FoodPlus plans value-added services

Ratna Bhushan

NEW DELHI, Dec. 5

The US-based FoodPlus Supermarkets chain, which made its official entry into the country at Delhi, a few months ago as a master franchisee of Mumbai-based Shivriem Megamarts Pvt Ltd. is now working out a growth pattern on the lines of providing value added services to differentiate itself from existing food and personal care retailing stores.

Mr Sandip Kapur, Managing Director, Shivriem Megamarts, told Business Line that FoodPlus was in talks with corporates to provide services such as subsidised canteen facilities, taking up consumer grievances at its level, and providing cross-branded food and beverages at its in-house coffee shop Goodies.

Other growth models could include home delivery and backward integration exercises such as packaging its own staples which would lead to cutting down on margins of suppliers.

Shivriem Megamarts is the exclusive master franchisee for FoodPlus in India. The FoodPlus store in Delhi is the American chain's maiden representation in the Asian market.

In the wake of the closure of established food and grocery retailing stores such as Nanz and SuperBazaar, Mr Kapur said that Shivriem Megamarts was adopting a cautious approach before expanding full steam in the domestic market. ``If all goes according to plan, we will open the second FoodPlus outlet hopefully within the first quarter of next year in Delhi,'' Mr Kapur said. While the flagship store has a built-up area of 4,000 sq ft, the subsequent stores could be of smaller formats, and possibly be in other metros such as Mumbai.

However, unlike competing food retailing chains such as Sabka Bazaar from The Home Store, FoodPlus is not banking on value pricing to attract customers, apart from offering the daily value offers, discounting and price-offs. The FoodPlus chain intends to adhere to a product mix including imported, premium and regular products.

While the majority of FMCG brands being retailed at FoodPlus are locally produced, 20 per cent of these are imported. While margins on Indian products range anywhere between 6-18 per cent, margins on imported products are at least 18 per cent or more.

Other big names that are expected to flex their muscles in the food retailing sector in the Northern region include Simone Tata's ambitious venture Trent and RPG's FoodWorld Supermarkets.

Shivriem Megamarts expects to break-even on investments by March 2002, Mr Kapur said.