Sahara India has announced its foray into the retail industry in India with Sahara ‘Q Shops’, where Q stands for quality. Initially, the company plans to start more than 800 shops across 5 states, selling food items, home and personal care products, processed foods and beverages. Chairman Subrata Roy said "This will be a bigger business than our real estate business and it will be among our top three businesses in the years to come", reported ET.
Sahara India’s venture into retail is a unique business model via a Rs. 3,000 crore investment, the company plans to push out its own ‘home brand’ products. The company will tie up exclusively manufacturers to deliver its own range of products to its customers. The products sold at Q Shops will be ‘..adulteration-free 100% Quality Consumer Merchandise..’ and will have ‘100% right weight/quantity’, claims the company’s website.
At present, Q Shops will be launched only in UP, Bihar, Jharkhand, Rajasthan and Uttarakhand. By end of this year, Sahara India plans to expand to West Bengal, Assam, Odisha, Tripura, Haryana, New Delhi, Punjab and Chandigarh. By February 2012, Q Shops will make their presence felt in almost all the country’s regions including Gujarat, Maharashtra, MP and other southern states.
To shop at Q Shop, customers will need to become members. The company plans to develop a strong membership by tapping its significantly large existing customer base. Subrata Roy said "Our one million workers regularly visit 6.5 crore depositors and it would be easy for them to enter those houses and sell our other products".
Once people become members, they can buy products directly from retail outlets or through their home delivery system. Customers can simply place orders at designated call centres and avail home delivery. It is reported that the backend of the initial phase will consist of more than 300 warehouses which will work as distribution centres to supply products to Q Shops, and to customers who call for home delivery.
The concept of home brands and in-house products has been adopted since decades in the western retail markets. Taking advantage of thousands of customer walk-ins every day, supermarkets in the west are known to shelve their own home brand products alongside those of other brands.
For example, Australia’s largest supermarket chain Woolworths stocks its own product range of everyday household products branded as ‘Homebrand‘. From food and processed food products like milk to commonly used household products like dishwashing liquids, they have their in-house products for just about everything. Taking advantage of bulk volumes among many other factors, the chain can supply its products at prices a tad lower than other products, whose price tags may include the cost of branding.
In Q Shop’s case, Industry experts are seem to believe that Roy’s revenue targets of Rs. 20,000 crore in the first 18 months and Rs. 45,000 crore in a span of 2-3 years will be very challenging to achieve. There seems to be a general consensus among commentators that the efficiency of Sahara India’s supply chain will be critical in shaping the growth of its retail venture.
Additionally and unlike other supermarkets where consumers will have a choice of buying from many brands, it appears that Q Shop customers will only have access to the company’s own product line.
It will be interesting to see how, despite the lack of choice, Sahara India manages to lure consumers to its aisles. Without a doubt, pricing is expected to play a definitive role among other factors like customer service, product QC and overall shopping experience.