholders of both the companies.
What makes this acquisition interesting is the cross selling opportunities that Spencer’s Retail will now have for its private labels – like ‘Smart Choice’, ‘Maroon’, ‘Care’ and ‘Esentialz’ – as well as its FMCG brand Too Yumm! through the Nature’s Basket omnichannel networks.
Nature’s Basket reported a turnover of INR 338 crore in FY2018-19, up from INR 291 crore the previous fiscal. While its sales grew by 15% over the previous fiscal, this was down from 18% from same-store growth in 2016-17. Also, it was unable to post profits in the recently concluded financial year. To cut its losses, the company exited out of the Delhi and Hyderabad markets and reorganized its business to become more omnichannel, rather than physical oriented.
Operating since 2005, Nature’s Basket is a premium convenience store format grocery retailer that sells products ranging from fresh produce, fish, meat, artisanal breads, FMCG and staples. It operates 36 outlets in Mumbai, Pune and Bengaluru and reported INR 338.28 crore sales for 2018-19.
Tanya Dubash, Executive Director and Chief Brand Officer, Godrej Group said, “For over a decade, I have watched with pride as Nature’s Basket grew from strength to strength with various firsts in the food retail industry. Looking forward, we realised that to further unlock the immense potential of this brand and to grow it to even greater heights, we need to pass on the torch to owners who have prioritised retail in their portfolio strategy and have the relevant ecosystems to take the business to the next level.”
She further added, “The retail industry is consolidating and to flourish in this environment, scale has become increasingly important. Spencer’s Retail Limited is very keen to further strengthen the brand and strongly accelerate the growth of the business.”
Shashwat Goenka, Sector Head – Retail and FMCG at RP Sanjiv Goenka Group said, “Nature’s Basket will make Spencer’s a truly national player, giving it access to the West of India through its 36 stores in Mumbai, Pune and Bangalore. These stores are located in prime residential locations, have a high sales throughput per square feet, and will add INR 363 crores of top line to the Spencer’s portfolio.”
He further added, “Both Spencer’s and Nature’s Basket are positioned as experiential grocery retailers, and that is the first of many synergies that this acquisition brings. Nature’s Basket has a strong portfolio of private label brands which has huge traction with its consumers. We believe there is huge potential to expand this to Spencer’s stores. It also has a strong ecommerce presence, and we believe that fits in well with our omnichannel strategy at Spencer’s.”
Spencer Retail’s revenue for FY 2018-19 was INR 2,187.19 crore, with net profit at INR 7.94 crore. In 1995, the company launched ‘Foodworld’ as a joint venture with Hong-Kong based Dairy Farm International. The joint venture, which operated supermarkets under the ‘Foodworld’ name and hypermarkets under the name ‘Giant’, which was terminated in 2006. RPG retained 48 of the 93 stores it owned. These were re-furbished and were relaunched under the Spencer’s brand name.
In 2007, brand changed its positioning from ‘Smart Ways to Shop’ to ‘Taste the World’ and introduced its first private label brand ‘Smart Choice’ and two years later, it introduced its second private label ‘Maroon’, followed by ‘Care’ and ‘Esentialz’.
In 2013, Spencer’s quit the highly competitive Mumbai hypermarket business. The Nature’s Basket acquisition gives it a point of entry back into this lucrative region.