Business

More Retail MD Vinod Nambiar: “Our Business is Flourishing, and We Are a Retailer Built for the Future

More Retail plans to go public with an IPO in the next 12-15 months. Backed by Samara Capital and

More Retail MD Vinod Nambiar: “Our Business is Flourishing, and We Are a Retailer Built for the Future

More Retail plans to go public with an IPO in the next 12-15 months. Backed by Samara Capital and Amazon, the company is strengthening its omni-channel strategy with a clear focus on profitability. It is also in talks with investors to raise additional capital. In an interview with BusinessLine, Vinod Nambiar, MD of More Retail, stated, “We believe we are one of the fastest-growing online grocery businesses. Our operations are now fully optimized, and we are focused on building a profitable business. A large portion of our revenue comes from fresh and perishable products, and we view our expertise in handling fresh items as a key competitive advantage.”

What strategy have you implemented to restructure the business, and how are you strengthening the hybrid store model?

With the acceleration of online shopping during Covid, we took a comprehensive look at our business between FY 2020-2022 and made three key decisions. First, we decided to scale back our large store network in favor of smaller stores. We initially had around 40 large stores, and now we have reduced that number to 18. By the end of January, we plan to have only nine large stores remaining.

Secondly, we made the decision to exit the lifestyle business. When we acquired it, apparel and general merchandise made up over a third of our business, but now that figure has dropped to just 3%.

Lastly, we’ve been focusing on developing a hybrid business model. Amazon Fresh operates its own fulfillment centers in parts of India, and we handle their orders in other regions. The hybrid model integrates a traditional store layout in the front, where customers shop as usual, and an operational space at the back dedicated to fulfilling Amazon Fresh orders. This approach allows us to tap into two revenue streams, greatly enhancing store efficiencies. In fact, we achieve a 50% higher gross margin in hybrid stores compared to non-hybrid ones. Currently, about one-third of our 765 stores operate as hybrid locations, and nearly 25% of our business comes from the online channel. In the next 18 months, we aim to have at least 400 hybrid stores.

We are confident in our omni-channel retail strategy and unique business model. Additionally, we have been strengthening our offline loyalty program, which now has over 1.3 million members. These initiatives are key pillars of our transformation. Financial restructuring is complete, the business model has been validated, and our focus now is on scaling the business.

What are your plans for store expansion?

In the past four months, we’ve opened around 15 stores, and over the next 15 months, we plan to add 150 more. These will all be small-format stores. Our main focus will be on the five southern states, as well as West Bengal and Odisha.

When do you plan to go public? Are you raising funds to attract more investors before the IPO?

We plan to go public in the next 12-15 months. We broke even in October and aim to be free cash flow positive by 2027. Our priority is to build a highly profitable business and scale it accordingly, which is in the best interest of our shareholders. Over the last three years, our main investors, Samara Capital and Amazon, have continually supported us financially. This year, we’ve been in discussions with large family offices and other investors to raise ₹250-300 crore. We are halfway through the fundraising process and are confident that we will complete it soon. This will provide us with the necessary capital to open the next 150 stores.

How has the company performed in recent months?

We consider ourselves one of the fastest-growing online grocery businesses. In October, our online business grew by 110%, and our GMV run rate for online sales is ₹1,700 crore. Simultaneously, we are seeing strong offline growth, with a like-for-like sales increase of 18% YoY in October.

We’ve experienced significant growth momentum over the last seven quarters, with our annual revenue run rate now exceeding ₹5,000 crore. In the September quarter, our overall like-for-like growth was 17%, and we anticipate mid-20s growth for the December quarter.

Our business is performing at full capacity. Approximately 36% of our stores are located in metropolitan areas, where more than one-third of sales come from online channels. The remaining 64% of our stores are in smaller cities, where online sales contribute in the low double digits. However, we’re observing a swift shift toward online, which reassures us that we are a future-proof retailer. A large portion of our sales comes from fresh and perishable products, and we believe our expertise in handling fresh goods gives us a significant competitive edge.

How is the rise of quick commerce shaping online grocery businesses?

We focus on providing deliveries within two hours, and our average order value is double that of quick commerce platforms. While there is a market for 10-minute or 30-minute deliveries, particularly for consumers in large cities with high population density, we believe that two-hour deliveries offer a more sustainable business model. This approach is more appealing to a broader range of customers, with an emphasis on affordability and reliability. However, we do have the capability to pick and pack orders quickly, enabling 10-minute deliveries by our partners from our stores when required.

About Author

mansi

Leave a Reply

Your email address will not be published. Required fields are marked *