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Dhanyam Organic Superstores: Creating its own canon in organic retail

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Life offers several remarkable instances of people carving a shining and fulfilling career by pursuing their passion and interest. The way Madhusoodhanan K and wife Thendral Madhusoodhanan stepped out on a limb to chuck up brilliant and flourishing careers in the corporate world only to chart a very different course in organic retailing is one for the books and a story worth telling and recounting.

A postgraduate in Management from IIM Ahmedabad (2004-06) and B.Tech (Computer Science) from Pondicherry University (1997-2001), a gilded career path opened up before Madhusoodhanan when the time came to move past the college portal. Thendral, on the other hand, before tying the knot with Madhusoodhanan, earned her academic stripes as a postgraduate in English literature and computer science and later worked in the IT industry for five years.

By early 2010, Madhusoodhanan felt his instincts and impulses strongly drawn in the entrepreneurial direction. In April 2010, he decided to “call it a career” and bade goodbye to his role as an investment manager with a venture capital firm. Even though he was fast climbing the career totem pole and doing well professionally, he felt the excitement in his corporate career was fast ebbing away. “I felt bored with my corporate life and so I quit in 2010,” admits Madhusoodhanan.

But he had an idea simmering within, and felt driven by an inner force to figure a way out to make life more exciting. “Right from my childhood days, I had a keen interest in the grocery business and it was something very close to my heart. While working on a project as a consultant, I came to know all about organic farming, what it means, why it is beneficial for farmers and how it’s a good solution to many underlying problems that beset Indian farming in general,” explains Madhusoodhan.

He was lucky that wife Thendral came more than halfway forward to pave their entrepreneurial journey together in organic retailing. But people don’t abandon high-flying corporate careers to enter the grocery business just for the love of it. They inhabit the role primarily because of a deep passion for the field they want to enter. In choosing their new calling, Madhusoodhanan and Thendral found their interests perfectly aligned to how they wanted their career to play out in the future, and which came to serve as a cathartic release in the couple’s lives.

The way both husband and wife have poured body and soul together to build a successful specialized organic retailing enterprise in Chennai- from a single Dhanyam Organic Superstore to nine outlets today – is an exemplum of how one can transmute an inner passion into a soaring arc of accomplishment. As the couple round out13 years in the organic business, Dhanyam Organic Superstores have come to occupy a cherished place at the top table in Chennai’s organic food retailing universe.

How the first store scripted organic retailing success

Just three months after giving up on his corporate career, Madhusoodhanan found himself giving in to what he had always wanted to do: Serve healthy, wholesome, and nutritionally dense food to the people and take the message of organic goodness to his community.  It appealed to a deeper slate of personal desire that cut to the center of his life. In July 2010, Thendral and Madhusoodhanan launched their maiden organic store in the Thyagaraya Nagar (known locally as T. Nagar) locality of Chennai – a 1,100 sq.ft. retail establishment called Dhanyam Organic Superstore.

Reflecting on the choice of his store’s name, Madhusoodhanan says it means ‘foodgrain’ in Tamil and Sanskrit, which aptly underscores the store’s purpose of selling naturally good and organic food to the people.

Around the time the first Dhanyam store opened, health-consciousness was beginning to catch up fast with the people even though consumer awareness around organic food was still hazy and nebulous. Demand for natural and organic food was rising but the market for such products was acutely underdeveloped and underserved. Even in a metropolitan city like Chennai, there were hardly 3-4 organic food stores around then,” says Madhusoodhanan, Founder & Director, Dhanyam Organic Superstores.

Dhanyam store’s location proved to be a trump card for its organic retailing creds. As an affluent commercial and residential neighborhood, T. Nagar provided a ready catchment of rich, discerning, and upwardly mobile consumers who did not crimp on paying a slight premium for organic offerings. The store’s prized locality had a rub-on effect in enhancing consumers’ palatability for organic food and made Dhanyam a coveted destination for organic shoppers.

The store succeeded in quickly building a growing audience of health-conscious buyers for its organic fresh produce, groceries, vegetables, baby food, health food, among other product categories. With its growing reputation for being an organic specialty store selling fresh produce and groceries, the store soon became a driver for higher consumer awareness of organic food and started drawing a good traffic.

Apart from that, the store also successfully ticked the right boxes for drawing positive consumer receptivity and market response. Madhusoodhanan says ‘‘For a long time, organic and natural food lovers in the locality suffered from a lack of choice and non availability of a good range of items. Dhanyam came to offer a huge range of finest natural and 100% organically grown food, made available in a pleasant modern retail format and with the option to shop online.’’

Building a loyal clientele for organic products

As a single-brand store, Dhanyam sells only its store labeled products, which are procured and packaged by the retailer. “We focus on our own-branded products because our customers want unique stuff that is not available elsewhere. Though we source our organic produce from a network of organic farmers, we also have our own production unit and our own kitchen where we do very unique formulations for people who have some special food needs and for certain products like baby food. Focusing on our products has helped us build a more loyal clientele and offer uniqueness to our customers,” says Madhusoodhanan.

“We offer a variety of fresh produce, pantry staples, snacks, beverages, personal care items, and specialty products sourced from local farmers and suppliers. We ensure that all products meet the required organic standards and carry appropriate certifications. says Thendral Madhusoodhanan, Co-founder & Director, Dhanyam Organic Superstores.

The commitment to quality and authenticity helped the store earn the trust of customers who are conscious about the origin and production methods of the products they consume. As Dhanyam’s products offered a distinct organic and farm-fresh texture, aroma, and flavor, firsttime customers turned into regulars and they came to form the store’s loyal core base of shoppers. At the same time, as first-time buyers turned faithful converts, they also helped to broadcast the store’s identity to their family and friends, thus augmenting the store’s following and reputation.

Knowledgeable staff offer personalized service to customers

Customers also appreciated the fact that the store employed a team of knowledgeable staff members who were well-versed in organic products and could meaningfully engage with customer queries and concerns. The staff was well trained to provide guidance on choosing the right products, understanding labels,

and helping customers in adopting an organic lifestyle. They could explain to customers about which particular farms the products have been procured from, thus giving them some kind of visibility on the sourcing and procurement process. This kind of personalized service to customers not only enhanced their shopping experience but also encouraged customer loyalty.

Apart from staff, engaging with the local community through various organic-related initiatives has also helped Dhanyam to burnish its credibility. The retailer organizes regular workshops, seminars, and events related to organic farming, healthy cooking, and sustainable living. For instance, Thendral hosts Dhanyam Organic Kitchen, which showcases wholesome dishes and recipes using Dhanyam’s organic ingredients. It’s one of the retailer’s more popular initiatives to make organic produce and food items more accessible to the people. Dhanyam Organic Kitchen has been successful in promoting awareness about organic and sustainable practices, and in fostering a sense of community, which has made the retailer a trusted name in Chennai.

Within a couple of years, the store came to acquire a sterling reputation for stocking and selling more than 60 varieties of vegetables and 500 varieties of cereals, pulses, nuts & spices, processed foods, snacks and beverages, thus providing an extensive and eclectic variety of organic foods. And it sold all of these products with a clear and laser-sharp message: “100% Organic Good’’ & ‘‘Good Food to People’’

Challenges for organic retailers and how Dhanyam faced them

Offering his insights on the organic food business, Madhusoodhanan says that specialized organic retail is a very different ball game from the garden variety supermarket retail, which has better longevity genes. While the success and failure rates of all food stores in general depend on numerous factors, including location, competition, management, market demand, and various other business-specific considerations, the odds are loaded heavily against organic retailers. “It’s a niche market but for retailers who play their cards well, it’s a profitable niche.” It’s therefore not surprising that while lots of new organic stores keep springing up in urban pockets everywhere, very few succeed in sustaining themselves over the long haul and even fewer are able to turn profitable.

With the mortality rate for organic stores having a lower ceiling, the challenge for retailers boils down to the stark imperative of keeping their heads above water and work toward cracking the code of profitability. “Making ends meet is a huge existential challenge for most organic stores. Retailers must ensure that their stores are located in specific urban micro-markets or among certain demographics with a high demand concentration for organic products. Organic food stores located in areas with limited demand or lower consumer awareness find it difficult to attract a consistent customer base, affecting their survival and profitability,” says Madhusoodhanan.

The peculiar consumer and business dynamics of organic retailing and sales explains why all nine Dhanyam stores are located in upscale neighborhoods, which tees them up perfectly to cater to a customer base that values organic food and is more likely to make repeat purchases. For an organic food store, getting the location right creates a winning playbook for the retailer, enabling easy access to the target market, community support, and marketing opportunities. ‘‘All our nine stores spanning some 9,000 sq.ft. are located in places where there is a good market for organic food and where there’s a well-paying clientele who understand what organic food is and remain perceptive about their consumption choices,” points out Thendral.

She says that organic stores are dealing with a unique type of customer base and need to ensure that they provide a certain kind of service level. “When you walk into a normal supermarket, you go and pick up the product you want to buy from the shelf. But when a customer enters an organic store, she will not pick any product off the shelf. She expects a certain premium kind of service. If you are charging a premium price for the product, the customer too expects premium service. ”However, maintaining that superior service level and also the integrity of the product is a challenge for any organic store and probably that’s where most organic retailers also fail. Even when you deliver, and we do a lot of deliveries nowadays, customers expect a certain kind of staff to come and deliver the product to them. Mostly, they expect our own staff to come to ensure that all material information regarding the product and its benefits is communicated properly,” says Thendral.

Organic retailers also have the onus to draw out the necessary evidence that underline their organic credibility and reposes customer trust in their products. However, getting certification that identifies your product as authentically natural, organic, alongside other clean-label identifiers racks up the cost. Another reason for the high price is that organic products belong to a niche category, and they don’t enjoy high volume sales. “A retailer selling Ashirvaad atta, Brooke Bond tea, or Nescafé is assured of a certain volume and quantity getting sold and so the margins are not that high. But for organic products, the volumes being sold and the

throughput is much lower and therefore the margins are higher or otherwise it’s not economically sustainable,” says Thendral. Organic farming and cultivation is done on a limited scale and so unless a significant number of people take up organic farming, the prices are not going to come down.

Diverse and eclectic range of organic product

Dhanyam’s comprehensive range of organic products caters to the growing demand for healthier and eco-friendly alternatives in Chennai. The retailer specializes in organic fruits, vegetables, and groceries but also stock organic gourmet foods, organic beverages, preserves and snacks, and organic personal care products. Dhanyam has also created a special brand called Yaksha under which it makes and sells eco-friendly, chemical-free soaps, toiletries, dish wash, floor wash, and those kinds of other products. “It’s a huge and growing category for us,” points out Thendral.

A sharp focus on organic procurement

Apart from its diverse product range, what makes Dhanyam stand apart is that it has built a strong procurement process, procurement infrastructure, and a trained procurement team that is able to procure real, organic stuff.

Madhusoodhanan points out that organic retail is very different from supermarket retail and wholesale retail when it comes to the procurement process. For instance, tomatoes are readily available at a normal supermarket or in the wholesale market. Retailers have their vendors or they can always pick up tomatoes from the mandis or the wholesale market and so there is no possibility of tomatoes not being available in a supermarket. “But there is no organized wholesale market for organics. Organic retailers have to deal with, say, five, six or 10 farmer groups. In such a scenario, if a couple of farmer groups fail, an organic retailer may suddenly face a crisis in procuring tomatoes. So, organic retailers need to be in constant interaction with farmers to check what is happening on the ground.

Currently, Dhanyam is working with some 10-15 farmer producing organizations. “We are dealing with farmer organizations, some of whom have 100 organic farmers, some have thousands. For some we are not the only customers, for some we are the only customers. We partner with a large network of organic farmers who follow the strictest quality standards in the industry and have a holistic commitment to sustainable agriculture,” shares Madhusoodhanan. As an organic retailer focused on bringing more helpings of credibility for its products, Dhanyam goes to great lengths to ensure that only the best quality organic products are sold through its outlets.

Looking into the future

For someone whose interest in organic was fired early in his career, building a network of nine highly credentialed organic stores seems like a fantastic capstone to the project. But the passion for organic inside Madhusoodhanan and Thendral remains undimmed. “We have 9 stores in Chennai and I don’t think we can have 90 stores. The market is not that big in Chennai. But we will very well have 15 stores, probably,” says Madhusoodhanan in his characteristic elf-effacing manner. The retailer is looking at new places to slowly expand its presence in Chennai. In the next couple of years, it also has plans to take Dhanyam store footprint to Bangalore, Coimbatore and Hyderabad.

The retailer is also looking to ramp up its marketing focus. “So far, all the brand visibility has come to us through word-of-mouth publicity and by way of our exceptional customer service at the store. But we have not done any systematic marketing work,” says Thendral. Leveraging the Dhanyam organic brand on social media is among the various options that the retailer is looking at. “We have a very active WhatsApp group, which allows us to communicate with our customers  regarding our new products and what new is cooking in our kitchens. WhatsApp as a business tool has been successful for us. Other than that, we were also using Facebook a lot but the returns on that have been dipping actually. So we are not much into Facebook. Currently, we are still evaluating what is the best way to go forward. These are some plans that are right under the radar now,” signs off Thendral.

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