Friday, June 14, 2024

The Organic World: Bangalore’s Prime Destination for Organic Offerings

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Explore the journey of The Organic World, which has emerged as the premier destination for organic offerings in Bangalore. Its 17 stores in prime neighborhoods of the city engage discerning consumers with their commitment to excellence, variety, affordability, and authenticity. Offering the widest range of chemical- and preservative-free groceries under one roof – 3000+ SKUs that meet all the monthly consumption needs of a family – The Organic World has risen to become India’s largest multi-store retailer for organic and natural groceries.

Recounting how his entrepreneurial journey took off, Gaurav Manchanda, Founder, The Organic World (TOW), a leading organic food and grocery retail chain in Bangalore, has an interesting tale to narrate. “My journey into entrepreneurship was shaped by my upbringing in Bangalore and experiences in the United States,” he says.

Having grown up in Bangalore, Gaurav’s path took a turn when he ventured to the US for higher education and work. “During my tenure in the US, I lived in Boston, New York, and California. My academic pursuits culminated with the completion of a master’s degree. Additionally, I honed my professional acumen in New York while serving as a strategy consultant,” Gaurav recalls.

While living in the US, Gaurav cultivated a passion for cooking and embraced a healthier lifestyle, inspired by the easy availability of organic and nutritious foods. “The easy accessibility to organic and nutritious foods in the US was something I admittedly took for granted. However, upon returning to India in 2016, I recognized a significant gap in the availability of such foods, including organic and clean-labeled options, which were still nascent in the market.”

Driven by his passion for healthy and organic eating, as well as a desire to address this gap, Gaurav envisioned creating a platform that would make such foods accessible to a wider community in Bangalore. Thus, the idea of establishing a retail format, known as The Organic World, took shape.

What helped to actualize Gaurav’s entrepreneurial vision was the family’s ownership of farms in the eastern region of Karnataka. Perceiving the opportunity to incorporate their organic farm produce into a retail environment, Gaurav initiated his venture in 2017 with the establishment of The Organic World stores in prominent Bangalore locales.  

Over the subsequent six-year period, TOW has undergone substantial growth, and now boasts of 17 stores, spanning some 23,000 sq.ft. of retailing area. The outlets are strategically located across several prime neighborhoods in Bangalore, which includes JP Nagar, JP Nagar RBI Layout, Jayanagar, Banashankari, HRBR Layout, Whitefield, Bellandur, Yelahanka, Malleshwaram, Koramangala, Indiranagar, HSR Layout, Cunningham Road, and other central locales.

One-Stop Destination for Healthier Alternatives

For many consumers, the gateway to embracing an organic lifestyle begins with fruits and vegetables. These fresh and clean foods serve as the initial step towards organic choices when entering the store. Their appeal lies not only in their nutritional value but also in their appearance — crispness, crunchiness, and freshness are immediate indicators of their organic quality. Fruits and vegetables serve as an immediate visual indicator of organic quality, making them the preferred choice for buyers at TOW stores.

The Organic World began as a retail establishment specializing in fresh organic fruits and vegetables has evolved into a full-basket grocer with a comprehensive collection of organic goods. The Organic World today offers the widest range of chemical- and preservative-free groceries under one roof – 3000+ SKUs that meet all the monthly consumption needs of a family. “We are India’s largest multi-store retailer for organic and natural groceries and a full-basket grocer,” avers Gaurav.

“As customers embark on their organic journey, they often progress from ‘I want to eat organic’ to ‘I want to live organic.’ This journey typically starts with incorporating organic staples like fruits, vegetables, and milk into their diets,” explains Gaurav. Over time, this commitment extends to include personal care and home care products, characterized by a preference for items devoid of harmful chemicals and allergens.

According to Gaurav, this shift reflects a conscious endeavor to prioritize health and well-being across various aspects of life. He further highlights the growing inclination towards plant-based alternatives in skincare and household cleaning, which offer gentler, safer options for individuals, their families, and the environment.

The retailer has its own in-house brand – Wellbe Foods – which offers a range of healthy alternatives ranging from pantry essentials to snacks and wellness products that suffices to meet the daily food consumption needs of a family. Whether it is snacks, breakfast cereals, health and wellness products or kitchen staples, the focus is on providing organic and natural products, completely free of chemicals and preservatives.

Fruits and vegetables at The Organic World are sourced from the retailer’s organic farm network. One such farm is Mapletree Farm in Hosur, which is one of the pioneers in organic farming in India. All farms in the network are carefully vetted by the retailer to ensure they follow the strictest organic and sustainable farming practices.

“As a conscientious and principled retailer, we firmly believe in providing our farmers with fair compensation for their crops, recognizing them as essential partners in our mission. Our goal is to foster a mutually beneficial relationship where both parties thrive. By nurturing the organic ecosystem, we aim to ensure that everyone involved – from consumers to producers to stakeholders – enjoys maximum value in a sustainable way,” says Gaurav.

The retailer also partners with brands who share its vision to offer chemical- and preservative-free better choices to the consumer. It works with like-minded local brands, SMEs, women entrepreneurs and gives them a platform to compete against the big box retailers. “Throughout our retail journey, we have taken pride in our ability to attract numerous like-minded brands to join The Organic World family, including local businesses, SMEs, and women entrepreneurs,” Gaurav explains.

Commitment to Better Choice Products for Varied Customer Segments

The Organic World caters to a diverse clientele, each with their own unique preferences and priorities. Among them are the empowered working mothers, aged 35 and above, who are deeply mindful of their family’s well-being. For these women, the top priority is providing their loved ones with the very best. That means opting for ‘better choice’ products that are organic, natural, and made without any harmful chemicals. This cohort seeks out traditional, wholesome options that align with their values and ensure the health and happiness of their families.

Another valuable customer segment for the retailer are discerning working fathers, aged 40 and above. They appreciate products that bring something extra to the table and share a common goal with their families: embracing ‘better choice’ options that elevate their lifestyle. They seek out value-added products that not only meet their high standards but also contribute to their family’s overall well-being and vision for a healthier future.

The 50+ age group also makes up a big chunk of the retailer’s consumer base. This demographic comprises consumers who are price-conscious, prioritize freshness and look for traditional products. At The Organic World, there are a lot of grandparents who can be seen shopping with their grandchildren, and looking for products they believe are truly good for their family.

Young working professionals also form a significant customer base as there are an increasing number of young working professionals who prioritize healthy food and look for better alternatives. This trend has accentuated, particularly in the wake of the pandemic and also because of the buzz about food trends on social media.

When it comes to meeting the needs and tastes of today’s younger generation, The Organic World has offerings aligned to their requirements. “Our stores stock a widely popular range of Clean Beauty and Immunity Boosting products, as well as Healthy Snacking Alternatives that appeal to this target audience,” says Gaurav.

In order to further appeal to the sensibilities of young shoppers, The Organic World also hosts key events across the city — there are contests across social media involving various brands that offer unique shopping experiences. Besides, the retailer organizes events with fitness experts and conducts live social media interactions with key brands involving exciting giveaways.

To encourage customer stickiness, The Organic World platform is designed to follow its customer’s journey right through their everyday and monthly shopping needs. “Our personalized offers are created with a theme relevant to customer experiences with respect to their daily activities. We also encourage customer stickiness through our intuitive offers complementing previous purchases. Customers also appreciate our seasonal deals. For instance, during the festive season, customers can expect special promotions on oils, ghee, and jaggery, while the focus shifts to warm foods like millets during the winter months,” says Gaurav.

As part of its customer centricity, the retailer engages and interacts with its customer base on a regular basis through social media platforms as well as through emails and WhatsApp. It also runs a campaign called #AskUsAnything, which seeks to promote transparency and work towards awareness-building by giving the customers a chance to ask the retailer about anything related to organic farming, its brands, products, and retailing practices.

When it comes to enhancing the customers’ shopping experience, The Organic World has several initiatives in place. All its 17 stores have a ‘zero waste’ section, where customers can dispense exactly what they need, thus minimizing waste and maximizing sustainability. “It’s all about empowering our shoppers to make eco-friendly choices. Many of our customers bring their own containers or jute bags, but we also offer cloth bags and glass bottles for oils, ensuring every visit is not just convenient, but environmentally conscious too,” shares Gaurav.

Another initiative The Organic World has introduced is aimed at encouraging customers to make more informed choices when shopping. They’ve developed an industry-first “Not In Our Aisle List,” which defines their entire range of products. This initiative gently guides customers away from a purely need-driven consumption pattern towards a more thoughtful and informed approach to shopping.

The “Not In Our Aisle List” is a prominent feature implemented across all 17 stores of The Organic World. This initiative prohibits the sale of products containing chemicals and harmful ingredients, prioritizing the well-being and safety of consumers. The list comprises various harmful ingredients commonly found in everyday products. These include high fructose corn syrup, often used as a sweetener in beverages, candies, cereals, and packaged snacks; artificial flavorings and colors commonly added to snacks and processed foods; Tertiary Butylhydroquinone (TBHQ), an antioxidant present in biscuits, microwave popcorn, margarine, and chicken nuggets; carrageenan, utilized as an emulsifier and thickener in products like cottage cheese and ice cream; parabens, sulfates, and phthalates commonly found in personal and beauty care items; as well as a range of acids and toxins present in household cleaning products.

In fact, the “Not In Our Aisle List” forms the cornerstone of The Organic World’s selection process. “If a brand does not conform to these standards, you will not find it on our store shelves. By ensuring the products we keep on our shelves live up to a higher standard than industry-established ones, we truly offer our customers a better choice products. This is a definitive and hard stand we have taken to give our customers the confidence that every single product on our shelves is a better choice for them and also reinforces our commitment as a responsible retailer,” says Gaurav.

The initiative has helped several brands change their product formulation, obtain the necessary certification, etc., to conform to The Organic World’s standards and be part of its offerings. This demonstrates the brands’ confidence in the retailer’s vision and contributes significantly to the cohesive synergy between brands and retailers.

Targets 25-30 Stores in Bangalore, Eyes Nationwide Growth

As all 17 stores of The Organic World are located in Bangalore, it in many ways affirms the city’s status as the nucleus of India’s organic food retailing landscape. Acknowledging that Bangalore indeed stands out as a hub for organic retail and organic offerings, Gaurav says that the city is as a prime testing ground for the acceptance of new products and innovative ideas.

He attributes Bangalore’s receptivity for organic offerings to the city’s dense population and diverse demographic composition, which includes individuals from different states and cities, as well as both local residents and migrants. “The amalgamation of these factors makes Bangalore an ideal locale for testing diverse products, whether they are technological, culinary, or pioneering in nature,” he says.

He further explains that from an organic perspective, TOW’s reception within the city has been very positive, which explains why the brand is continuing to expand its presence in Bangalore despite already having 17 stores. “We’re aiming to establish a total of 25 to 30 stores in Bangalore alone. While we’re also considering expansion into other cities, Bangalore remains a priority due to its favorable reception,” says Gaurav, adding that he is also planning expansion into additional cities such as Hyderabad, Pune, and Chennai within the year. The company envisions these new locations as strategic growth opportunities to broaden its reach and cater to a wider demographic.

Regarding price points and other factors, Gaurav says that TOW encounters similar challenges related to affordability, accessibility, and authenticity. “These are universal concerns that arise regardless of the city. However, it’s worth noting that Bangalore, as a Tier one city, shares similar price acceptance patterns with other major cities like Mumbai, Delhi, Chennai, and Hyderabad. However, Tier two cities may have their own level of price sensitivity, but they still prioritize authenticity and accessibility. Overall, the price sensitivity in these cities aligns closely with that of Tier 1 cities,” he observes.

Organic Retail Challenges: Affordability, Authenticity, and Accessibility

Gaurav emphasizes the significant challenges involved in running an organic food retail business, identifying three key pillars. Affordability takes precedence, emphasizing the importance of keeping products reasonably priced to meet customer preferences, while also considering factors like choosing the best locations for accessibility and authenticity of products.

TOW’s F&B products are generally priced at approximately 1.2 times higher in comparison to conventional items. “The lower shelf life of organic food contributes to its higher price, known as “premium”, which is generally 1.2X over non-organic products. However this premium does not translate into extra profit for farmers or retailers. Instead, it represents the total cost of the product due to factors like certification, testing, post-harvest losses, and reduced shelf life,” says Gaurav.  

When asked how organic products can be made more affordable, Gaurav believes that addressing this challenge requires collaboration among various stakeholders. “Farmers need support to transition to organic methods and navigate certification processes. Retailers also play a crucial role in organizing the sector and increasing scale to accommodate organic harvests. Additionally, educating consumers about the benefits of organic foods is essential. Government intervention through programs and subsidies is also vital for the success of this endeavor. Cooperation among stakeholders is necessary to make organic products more accessible to everyone.”

When it comes to prioritizing transparency in the pricing structure, TOW makes it possible by leveraging their scale and consolidation within Bangalore. With 17 stores under their belt, they rank among the major players in the organic food sector in the city. Leveraging their scale and addressing supply chain inefficiencies, they’ve managed to narrow the pricing gap to approximately 1.2 x that of conventional products.

The stores also use clear labeling to show how the prices of their organic products compare to those of similar items elsewhere. By providing such straightforward comparison, customers gain insight and can see the difference in price and understand and appreciate the affordability of its products. This approach ensures that TOW’s pricing structure is both transparent and accessible to customers.

Another crucial aspect is ensuring the authenticity of products, which is at the forefront of consumers’ concerns when buying organic. Buyers seek assurance regarding the true authenticity and organic nature of products, and they want to know if the products meet rigorous certification standards. “In terms of authenticity, our commitment is underscored by certifications and documentation for all our sources. These certificates are readily available in our stores, and for those seeking further reassurance, our help desk provides access to additional certificates and lab tests upon request. This meticulous authentication process ensures that our products are genuinely certified and free from harmful chemicals, offering peace of mind to our discerning customers,” points out Gaurav.

Mentioning the significant financial implications associated with product testing and certification processes, Gaurav explains that each test conducted per Stock Keeping Unit (SKU) incurs a cost of approximately 3,500 rupees, which accumulates substantially over time across various SKUs and testing intervals. “Moreover, farmers, Farmer Producer Organizations (FPOs), and suppliers also bear expenses for periodic testing and certification, typically over a three to five year timeframe. Certification costs can range from 30,000 to 200,000 rupees depending on the specific requirements. These expenditures significantly impact the overall economics of the process.”

TOW’s awareness activations also help the retailer to build on the brand’s trust and deepen its relationship with the farmers as well as the customers. “In our stores, we organize awareness events where farmers spend a day or even a week with us. This gives customers a firsthand look into the world of organic farming. These interactions create a strong bond; customers enjoy talking to farmers, learning about the ins and outs of organic cultivation. These genuine conversations, often in local languages, help build trust—a crucial part of what we do. These efforts are just part of our ongoing dedication to building trust and relationships with both farmers and customers,” says Gaurav.

He adds: “We firmly believe that just as individuals know their doctors intimately, they should also cultivate a relationship with their farmers. While doctors deal with problems after they happen, farmers work to prevent problems before they occur. Knowing one’s farmer ensures a deeper understanding of the food consumed and promotes a healthier lifestyle. To foster this connection, we facilitate farm visits where customers can witness firsthand the cultivation process and engage with the farmers.”

From an authenticity perspective, the company also collaborates with a network of farms known as Happy House Farms. This initiative involves partnering with various farms, Farmer Producer Organizations (FPOs), and markets to ensure the sourcing of high-quality organic fruits, vegetables, and produce. Farms that meet these standards become part of the Happy House Farms network.

The farms within the Happy House Farms network undergo rigorous certification processes to ensure their organic status. This involves thorough audits, including examinations of their farming practices, inputs, and soil quality. “Additionally, our team conducts internal testing regularly to verify organic compliance. For farms transitioning to organic methods, we provide guidance and support throughout the process, offering advice on inputs and assisting with certification procedures,” shares Gaurav. This commitment to authenticity involves comprehensive testing, authentication, and certification procedures.

Additionally, accessibility plays a pivotal role, as consumers prioritize convenient channels through which they can access these products, whether online, offline, or through brick-and-mortar retail stores located conveniently in their neighborhoods. The company employs various channels for accessibility, including a mobile app, website, and partnerships with last-mile delivery services like Dunzo and Swiggy. Additionally, TOW is part of the national commerce network ONDC, integrated into the India tech stack. The approach isn’t about online versus offline; rather, it’s about strategizing for each channel to best serve the customer.

In the process of selecting store locations, a key element in enhancing TOW’s outreach and accessibility, the primary consideration revolves around population density. This metric serves as a key indicator of the concentration of individuals and households within a specific geographic area. Bangalore boasts pockets of significant density, particularly in areas like Electronic City, Sarjapur Road, and certain parts of North Bangalore. These areas are distinguished by their proliferation of high-rise residential complexes and bustling communities, making them prime locations for TOW’s operations.

“While we do consider socio-economic factors in our decision-making process, it’s important to note that our customer base spans across various economic brackets. Organic food consumption is not merely a luxury but a lifestyle choice driven by a desire for healthier, more nutritious options. In fact, organic farming has deep roots in India’s agricultural heritage, reflecting a return to traditional practices where individuals cultivated their own produce or sourced directly from trusted farmers,” says Gaurav.

His comments reinforce the fact that organic food isn’t solely a premium or niche offering but rather a return to our culinary roots, and echoes the dietary habits of previous generations. “Therefore, our emphasis lies in locating stores in densely populated areas, thus ensuring accessibility to a diverse demographic. It’s noteworthy that some of our franchisees have chosen locations that may not have been our initial preference, yet they thrive due to their dense foot traffic and appeal across socio-economic groups.”

By focusing on these three overarching areas — affordability, authenticity, and accessibility — which present formidable challenges for organic food retailers — TOW has been successful in strategically positioning itself as a leader in Bangalore’s organic food market. “Over the past few years, our team has dedicated significant efforts towards addressing these challenges, and we strive to ensure that our products are affordable, genuine, and easily accessible to consumers,” says Gaurav.

Thanks to TOW’s efforts in advancing crucial metrics in organic food retail, the brand has successfully instilled confidence and trust in its products among customers. Consequently, the repeat rate of TOW’s customers returning to its stores to buy products is quite significant.

Gaurav says that customers tend to return to the stores approximately 3.2 times per month, which is considered healthy for the grocery industry. This frequency indicates loyalty and trust in the brand. “Our customer base is exceptionally loyal, believing in our mission and values, particularly in promoting an organic and healthy lifestyle,” affirms Gaurav.

The retailer aims to meet customer needs through various channels, whether online or offline, with trust, convenience, and accessibility as key elements contributing to customer satisfaction. Moreover, the retailer is also actively addressing affordability concerns, recognizing it as an area needing improvement. “Overall, it’s the combination of trust, convenience, accessibility, and affordability that addresses the challenges faced by our industry and ultimately keep our customers returning to us,” says Gaurav.

Profitability in Organic Retail

When it comes to organic food retailing, a perplexing question lingers: Why do numerous organic stores sprout up each year, only to wither away into obscurity shortly after? What lies at the heart of this existential crisis? Amidst a growing community of health-conscious consumers, the sobering reality of business mortality prompts reflection.

Gaurav agrees that it’s a significant observation and point to consider. “Many ventures in this field begin with passionate individual entrepreneurs who face common challenges of affordability, accessibility, and authenticity. These issues are intricate and not easily addressed. Affordability, in particular, hinges on customers being willing to shop at a certain price in the stores. Addressing these challenges often requires scaling up the business, which necessitates both private and public investments to ensure scalability on both the supply and demand sides.”

Boosting supply access and demand can lower prices, making organic products more affordable. Bringing in more participants and organizing the sector can also help with pricing. As prices align with conventional products, individual organic stores are likely to thrive more. Gaurav notes, “Organic stores are usually small-scale and located in less prominent areas, not main streets. This lack of density and limited product variety presents challenges to the business model, worsening the mentioned issues.”

Sharing his thoughts on the recipe for profitability for organic retailers, Gaurav says, “In general, the grocery retail sector is highly competitive and commoditized. It’s not for the faint-hearted. This applies equally to organic grocery retail. However, with increasing demand, acceptance, affluence, and awareness surrounding clean and healthy foods, we’re witnessing several factors that provide favorable conditions. Over time, with the right scale, supply chain, and efficiencies, positive outcomes are inevitable. Ultimately, upcoming retailers will recognize this and embrace sustainability. There’s no doubt about it.”

Regarding the operation of an organic food store via the franchise route, Gaurav underscores the courage required to run an organic business franchise. This is especially true given the anticipated low volumes in organic food retailing, which contrasts with the emphasis on volume in the food and grocery trade.

Taking a TOW franchise requires an investment of approximately INR 20,00,000. This investment is sufficient to open franchise store in a 500 square foot space. Typically, the operational break-even period for franchisees ranges from 3 to 6 months, contingent upon factors such as location and population density.

“Regarding our 4 franchised stores, we have observed positive developments from an operational perspective. Leveraging our scale, we have been able to strategically expand and source materials. This enables us to offer competitive pricing for fruits and vegetables that surpass what franchisees could obtain independently. By addressing these challenges at scale, we provide a significant advantage to our franchise owners,” avers Gaurav.

Plans for the Future

With a strategic vision to extend its retail presence beyond Bangalore to cities such as Hyderabad, Pune, and beyond, TOW has commenced its expansion plans in the short to medium term. Over the next 5 years, there are plans to launch a minimum of 100 stores. These stores will be strategically located in key cities, encompassing both Tier 1 and Tier 2 cities. “Moreover, we are committed to fostering entrepreneurship by engaging other individuals in this journey and empowering them to become entrepreneurs themselves. This initiative is a pivotal focus for us, and we are dedicated to its success, working diligently to realize this vision,” says Gaurav.

Asked if is considering any investors aside from the franchise model, or contemplating alternative funding methods for expansion, Gaurav says: “No, currently, our ownership structure is held and owned privately. However, as we progress and reach our milestone of one hundred stores, we will certainly entertain the possibility of involving investors.”

As per an IMARC study, the India vegan food market size reached US$ 1,324 Million in 2022. It is expected to reach US$ 2,463 Million by 2028, at a growth rate (CAGR) of 10.9% during 2023-2028. Tapping into this opportunity, TOW aims to get 10% of its total sales from the vegan category.

Speaking about the expansion, Gaurav says, “The decision to broaden TOW’s vegan product line is inspired by a growing interest among our customers. Initially, we expanded with fundamental products like tofu and chocolates and later extended our range to include more diverse offerings such as ice cream, bread, and beauty products. The rising popularity of the growing vegan market has led to the need for trusted vegan brands, which has significantly influenced and reinforced our commitment to this expansion so that we can serve our customers at every point in this journey.”

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