Swanky 3,000-odd square foot stores, often housed in upmarket neighbourhoods in big Indian metros; bright, colourful interiors, and even brighter displays. Godrej’s Nature’s Basket (GNB) stores, placed in literal glasshouses, famously catered to the affluent with its gourmet food offerings.
Until it didn’t.
Today, one such outlet located in an upmarket residential locality in Mumbai has reason to be upset. Its average sales per month has dropped by at least Rs 2-3 lakh ($2,900-4,350) compared to three years ago. It’s no coincidence that, in this time, GNB has also reinvented itself with ‘GNB Refresh 2020’—a plan to turn the company around, growing sales by 3X to Rs 1,000 crore ($144 million) by March 2020. And this was to happen by replacing fine foods with everyday grocery, fresh food requirements and more private labels.
What once housed a wide array of exotic fruits and vegetables, cheeses, wines—‘world food’—was now suddenly a daily-needs-first marketplace. From selling gluten-free breads and international brands to selling onions and potatoes, Nature’s Basket…ended up selling itself.
In May, parent company Godrej Industries sold GNB to Kolkata-headquartered Spencer’s Retail for Rs 300 crore ($43 million), a little less than the Rs 338 crore ($48 million) GNB clocked in annual sales as of March 2019.
When a century-old Indian conglomerate like Godrej is forced to sell a barely-decade-and-a-half-old retail dream, a dream it was determined to live out through grocery, a year before its turnaround plan was to succeed, one is compelled to ask why.
“We believe it is a value-accretive divestment as GIL (Godrej Industries Limited) has sold GNB before further erosion of balance sheet and brand strength,” reads an ICICI securities write-up on the deal from 19 May 2019. “We expect GIL to use the cash proceeds to repay debt.”
This is the story of how a retail chain that catered to high-earning expats with ~Rs 40,000 ($580) monthly grocery budgets (as estimated by an industry expert) suffered the greatest loss of all—customer disconnect. Premium groceries, online presence, national growth, prime locations, and eventually, mass appeal—everything that was supposed to work in GNB’s favour became its albatross.
Godrej wanted to carve out a niche for itself in authentic world gourmet food in India’s poshest neighbourhoods. It chose Mumbai’s upmarket Warden Road to start the journey, selling international wines, cold cuts, organic foods, preserves and packaged food imported from the world over.
It had the resources, it had perfect showroom-like stores, and it had capital. And yet, it took too many decisions that, in hindsight, were detrimental to its growth.
“They (Godrej Industries) did not know what to do with the GNB business. They did not have a clue on how to scale it,” said an industry executive with direct knowledge of GNB’s operations. “Godrej should have sold GNB in March 2016,” he added bluntly. The business was then valued at Rs 450 crore ($65 million), he claimed.