Future Group's appetite for food is taking a new form

The Kishore Biyani-led group is scaling up operations with Foodhall, its latest venture in the food retail space, which would offer a different format to cater to the growing aspirations of consumers.

And its tag line "for the love of food'' is only spicing up the company's prospects to take the food retail business to the next level.

"We believe the market is ready for the next level of offering with increasing consumer aspirations and incomes," says Damodar Mall, director, integrated food strategy, Future Group.

The company's existing food retail chains comprise the no-frills, small-format KB's Fair Price stores, Food Bazaar and FoodRite. Foodhall will be the fourth organised food retailing chain in the group's portfolio.

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With the all-new concept, Foodhall wants to tap the urban Indian consumer who wants to experiment with both imported food items like wines and chocolates, and grocery regulars like exotic spices and organic lentils.

The first Foodhall store, located in the upmarket mall Palladium in south Mumbai, is slated to open this week.

The 10,000 sq ft store houses a live kitchen and a bakery, a dedicated fresh fruits and vegetables section and a separate area for dairy products, cereals and processed foods.

"We want to create an upmarket lifestyle food store that is all encompassing," says Mall.

However, industry experts like Naimish Dave, director, OC&C Strategy Consultants, beg to differ on Future Group's strategy.

"In supermarkets, you cannot be everything to everybody. You have to have focus and select your target customers."

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The Future Group is putting its money where its mouth is with retail food stores contributing around one-third of its revenues of Rs 12,000 crore (Rs 120 billion).

Last year, the group launched its community foods brand Ektaa, which Biyani hopes will become the group's biggest private label brand in two years.

According to Mall, while Big Bazaar and Food Bazaar were launched to democratise consumption and accessibility, Food Hall is for the discerning customer.

"Though there are overlaps in the products we sell, the Food Hall offering is one level higher."

Mall says the group has identified 10 locations in the country to open Foodhall outlets. "In 10 to 18 months we expect the store to break even."

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Future Group is sharpening its focus in the food space at a time when retail chains run by the Tatas and Birlas have already forayed into this space with a similar set-up.

Westside, a department store chain run by the Tatas, entered the gourmet retailing sector with Gourmet West, which stocks Chef Moshes's (a bakery in Mumbai) signature breads, dips and sauces and a dedicated section for imported sauces, confectionery and chocolates.

The Gourmet West store in Mumbai also offers a cereal bar - a space that allows customers to tailor-make their own breakfast cereal mix. Westside now plans to take Gourmet West and ChocoWest to other parts of the country.

"It is a big step for us. Though food is a low-margin and tough business, we want our customers to enjoy an experience and want more customers to come to our stores," says Gaurav Mahajan, chief operating officer, Westside.

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Godrej's Nature's Basket is another player in the gourmet retail space with 12 stores located mostly in Mumbai and Delhi. With an annual turnover of Rs 60 crore, the brand has seen 70 per cent year-on-year growth last year.

Devendra Chawla, head, private brands of Future Group, says their team conducted "kitchen audits" in south Mumbai to see what exactly their target audience was consuming.

They also conducted focus groups with target consumers to understand the assortment they were looking for.

"We have set up a customer advisory board that consists of non-resident Indians (NRIs) and housewives from business families who advised us on what they want from the store."

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The store has set up an in-house team for training its staff. In the transition period, their partners like Moches, for bakery products, and Zeba Kohli for chocolates will train the Foodhall staff on how to serve customer needs.

The group has also experimented with Gourmet Food Bazaar - a premium version of Food Bazaar at certain locations.

"Our Gourmet Food Bazaar stores at Bangalore, Saket (Delhi) and Gurgaon have helped us gauge if the customer is ready for the next level of offering. Now we no longer need to operate as a brand extension but can get into a completely new offering," Mall adds.

The Gourmet Food Bazaar stores will eventually merge with Foodhall.