Retailer with a Rural Heart and a Business Model Studied ...

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2 September 2021 Progressive grocer

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Progressive grocer September 21 3

How the Journey BeganHearty Mart’s storied retail journey started with a 1600 sq.ft. store at Vishala Circle in the Juhapura neighborhood of Ahmedabad, in February 2004. But the location and timing seemed hardly conducive to the birth of a new business.

Following the bloody 2002 riots in Godhra, Juhapura had turned into a haven for Muslim refugees from all over the city and neighboring districts. The population had swelled to about 5 lakh, making it the largest Muslim neighborhood in Gujarat.

It was against this backdrop that Hearty Mart launched its first store, which was envisioned as a mini-supermarket for grocery and daily-need products and, in the aftermath of the riots, it came to be seen as a beacon of post-riot harmony and progress.

The shop offered discounted prices, which were lapped up by the residents in the locality. At the same time, it offered a shopping experience that was modern and contemporary but without frills and yet fulfilled the desires and aspirations of people who missed out on big-brand organized retail.

“With the aim of bringing convenience to the locality, the Hearty Mart maiden retail venture was modelled as an ideal neighborhood convenience store whose value proposition of ‘Sabse Khaas Ghar ke Paas’ offered the promise of being a one-stop-solution for meeting the daily needs of groceries, cosmetics, food grains and other basic merchandise,” says Nadeem Jafri, Founder & Chief Mentor, Hearty Mart.

Meanwhile, the influx of a large Muslim population into Juhapura created a booming demand for real estate in the locality, with the added promise of imminent future development.

“The area was not congested unlike other parts in this neighborhood and we speculated good growth of the region in the near future. Vishala Circle in Juhupura was developing fast as a large number of affluent Muslims had moved in here and that gave us an opportunity to fill the gap with our supermarket for their daily needs,” remembers Jafri.

However, the Juhapura neighborhood, despite the value appreciation of its real-estate, still did not have a proper organized retail store, which could provide the convenience of purchase to its residents.

Invoking an expression that refers to new and untapped markets as ‘blue oceans’, Jafri says that the decision to open Hearty Mart’s first outlet in Juhapura was a Blue Ocean strategy.

Jafri’s acumen lay in spotting this gap and in identifying the opportunity to start an organized food and grocery store in the fastest developing area within Juhapura.

Retailer with a Rural Heart and a Business Model Studied Globally and Taught at IIM-AThe hearTy MarT chain of 16 rural grocery sTores across The neighborhood and superMarkeT forMaTs has been providing a Modern reTail experience To The boTToM-of-The-pyraMid consuMers in seMi-urban and rural MarkeTs in gujaraT since 2004.

iTs unique franchise Model has helped Turn aspiring rural enTrepreneurs inTo successful superMarkeT owners, besides creaTing a nurTuring eco-sysTeM for supporTing new reTail venTures and opening up new enTrepreneurial avenues for rural coMMuniTies.

iTs Much-acclaiMed franchise Model has earned hearTy MarT widespread kudos, naTionally and globally. The Model has becoMe a learning Module and a case sTudy in preMier b-schools, including The iiM-a, and is also TaughT overseas for helping and hand-holding rural reTailers wiTh The righT guidance and skills-seT To becoMe Modern superMarkeT owners.

aparT froM iTs food and grocery reTail franchise business, hearTy MarT has also diversified inTo oTher secTors of The food business and has successfully creaTed and builT 9 Micro-enTerprises by parTnering wiTh Micro enTrepreneurs of villages.

By Sanjay Kumar

ow many grocery chains in the country earn the stripes to make it to a study project at India’s top and most prestigious business school?

Well, Gujarat-based Hearty Mart has not only been a case study at IIM Ahmedabad and other leading Management institutes, its business model has also been taught globally

at the European Case Clearing House for many years now. The Hearty Mart chain, which operates its flagship company-

owned store in Ahmedabad and manages another 15 franchised stores in the villages of central, south, and north Gujarat under the Hearty Mart brand, has earned national and international recognition for offering a modern retail experience to the bottom-of-the-pyramid consumers in semi-urban and rural markets across the State since 2004.

The story of Hearty Mart and its hugely successful franchise model has also been covered by marquee international magazines like Forbes and Fortune, and leading Indian publications like Open magazine, The Economic Times, New Indian Express, Hindu BusinessLine, and others.

The grocery chain has also been featured on CNBC, NDTV, ANI and other media outlets. It was conferred the ‘Star Entrepreneurship Award’ by Indira College, Pune in 2010 and the ‘Rising Sun Award’ by eChai-MICA, Ahmedabad in 2016.

hNadeem Jafri

founder & chief MenTor hearTy MarT

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“Although there were other superstores such as Reliance Fresh and Big Bazaar in Ahmedabad, none had ventured into restive Juhapura,” recalls Jafri.

The mention of Big Bazaar lights up a nostalgic link and an old cherished memory in Jafri. After completing his MBA from IMS Indore in 1998, Jafri worked in the media and advertising businesses for eight years. The idea to get into entrepreneurship with food retailing was born out of his frequent visits to a Big Bazaar outlet near his office.

“It was 2002 and I was working for an advertising agency whose office was located inside the Phoenix Mill Compound at Parel, Mumbai. Just opposite our office stood a Big Bazaar store. I used to visit the store regularly and enjoyed my shopping experience there. The merchandise on display left me very impressed. This was my first experience with an organized retail store of that magnitude and the impressions they left catalyzed my own deep desires to venture into Modern Trade retail,” remembers Jafri.

Two years on, Jafri quit his job to launch his own food & grocery retail business with a capital of Rs. 62.5 lakh, which he raised in partnership with a few friends in the real estate and hotel industry.

Hardships and travails of Food & Grocery BusinessHowever, Jafri soon realized how tough it was for a newbie entrepreneur to run and sustain a food retail business on a profitable basis.

Hearty Mart used every trick in the book – from customer loyalty programs and home-delivery services – to raise its bottom line, but progress was very slow. It required sales of Rs. 3.75 lakh a month to break even, and it was proving to be a stretch.

To support and finance his new business, Jafri turned to his family and friends for help. As someone who hails from Gujarat and is a native resident of Ahmedabad, it was natural for Jafri to look up to his relatively prosperous Cheliya Muslim community to support the venture. It helped that his uncle was the community head of the sect, making it relatively easier for Jafri to raise the capital from friends and relatives.

“The initial five years of my retail journey were really tough as the store did not break even during this period. But disappointments and failures are a part of the entrepreneurial journey. As an entrepreneur, I was required to remain calm through this testing time,” reminisces Jafri.

He left the day-to-day running of the store to his colleagues and took up a job selling space at Times of India and later, joined Grey Worldwide, an advertising company where he worked in an earlier stint.

Jafri also started teaching advertising and organized retail at business schools such as Proton Business School, NRIBM, and Idea Foundation, in and around his hometown Ahmedabad.

He taught for six years in different colleges and B-Schools from 2006 to 2011. This experience, apart from buoying the financial survival of his debut business, also proved to be enriching and groomed him into becoming a mentor.

It gave him a chance to interact and mentor young students and he came to realize that he was good at mentoring. “I took this learning to Hearty Mart and helped my team with the necessary mentoring and groomed them. I found a suitable role

for myself I groomed our top leadership in my set-up and they, in turn, groomed their subordinates further,” shares Jafri.

He attributes his success as a mentor to the support of the rural community he belongs to, which is into farming at the rural level and into the hotel/ restaurant business in cities.

“I belong to the family of their spiritual head, and hence gaining their trust was easier for me. The mutual respect we have for each other – me and the community, has helped us grow together. They are ready to experiment on my ideas and take my advice positively and work on it to execute with perfection. My exposure to the outside world in media, advertising and communication industry and their knowledge of the farming and food-grocery products has created a winning combination as they produce the best of products while I find the ways to create a brand out of those products.”

At the same time, the initial setback in business taught Jafri two things, which helped to shape his onward entrepreneurial journey. First, the experience of dealing with students made him a better mentor to his business team and, second, the failure at his store inspired Jafri and his team to think more innovatively and create a unique retail franchise model for the business.

How the Franchise Idea Became a turning Point“I feel that failure can act as a much-needed booster dose for would-be entrepreneurs. It can help ignite the fire in an entrepreneur and inspire him to do better,” says Jafri, recounting how, despite the continuing struggle to stabilize his business, he still went ahead and launched a retail franchise network, besides also foraying into the HoReCa segment.

By 2007, the Juhapura store business had started showing signs of stabilizing, providing the impetus for Jafri and his team to launch their rural franchising concept. The concept was born out of the learnings that Jafri and his team gleaned from entering into an unexplored Juhapura and provided them with the insights and courage to target other unexplored areas of rural Gujarat.

Finally, the page turned, and Jafri’s Juhapura store broke even on the positive side of the ledger in 2009. Since then, it has kept growing 15-20% annually, pulling in over Rs. 3 crore in revenue last year. “Had we succeeded in earning profits straightaway, we would have remained a one-store venture without innovation,” feels Jafri.

“There are many aspiring entrepreneurs who would like to take up organized grocery retail as a business but feel handicapped to pursue their ambition. More importantly, the long-term strategy for growth in the retail industry is to have multiple stores. Even we wanted to expand in this manner but found that the lack of funds made it difficult. Hence, we came up with the innovative idea of expansion through franchise stores by tapping into the social network of rural community residing in villages,” says Jafri.

With the help of his team, comprising B-school graduates and senior partners at Hearty Mart, Jafri set up a Franchise Development Cell, whose objective was to provide a retail ecosystem to its franchises and work as a guiding force for them.

A Franchise Model for Rural Entrepreneurs“With our franchise model, we train the entrepreneurs at our Juhapura supermarket, share with them the insights and knowledge of organized retail, and guide them to run their own franchise store at their respective villages. Creating entrepreneurs at a rural level with our franchise model and hand-holding and supporting them through our Franchise Development Cell makes for a unique business model at Hearty Mart,” states Jafri.

“Our vision can be best defined as: To touch the life of every Indian and provide him with the best merchandise that suits his lifestyle and to constantly work on opening up new entrepreneurial avenues for rural communities. We help the entrepreneurs with their franchise business as we believe that our growth

HEARTY MART: FACT FILE Retailer: Hearty Mart

Launch Year: 2004

Parent Company: Hearty Mart Pvt. Ltd.

Company Headquarters: Ahmedabad

Key People: Founder & Chief Mentor; Group CEO; Group Sales Head; Retail & Franchise Head; CFO

Operating Model: Franchisee (FOFO)

Retail Format: Super Market / Neighbourhood

Number of Employees: 100+

Total Number of Stores: 16 Franchised Stores

Distribution of Outlets/ Number of States and Cities: Gujarat State, 13 towns & villages of Gujarat

Buying/ Purchasing Team Members: 12

Product Basket: 2,500 Products; More than 5,000 SKUs

Same Store Sales Growth: 20% annually

Hearty Mart stores are modelled as an ideal neighborhood convenience shop whose value proposition of ‘Sabse Khaas Ghar ke Paas’ offer the promise of being a one-stop-solution for meeting the daily needs of groceries, cosmetics, food grains and other basic merchandise.

While Hearty Mart has bigger stores spanning 1,000-2,500 sq.ft. to even 6,000+ sq.ft. in towns like Ahmedabad, Dholka and Sidhpur, most of its 16 franchise outlets are smaller stores ranging from 300 to 550 sq.ft. in size depending on the demographic profile and real estate cost of the location.

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would be reflected in their growth. We nurture them and train them and even invest in their companies to make them own a venture,” adds Jafri.

In that sense, Hearty Mart works on an inclusive growth strategy. The social impact is that it generates entrepreneurs and promotes entrepreneurship at the rural level.

Franchisees have to pay a one-time fee and a brand royalty under the Hearty Mart franchise model. “We take a fixed fee ranging from Rs. 5 lakh to 10 lakh, depending on the quantum of efforts we anticipate in developing the franchise. A recurring brand royalty of 0.5% on annual sales is also part of our license fee structure, points out Jafri.

On its part, Hearty Mart takes up the responsibility to do the store layouting, purchasing the inventory, training the managerial staff of the franchise in various aspects of organized retail such as usage of software, SKU building, among other things. It also monitors their data related to sale & purchase and guides them regularly on their inventory management decisions and promotional schemes on a periodic basis.

To design and execute the promotional strategies, the Hearty Mart team regularly visits franchise stores to sew up tailor-made offers and schemes that suits the needs of the respective franchises and their customers. It has introduced smart card and loyalty programs for key customers of the stores besides also launching monthly promotional discounts on select products in the stores.

At the same time, Hearty Mart expects its franchise stores to follow faithfully the guidelines of its franchise document and be honest in their dealings with their customers and the mother brand. “Basically, it is their store and they need to work on the

topline and bottom-line even though we are always there to support and handhold them as and when needed,” says Jafri.

Distributorship for certain brands is also managed by Hearty Mart through which it purchases merchandising stock centrally and sends it across to its 16 franchisees. “The rural franchisee network under the Hearty Mart model has thrived because it is backed by a robust ecosystem. We have created an ecosystem that handholds our rural franchisees, helps them procure products profitably and guides them in running their store efficiently,” shares Jafri.

success Recipe Behind the Franchise ModelRight from its first franchise store in 2007, which opened in Ilol Talav village near Himmatnagar district, Hearty Mart has been working closely with rural retailers as their franchise partners. As on date, Hearty Mart operates a chain of 15 franchise stores at the taluka level, semi-urban centres and in rural villages. “My focus is on creating entrepreneurs,” says Jafri, who does not solicit franchise partners. “They should feel the need in their locality and come to us. They should be convinced about the business model.”

That the first franchise store at Ilol village still continues to operate even 14 years after hitching its star to Hearty Mart’s wagon attests to the success and credibility of the latter’s franchise model. In fact, the renovation and expansion of the Ilol store is in the cards now and plans are afoot to increase the store’s size by adding one more floor to the existing infrastructure. “The parameter of success isn’t always the number of stores owned by a retail chain but about creating successful stores. Multiple loss-making stores, including those belonging to large retail networks, shut down regularly or risk closing down. We have witnessed many prominent food-grocery retail chains closing down their operations in the face of sustained losses,” observes Jafri.

On its part, Hearty Mart strives to work closely with its franchises to help them earn good profits. This unwavering belief that Hearty Mart’s own success is incumbent on the progress and performance of its franchises has resulted in most of the franchise stores doing good business in their respective villages and towns.

The Dholka franchise is yet another case of successful organic expansion under Hearty Mart. The store was set up in 2012 and in 2019, the franchise partner added one more store at a different location in Dholka. Another franchise, in Pimpodar village, added an additional floor to his shop in 2016.

“Our franchise supermarket owners have been very successful and happy in continuing their association with us. Our innovative model is discussed as a case study in premier B-Schools, including the IIM-A, and our business model is taught overseas for helping and handholding rural retailers with the right guidance and skills-set to become modern supermarket owners,” avers Jafri.

But of all the deserving recognition of Hearty Mart’s incredibly successful franchise model, he counts the book titled “Super Market for Rural Customers – A Study of Community Oriented

Social Enterprise in Gujarat” published by The Academic Foundation as the most special and best acknowledgment so far.

“It is a dedicated book on Hearty Mart written by two research professors – Subrata Dutta & Munish Alagh – of Sardar Patel Institute of Economic and Social Research (an ICSSR Institute), Ahmedabad. They did a detailed research study on our business model. The US-based economist Dr. Abu Saleh Sharif has written a forward for the book. It is available online on The Academic Foundation website (http://academicfoundation.org/index.php route=product/product&product_id=853). I consider this as the best accolade on our work so far, as it has the potential to motivate young entrepreneurs to study our business model, get inspired and strive to do something similar or better than what we could do,” says Jafri.

The result of the hard work it has put in to make its rural franchise model a success has won laurels for Hearty Mart and has further burnished its brand salience as a retail chain with rural heart. It has also paved the way for Hearty Mart’s entry into more villages in Gujarat.

Today, its 15 franchise-operated stores in Gujarat’s rural market cover small towns and villages like Dholka, Ilol, Chhapi, Pipodar, Kakoshi, Vadnagar, Idar, and many more covering over 23,000 sq.ft. in retailing area.

While Hearty Mart also has bigger stores spanning 1,000-2,500 sq.ft. to even 6,000+ sq.ft. in towns like Ahmedabad, Dholka and Sidhpur, most of its 16 franchise outlets are smaller stores ranging from 300 to 550 sq.ft. in size depending on the demographic profile and real estate cost of the location.

PosITIvITY In TIMEs oF CovId dIsTREssApart from the large-scale disruptions caused by the lockdowns, the first and second wave of Covid also triggered massive displacement of migrant laborers all over the country, including in the cities and towns of Gujarat. As a responsible corporate entity, Hearty Mart teamed up with like-minded people and launched a fund raiser to support individuals and families impacted by Covid.

It teamed up with the Elixir Foundation and its volunteers and brought in a Public Relations company – Communicate Karo – as its outreach partner. The initiative also roped in more than 100 volunteers and tapped many NGOs to help in the cause of distributing ration kits to daily wage earners and laborers.

This collective initiative was named “#AhmedabadFightsCorona”, and it pitched in to offer the last-mile connect and provide the needy people with ration kits. These ration kits contained the basic essentials for a family of four to sustain for 7-10 days.

The initiative helped in distributing over 9000 Ration Kits to 36000+ individuals; serve 4 Lakh+ Meals; distribute 2000+ Face Shields to the local administration and police; distribute 7500+ PPE Kits; Launch 2 Training Programs with UNICEF Gujarat for the volunteers; Raise Rs. 25 Lakh in cash through crowd funding and Collect Donations in kind worth Rs. 45 Lakh. More than 100 Volunteers spent 3500+ hours engaging with the program and over 150 migrants received travel support.

To sustain his business, Hearty Mart’s founder and mentor Nadeem Jafri taught for six years in different colleges and B-Schools from 2006 to 2011. The experience helped him hone his skills as a mentor and entrepreneur.

Being a food-grocery retail chain, Hearty Mart’s small convenience stores stock products from regional and local brands as well as those of leading brands like HUL and P&G, which occupy over 40% the shelf-space.

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“A total investment of approximately Rs. 40-45 lakh is needed for opening a decent 1,000 sq. ft. store in a rural set-up. The net margin for the retailer is 7-8 per cent. This makes it a business of turnover. Typically, a 1,000 square feet store in a rural set-up would take around three years to break even,” informs Jafri.

Among its bigger stores, Dholka has two supermarkets and a Super Bazaar (mini-Hypermarket), which has been newly launched near Sidhpur in Patan district, in a village called Shedrana. Super Bazaar is a rural version of a hypermarket but much smaller in size and comprises 24 shops - all under the Hearty Mart brand.

But unlike Hearty Mart’s other franchises, which are food-grocery convenience stores in a small size format ranging from 1,000 to 2,500 square feet, Super Bazaar has 6,000+ square feet of retail space, which has a food-court, a grocery shop, a lifestyle and apparel shop, a bakery and kids’ play area as of now. “We might add a few more categories like electronic section and kids apparel in coming months. We promote it as a place to Shop, Eat & Enjoy,” says Jafri.

Another big difference is that Super Bazaar is an investor-backed franchisee, unlike Hearty Mart’s other supermarket franchises, which are owned and backed by rural retailers who invest in the shop and run it. The Super Bazaar franchise has the freedom to purchase the inventory from anywhere as per their liking and understanding and they need to only maintain the quality standard.

Hearty Mart calls it Super Bazaar model as ‘Freedom Model’ and it is run by Hearty Mart Marketing & Logistics, a subsidiary of Hearty Mart Enterprise. “We provide them with the entire inventory and we have placed managers to run the store under our guidance. We visit the outlet periodically to chalk out the future growth plans. Under the Super Bazaar Freedom Model, we co-own the store along with the investors whereas other Hearty Mart franchisees, in most cases, are owned by the rural retailers and their partners who run the stores in their respective villages,” reveals Hearty Mart’s Group CEO and MD, Vajir ali momin.

Inventory and MerchandisingBeing a food-grocery retail chain, Hearty Mart’s small convenience stores stock products from regional and local brands as well as those of leading brands like HUL and P&G, which occupy over 40% the shelf-space.

“The biggest competition is over local brands, because other kirana stores give hefty discounts on them. So, to beat them, at times we sell the products at their actual cost. But our profits come in from other branded products that they buy,” says Sadiq ali, a former employee of Hearty Mart, who is now the largest shareholder in the Dholka franchise.

The product categories related to food, groceries, and beverages are the fastest-moving at Hearty Mart stores. The popular food categories include loose lentils and rice along with packaged spices and flavorings like coriander, cumin, and chili powder belonging to national and regional brands like Everest, Badshah, MDH, and Ramdev. In the villages, the more localized brands in the same product line, but with an economical pricing, are sold.

“We conduct consumer survey of the buying patterns, particularly of fast-moving consumer products and food groceries, of people residing in the proposed location and take observational tours of competing stores located there to check the products/ brands available with them before we invest in the inventory for starting up a franchisee. This helps us in coming up with the right product inventory mix for the residents of the locality,” says Sabir momin – Retail & Franchise Head, Hearty Mart.

Most multi-locational chain of stores, either owned by an individual, corporate or a venture capitalist, have centralized purchase and inventory decisions. But at Hearty Mart chain of franchise stores, which have different store owners running different franchises at different locations, the inventory decisions are decentralized according to the needs of the specific store and the locality and, hence, the store inventory differs from store to store.

For example, store inventory at the Dholka franchise might be very different from the one at Ilol. The store shelves at the Dholka franchise, which has emerged as the shopping centre for the 30 villages that surround it, are a reflection of the local aspirations. They are stocked with global brands such as L’Oreal, Johnson & Johnson, Dove, Pears, Maggi and Sugar Free, alongside local brands and Hearty Mart’s own private labels that now compete with the leading brands in their respective categories.

“The needs for products change every few kilometers in our country of diverse consumption tastes and culture. However, our in-house private brands are sold across our network of stores. The quantity and number of SKUs in each store might differ depending on the demand for these brands in that specific area but they are invariably sold through all our stores. You can say that our retail stores are known for providing convenience to our customers by offering them a wide range of products at an optimum price,” states Sabir Momin.

Diversification to Become Complete Food CompanyApart from its food and grocery retail franchise business, Hearty Mart has also successfully diversified into other sectors of the food industry. It has successfully created and built 9 micro-enterprises by partnering with micro entrepreneurs of villages. These enterprises are into manufacturing of different product lines such as tea, bakery, atta, paper napkins, toiletries, spices and flavorings, among others.

All these businesses are part of the Hearty Mart brand companies, and the products manufactured by them are sold through its network of stores. The synergetic harnessing of the production skills and market development skills of different companies under the Hearty Mart Group has worked well for the Group as a whole and for its business partners, rural entrepreneurs, franchises and other stakeholders.

One of Hearty Mart’s early initiatives to diversify and branch out into new sectors of the food business was taken in 2008 when it launched a wholesale business of food grocery and hotel supplies – Hearty Mart Enterprise Pvt. Ltd.

In launching HME, Jafri rightly reasoned that since his Cheliya Muslim community was already involved in running hotels, it would be easy for him to get their business and, that too, at a lower cost. The community’s experience also helped Jafri find the right people who understood the food and grocery business.

The creation of Hearty Mart Enterprise came about as a successful meeting of minds between Jafri and Vazir Ali, who had started Ashish Enterprises – a HoReCa Supplier – with Hussain Abbas, another entrepreneur. Ali and Abbas proposed a merger and Jafri accepted on the condition that they would help build Hearty Mart Enterprise into a food company with interests in the entire farm-to-shelf value chain.

The backward integration paid off. Soon, HM Enterprise was throwing up cash, and its scale was helping Jafri stock Hearty Mart at much lower costs, thus offering increased margins. “The creation of HME was a milestone for our group as we merged Hearty Mart with Ashish Enterprise, a company already working into the HoReCa domain. Today, Hearty Mart Enterprise caters to more than 1,000 restaurants across Gujarat, Rajasthan and Maharashtra, and is known as an established HoReCa wholesale supplier in these markets,” says Jafri.

With the expansion in numbers and geographical outreach, the need to integrate the businesses to maintain uniformity of quality and service

The initial five years of Hearty Mart’s retail journey were really tough as its first store, which opened in Juhupura, Ahmedabad in 2004, did not break even during this period. It required sales of Rs. 3.75 lakh a month to break even, and it proved to be a stretch.

In beverages, regional teas compete with the might of the national players like Tata Tea and Lipton. Jivraj Tea, Wagh Bakri and Navkar are the few brands that fight tooth and nail with the established and multinational tea brands. Hindustan Unilever’s and Proctor & Gamble products in cosmetics, shampoos, dental care and hair care form a large part of other fast-moving categories at Hearty Mart.

Managing the product inventory of stores is a critical element contributing to the success of Hearty Mart’s franchisee model. Inventory Management makes Hearty Mart stores different from other grocery chains in that it works more on area-specific inventory taking a completely customer-centric approach, which is based on the consumer and trade research of the proposed area of operation.

Franchises have to pay a one-time fee and a brand royalty. Hearty Mart takes a fixed fee ranging from Rs. 5 lakh to 10 lakh, depending on the quantum of efforts it anticipates in developing the franchise. A recurring brand royalty of 0.5% on annual sales is also part of its license fee structure.

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deliverables became essential. This led to the inception of Hearty Mart Marketing & Logistics in 2010, which was aimed at providing back-end support to the Hearty Mart franchise network by helping them in procuring products for their stores, at an economical price.

Like all supermarket chains, Hearty Mart’s success also lies in its ability to source products at low costs. The scale of purchases helps chains such as Big Bazaar and Reliance Fresh, or international ones like Walmart and Tesco.

But the size and scope of Hearty Mart stores cannot bring in the cost advantage. Hearty Mart has gotten around the problem by integrating a wholesale supply business to the retail one. With the range of consumer and food products from Hearty Mart Enterprise at its disposal, Hearty Mart Marketing & Logistics entered into the wholesale business of these products.

Besides, it helped to connect HME and the franchises and in tapping the network of store owners, mom & pop kirana stores and retailers and also becoming a channel of distribution for Hearty Mart products as well as products from other brands. Hearty Mart Marketing & Logistics became an independent super-stockist and distributor for many outside brands like Cadbury and Crave Eatables, and also for the in-house brands introduced by Hearty Mart Enterprise.

All these ventures opened up a window of new opportunities. One such opportunity gave birth to Hearty Mart Tea Packers, which launched a new brand of tea – Day Break Tea – and tapped onto the huge potential market of highway restaurants.

Under Hearty Mart Enterprise, the company launched its own private label brands – Chef Ki Pasand spices and masalas to cater to the hotel and restaurant industry; FMCG brands like ‘GoodTime’ spices and flavourings; ‘Zareef’ spices and masalas, and also ‘Khamir ATTA’ to cater to the retail market.

In recent years, the Hearty Mart Group has also launched Hearty Mart Bakers Point, its in-house bakery products’ business, besides launching its own online store.

technology AdoptionHearty Mart, though being a predominantly rural chain of stores, has adopted technology with perfection. “Our franchises today understand the usage of data analytics in monitoring inventory-mix performance and consumer trends. And in order to further augment this process, we have implemented ERP solutions by investing in the centralized server at our office. The data thus collected at our server helps us in monitoring the overall store performance and devising customized product bundling strategies for different stores and other promotional schemes,” informs Jafri.

With e-commerce and online grocery pulling ahead as a more convenient medium of shopping, Hearty Mart launched its online store www.heartymart.com/shop to widen its customer base and beef up its brand’s presence online.

For efficient billing and stock keeping, each store has installed point-of-sales software, which tracks the inventory movement and helps the store in-charge in identifying the slow-moving products. Such products can then be removed from the shelf and the process thus helps in refining the inventory mix further and making it more market-ready.

In order to bring the franchises on a common platform, Hearty Mart uses the Trello software application extensively to manage its meetings and for exchanging business ideas. All franchises are also equipped with hi-tech security systems that allow them to monitor their shop-floor behavior from anywhere at any given time. “We understand the value of e-commerce in today’s fast-changing consumer world and hence have started selling our products through prominent online marketplaces like Amazon and Flipkart and our own online shop www.heartymart.com/shop to reach out to our online customers effectively,” says Jafri.

Private Label ForayAmong Hearty Mart’s recent forays into private labels is the launch of its Day Break tea brand, which contributes approximately 10 per cent of the sales in the beverage category. Very soon, it plans to launch its brand of mouth freshener, named mukhwaas.

Hearty Mart’s Good Time brand of spices and flavorings has slowly started picking up and now caters to 5 per cent of the overall category sales, which is dominated by brands like Everest, Badshah, and MDH.

The Covid-induced lockdowns last year and during the second wave of the pandemic this year came as a blessing in disguise for Hearty Mart to aggressively push its own private-label brands, both in the HoReCa and grocery retail segments. Hearty Mart’s HoReCa business was hugely affected and went off the tracks as the hotels and restaurant industry became almost non-functional.

To keep the business rolling on the HoReCa front, the team at Hearty Mart Enterprise started connecting with hospital canteens for meeting their grocery needs, collaborating with small kirana shops to fulfil their needs for food products, spices, and other consumer products.

Though its food-grocery retail business remained largely unaffected even as it too faced distuption in the supply and availability of products at the wholesale and distribution points, Hearty Mart saw a big opportunity in the shortage of popular consumer brands to promote and push its own FMCG products and private labels.

“We realized that though our retail stores had the permission to remain open for few hours during the lockdowns, our supply chain of consumer food brands was hampered badly. There was a shortage of daily essential brands of spices, atta, tea, and other

product categories at the distribution and wholesale points, which impacted the supply of brands like MDH, Badshah, Ashirwad atta, TATA Tea, and other popular brands. But it also gave us an opportunity to push our in-house private brands to the consumers,” says Vazir Ali Momin.

In a smart move, Hearty Mart launched a retail pack of ‘Khamir ATTA’, its private label atta brand, which was already available in a larger SKU for the HoReCa segment. In no time, Khamir ATTA came to replace the out-of-stock Ashirwad atta and Hearty Mart pushed the brand further with introductory pricing schemes.

“Today, it has become the most preferred atta brand for our customers. The fractured inward supply chain during the lockdown turned out to be a boon for us as we could sell our in-house brands like Day Break Tea, Good Time & Zareef spices

and masalas to the end consumers. Our valuable learning from the pandemic is that every challenge throws up huge opportunities as well. If we remain alert to the possibilities of the situation, we might get new market opportunities to tap,” reflects Vazir Ali.

Similarly, to promote another of its private brand – Chef Ki Pasand – among restaurants and caterers, Hearty Mart organizes an annual event called Chef Ka Kamaal under which it invites chefs from small restaurants and conducts a cookery competition. The chefs are required to cook a specific recipe using Hearty Mart brands under the watch of culinary experts who act as judges and award the top three winners with a cash prize and citation.

Vazir Ali says that private labels help the retailer to connect with his customers more efficiently since any in-house private brand is created based on the experience and key consumer insights. Hearty Mart’s initiatives on the private label front and its bold bets on food-related ventures have taken the group in the direction of evolving into a complete food company.

But at its heart, the company is committed to working for the development of the rural public and is continuously on the lookout for different opportunities, which can be created at the rural level.

Helping MsMEs & Local BrandsTo pursue its objective of creating and building on the rural entrepreneurship ecosystem in right earnest, Hearty Mart has established a stellar track record of encouraging and supporting young and aspiring entrepreneurs, brands and suppliers.

Its hand-holding efforts to nurture retailers in the rural parts and its liberal allocation of shelf space to Micro, Small and Medium Enterprises lends enough credibility to the brand’s assertion of helping rural entrepreneurs.

Jafri’s personal association in the capacity of a mentor with the CIIE-IIMA incubation centre and GUSEC-Gujarat University is helping many food-grocery start-ups from these centres to get access to Hearty Mart’s Juhapura store for product testing and other marketing activities.

To expand and grow its retail venture, Hearty Mart developed its unique and innovative franchise model under which its nurtures and trains newbie entrepreneurs and even invests in their business to make them own a successful retail venture.

Through its Franchise Development Cell, Hearty Mart trains the entrepreneurs by sharing with them insights and knowledge of organized retail, and guides them to run their own franchise store at their respective villages.

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SR. NO.

STORE NAME PLACE DIST STORE

OWNERLAUNCH

DATERETAIL

FORMATSKU IN STORE

AVG. STORE SIZE

% SHELF SPACE CATEGORY

MONTHLY SALES

SALES GROWTH

AVG BILL SIZE

CUSTOMER PROFILE

NO. OF EMPLOYEES

1 HEARTY MART JUHAPURA AHMEDABAD SABIRHUSAIN 2/11/2004 CONVENIENCE 5,000 ABOVE SKUS 1600 SQ FT

25% GROCERY 40% FMCG 20% PERSONAL CARE 15% GENERAL

2,500,000 13% RS.400/- URBAN CUSTOMERS 7

2 SMART SHOP ILOL TALAV HIMMATNAGAR MEHMUDBHAI 4/11/2007 SUPER MARKET 4,000 ABOVE SKUS 900 SQ FT


1,900,000 7% RS.600/- RURAL CUSTOMERS 5

3 SAHYOG SHOP

ILOL PAHADIYA HIMMATNAGAR HASANABBAS 10/28/2007 MINI STORE 2,000 ABOVE SKUS 600 SQ FT


800,000 5% RS.300/- RURAL CUSTOMERS 4

4 MARVEL SHOP PIPODAR HIMMATNAGAR ABIDBHAI 12/23/2008 MINI STORE 2,000 ABOVE SKUS 1300 SQ FT



5 SANKALP SHOP DHOLKA AHMEDABAD SADIKBHAI 8/15/2009 SUPER MARKET 5,000 ABOVE SKUS 1800 SQ FT


4,500,000 5% RS.750/- SEMI URBAN CUSTOMERS 8

6 ANAND SHOP KANAI HIMMATNAGAR MAYSAMBHAI 3/21/2010 MINI STORE 1,000

ABOVE SKUS 500 SQ FT



7NUTAN KIRANA

SHOPJETHIPURA HIMMATNAGAR AHMEDBHAI 5/4/2010 MINI STORE 1,000

ABOVE SKUS 250 SQ FT



8 MAQBOOL STORE META BANASKANTHA ABIDBHAI 5/1/2014 SUPER MARKET 2,000 ABOVE SKUS 1000 SQ FT



9 SANSKAR SHOP CHAPI BANASKANTHA HASANBHAI 6/26/2014 SUPER MARKET 2,500 ABOVE SKUS 1650 SQ FT



10 NUTAN SHOP SIDHPUR PATAN SABIRBHAI 3/21/2016 SUPER MARKET 2,500 ABOVE SKUS 1600 SQ FT



11 SIRAAT SHOP KAKOSHI PATAN RAJA ALI 9/27/2016 SUPER MARKET 2,500 ABOVE SKUS 1300 SQ FT



12 SAMRAT SHOP DHOLKA AHMEDABAD AHESAN ALI 1/17/2019 SUPER MARKET 5,000 ABOVE SKUS 2400 SQ FT



13

HEARTY MART

MARKETING & LOGISTICS

PVT LTD

MAKARBA AHMEDABAD BAKARBHAI 3/18/2019 CONVENIENCE 2,500 ABOVE SKUS 1200 SQ FT



14 COMFORT STORE VADANI PATAN HASANBHAI 12/3/2020 SUPER MARKET 2,000 ABOVE SKUS 900 SQ FT



15HEARTY

MART SUPER BAZZAR

MAKTABA PATAN ABBAS ALI 2/20/2020 SUPER MARKET 5,000 ABOVE SKUS 6000 SQ FT



16 MEGA MALL RAVAPAR ROAD MORBI HITESHBHAI

PATEL 12/09/2021 SUPER MARKET 5,000 ABOVE SKUS 5000 SQ. FT.


“If we see potential in their product quality and offerings, we help them place their products at our stores. There are a couple of ready-to-drink juice brands coming out of these incubation centres, which have been able to get shelf space at our Juhapura and Makarba stores, reveals Jafri.

Very recently, it gave space to a start-up perfume brand and also helped it with promotions. The brand is now being sold through all Hearty Mart stores. “These initiatives have definitely helped the Hearty Mart brand create and build its image as a rural and a startup- friendly brand,” affirms Jafri. Other than helping small local brands to mark their presence at its stores, Hearty Mart also actively collaborates with bigger, more established brands to build new categories and reach out to newer and wider customer base.

On Brand-Retailer partnership, Jafri says that it is necessary for a retailer wishing to earn higher margins as it can create a win-win situation for both – the brand and its retail partner. A retailer is extra attentive to the brands whose exclusive rights have been given to him. In India, we saw the classic case of Xiomi brand launched with an exclusive tie-up with Flipkart.”

Use of Innovative Retailing ConceptsDwelling on the interesting concepts or innovations that Hearty Mart has introduced at its stores, Jafri says that his food and grocery retail customers prefer good quality products at an economical price. But they tend to avoid experimenting with unfamiliar, new brands or products, which they haven’t used in the past. This is where a bundling or a cross-bundling strategy helps to introduce new products on the shop-floor and create demand for the same.

Jafri narrates a small incident that happened at his store where he introduced a premium brown bread with an introductory retail offer. The store staff waited for few days expecting to see good uptake of the product.

But due to the pricing of the bread – it was a premium bread and prices were higher than the other breads available at the store – along with non-familiarity with the brand, the product movement was very slow.

“We introduced a product-bundling strategy and branded a section of the shelf as ‘Breakfast Basket’. Here, the new premium brown bread was bundled with a 100-gm pack of popular butter, a small pack of cheese spread/ cheese cubes and a bottle of jam/ ketchup. We priced it smartly, showcasing expected

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savings due to this bundling of products. This helped the premium brown bread make inroads in the consumer households of our regular customers and it eventually resulted in developing a regular demand for the product.”

Pointing to another case of innovative retailing at his store, Jafri recalls the period five years ago when demonetization was being implemented resulting in the sucking out of almost 86% of Indian currency from the market and leaving people to face a severe cash crunch.

“We introduced an ‘ideal daily ration kart’ at Hearty Mart – it was a subsidized ration kart for our regular customers, which would help them purchase their daily ration at an economical price. The product mix of the daily ration kart was selected based on the purchase pattern of our customers, but it didn’t necessarily include established brands. The product mix was economical and offered lots of savings, which was the need of the hour then. We created buzz around the ration kart by circulating the information amongst our customers via WhatsApp and SMS. We continued with this scheme for two months from November 2016 to January 2017. Not only was the concept lapped up, it also helped us in enhancing our image as a concerned and customer-friendly retailer with the customers showing their appreciation for this proactive step.”

In another example of the use of innovative retailing concepts, Hearty Mart keeps introducing regular promotional and seasonal merchandizing schemes based on the catchment and customer profile at its stores. For example, at its Juhapura store, which predominantly caters to Muslim customers, the holy month of Ramzan is the peak business period. “We come up with iftar packages and introduce discount schemes on beverages and dates. Every Ramzan, we introduce an ‘iftar kit’ by bundling dates, falooda mix and sharbat and create a dedicated shelf space for this special offering in our store,” says Sabir Momin.

Like the Juhapura store, the rest of the franchisees that cater to all communities, roll out attractive discounts during the festive season of Diwali, Christmas, apart from Ramzan. “The organized food grocery stores main concern is to attract footfalls. Once the customer enters the store, the purchase is almost ensured. Hence, all the efforts of our promotional activities are aimed in the direction of luring customers to the store and maintaining a long-term relationship with them,” adds Momin.

Future Plans and GoalsLooking back at the road travelled so far and contemplating of the future, Jafri says that the ultimate goal is to take the Hearty Mart brand to the international level by manufacturing good quality Indian spices and other food & grocery products and exporting them overseas.

“They will be our main focus areas for the coming few years along with taking our brands Good Time and Zareef pan-India. To expand our portfolio of FMCG food products and turn them into established brands, we are engaged in adding many new products in the ready-to-cook category like dosa mix, idli mix, gulab jamun and more, under our brand Good Time. Our franchisee network of retail stores is seamless and it would grow organically the way it has progressed till now,” reveals Jafri.

Taking into account Hearty Mart’s 10,000 square foot manufacturing facility at Dholka GIDC, which is equipped with ISO certification and export license, the company’s goals look fairly reachable and within grasp.

Hearty Mart’s Good Time Spices is already being exported to Canada and the US markets along with Dubai and the UK markets. “Though we haven’t been able to crack these markets fully due to Covid restrictions currently, the initial feedback and response from these markets on our products are encouraging. And we are looking forward to focus heavily on exports as we feel that we have the potential to grow and expand our export base,” says Jafri.

When asked to how he would like to describe his own strengths and best achievements as a food entrepreneur, Jafri ruminates: “Every individual is blessed with inherent strengths, which are unique to him. If he figures out this well in time, he can create a world of difference for himself and people associated with him. We fail because we try to follow or emulate others blindly without trying to understand our own strengths and the skills-set we possess.”

Jafri, after his early-days’ business reverses, discovered his strengths as a mentor and put it to use in spotting and nurturing the latent entrepreneurial talent in villages, particularly within his own Cheliya Muslim community. And, in developing and exercising his mentorship skills, he came to rediscover and kindle his hidden mojo as an entrepreneur.

“Today, as a founder and chief mentor of Hearty Mart, I feel satisfied with my decision to have ventured into entrepreneurship and sticking along. Any entrepreneur, with proper planning, innovative thinking, and an unflinching passion to succeed can create a new destiny not only for himself but also for the people associated with him,” concludes Jafri.

Hearty Mart’s future goal is to take the brand to the international level by manufacturing good quality Indian spices and other food & grocery products and exporting them overseas.

Retailer with a Rural Heart and a Business Model Studied ...

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