Wednesday, June 19, 2024

Magson: Taking Gourmet Retailing To A New Level

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In the bustling landscape of Ahmedabad, Gujarat where tradition meets modernity, there exist a haven for food enthusiasts and grocery shoppers alike. Nestled in the heart of this vibrant city,MagSon stores, that collectively is a part of the 25-store chain specializing in Fresh, Frozen, Exotic and Chilled food products, can take shoppers’ mouths on the ride of their life. Located at key commercial and residential hotspots of 10 cities in western India like Ahmedabad, Thane, Udaipur, Gandhinagar, Anand, Rajkot, Jamnagar, Gandhidham, Surat, and Vadodara, MagSon’s 25 stores span more than 30,000 sq.ft. in the retail space with a total SKU count of over 3,000 units.

MagSon stores’ locations are based on the strategy to target cosmopolitan neighborhoods and high-end localities so as to attract the best of crowds. The stores have high-footfall and ground floor sites where the brand can establish its presence as a premium neighborhood gourmet and frozen food store. The broad strategy is to target areas of high population of expats, NRIs, tourists and International/global food enthusiasts.

Of the 25 MagSon stores operated by its parent company MagSon Retail and Distribution Ltd (MRDL), which is Gujarat’s largest retail chain of gourmet and frozen food, 15 are self-owned stores, 7 stores are run by the shareholders of the company who are also the stores’ individual owners, and 3 stores are operating as joint ventures.

With years of retailing experience and an unblemished record of delivering excellent frozen and gourmet foods to consumers, MagSon has earned a reputation for offering fresh and high quality products at the best prices.

Magson’s growth as a public company

MRDL is now a public limited company listed on the SME platform of the National Stock Exchange of India. It got listed on 6th July 2023. The Company is helmed by two partners – Rajesh Francis and Manish Pancholi. Francis serves as Managing Director and has over 25 years of experience in the Advertising, Banking, Restaurant, and Retail sector. He looks after Business Development and Finance department in the company. Pancholi is the co founder and whole time Director of MagSon. Along with Francis, Pancholi is the finance partner and has been the backbone of MagSon since its inception. Apart from its two co-founders, MRDL is grateful for the guidance of its mentor Raaj Maganlal, who was earlier a director but has now relinquished that position to take over the company’s white-labeling business. “He is our guru and has over 45 years of experience in Food Retail & Distribution business,” says Francis, adding that MRDL also has distribution business vertical for stocking, managing, and moving inventory for not only all its 25 stores but for other vendors and third parties as well.

Apart from MagSon, MRDL operates another brand called My Chocolate World. The brand was launched in September last year and currently has a single 1,000 sq.ft. store in Ahmedabad. MRDL has plans afoot to add 2 more branches shortly.

Ever since it turned into a public listed company, MagSon stores are being run by its shareholders who have a big stake and a vested interest in managing their stores successfully and profitably. In the initial years when Francis and Pancholi started expanding their store network, they had 4 self-owned stores while the other 8 stores in the brand network were operated by franchise partners. Then in 2019, with some 22 stores in its network of which 14 were franchised stores, MagSon merged all its stores to form a private limited company.

Under this model, all former franchise partners became shareholders of the company. “Now, we have moved another step ahead and become a public limited company from a private limited company, and all stores are being run by our shareholders who have a varied experience of 10-14 years running MagSon stores as former franchise partners,” informs Francis.

MagSon’s early journey

MagSon started off as a first-generation business by Francis and Pancholi who did not have any prior association with the grocery industry. “While our families did not have any previous association with this trade, I started my career by opening a restaurant cum frozen food joint in 2005 in Ahmedabad. From 2005 until 2009, I was into the restaurant business and into retail and distribution of frozen food,” says Francis.

During his five years in the restaurant and frozen food business, Francis discovered that retail and distribution of frozen food was more profitable than the restaurant business, which prompted him to move forward with the business of frozen food. “In 2009, I closed down my restaurant called Hot & Frozen and entered the frozen food retail and distribution business.”

Francis says that at the time when he first entered the retail and distribution of frozen food, there used to be only two stores in Ahmedabad selling frozen food products. The initial response to MagSon’s first store’s opening on 12th July 2009 was warm and positive. Enthused by the public reception, Francis soon turned his mind to expanding the store’s product basket and assortment.

“After initially starting with frozen food, I added and introduced imported gourmet food as well. We brought in products like mayonnaise, imported cheese, continental sauces like pasta sauce and Thai sauce, among other gourmet products. We were probably the only retailer at that time in Ahmedabad selling imported cheeses like Philadelphia Cream cheese, Gouda cheese, Emmental cheese, Brie cheese, and other varieties that no other retailer in the city was selling then,”says Francis.

How frozen & imported products find a ready audience in a city with a predominantly vegetarian food culture

 ‘‘When I opened my first store and launched myself in the retailing of frozen and gourmet food, my target audience was not the local and native residents who were traditionally vegetarians. I was targeting non-Gujarati, well-heeled immigrants into the city who loved eating non-vegetarian food. Also, our store was sui generis as it was the first store of its kind in the city that sold a combination of frozen and gourmet food,” recalls Francis. Deciding to sell frozen and gourmet foods in a city dominated by vegetarians was in itself a bold and an unconventional gambit.

In a city like Ahmedabad with a predominantly vegetarian-eating population, the potential customer base for a meat-focused frozen and gourmet food is significantly smaller. This can make it difficult for the store to generate sufficient sales and revenue to cover operating costs. “Yes, it was risky but I took on the bet that non-Gujaratis settled in Ahmedabad, who add up to a sizable number would find our store a good place to shop for their needs and fulfill their tastes,” says Francis.

Buyers who came to the MagSon store to purchase chicken nuggets or seekh kebabs discovered that it also sold mayonnaises and different kinds of sauces. And customers who bought burger patties also ended up buying burger mayonnaise and other complementary products. Soon, word began to spread around that MagSon was a specialist store dealing in all kinds of frozen and gourmet products, turning it into a destination for gourmet food lovers.

“To publicize our store we also did a lot of marketing and promotion by taking out ads in the local newspapers and by distributing pamphlets, which helped to attract the notice of food lovers to our store,” recalls Francis.

As MagSon’s first store was able to establish its business pretty fast and soon, the founders launched their second store on 23rd September 2010, just a little over a year, in a different locality in Ahmedabad. The size of this second store was 500 sq.ft. and it was located some 5 km away from the first store.

Drawing from their experience of running the first store, the founders brought in a new concept to the second store by adding a butchery section. The second store opened and it started selling fresh chicken and mutton from Day One. This proved to be a retailing masterstroke and it worked wonders for the store in terms of attracting meat lovers and pulling more customer traffic.

When the second store opened and people learnt about the in-store meat department, word spread like wildfire and meat lovers made a beeline to the store, which was the perfect antithesis to the grimy meat shops that existed in the city in those days, some 12-13 years ago. “The store drew in new customers from all over the city and many of them became our regular shoppers for both fresh meat and other gourmet and frozen products,” says Francis. He adds that not only was the public response to MagSon’s second store overwhelming, it created a snowball effect on the smaller first store. “Its brand visibility rocketed, leading to a perk-up in sales and performance. The success of our second store laid the ground for the brand’s faster expansion and growth.

MagSon’s elite customer profile

They say that the proof of pudding is in eating, and nothing exemplifies the adage more vividly than MagSon’s customer list headlined by the rich and famous. With over 14 years in the frozen and gourmet food retailing business, MagSon has a rolodex of high-profile customers and celebrities to show for. The list includes famous cricketers, top industrialists and business captains, celebrities and even the royalty.

“In Ahmedabad, even the Adani family shops at our stores and so are family members of Zydus Lifesciences, formerly known as Cadila Healthcare. Cricketer Parthiv Patel is also a customer. In Vadodara, cricketers Kiran More, Nayan Mongia, Irfan Pathan are all our customers and they regularly shop at our stores,” reveals Francis. MagSon’s store in Udaipur has the Prince of Mewar as a customer and it is also visited by the Princess of Jodhpur when she is in the city. “Similarly a lot of top officials including IAS and IPS officers also shop from our stores. That is the kind of reputation we have built as a store specializing in top quality frozen and gourmet food and it has helped us to build a very impressive base of discerning customers with a loyal following,” avers Francis.

An irresistible appeal for gourmet lovers

MagSon’s rich and varied product expanse includes Frozen food – Vegetarian and Non vegetarian; Premium Cheese and Dairy products; Exotic Vegetables and fruits; Ambient Products; Imported/ luxury Chocolates; and Imported packed products.

MagSon Fresh, the first jewel in this culinary crown, greets shoppers with a vibrant burst of colors – from exotic fruits and vegetables – to an impressive range of locally-sourced dairy, artisanal bread, and an array of condiments and spices that pay homage to the rich culinary heritage of Western India. Every visit to this section is a delightful voyage of discovery, an exploration of flavors that are as diverse as the land itself.

“MagSon provides access to hundreds of popular international and national food brands, with a wide range of gourmet, exotic, frozen and chilled food products under a single roof. These include cheese, dips, non-vegetarian foods, imported chocolates and confectionery, exotic vegetables and fruits, organic and healthy foods, premium dry-fruits, yoghurt, processed foods and imported beverages and cereals,” says Francis.

For shoppers stepping into the MagSon Frozen section, the store’s commitment to culinary excellence becomes at once apparent. What sets this section apart is its dedication to convenience without compromising on quality. From gourmet frozen meals that can be prepared in minutes to an array of ice creams and desserts that cater to every sweet tooth, MagSon Frozen transforms the concept of frozen food into a gourmet adventure.

For those seeking a culinary adventure beyond the ordinary, MagSon Gourmet is a gastronomic sanctuary. MagSon Gourmet isn’t just a supermarket section; it’s an invitation to elevate your culinary skills and explore the finest ingredients that the world has to offer.

MagSon Chilled is another delightful stop on the culinary expedition, where shoppers can discover an assortment of fresh meats, seafood, and dairy products that are nothing short of a foodie’s paradise. This section is a testament to MagSon’s unwavering commitment to quality and food safety, ensuring that every bite is as delicious as it is safe.

MagSon has also introduced 2 white labels products – RF Gourmet and My FAV, which was launched recently. RF Gourmet is MagSon’s own brand and includes a range of premium products such as French Fries, Fiery Fries, Chilli Garlic Potato Shots, Delhi Aloo Tikki, Veggie Burger Tikki, Chunky Fries, Eggs, and a range of Chicken Seekh Kababs.

By acting as a one-stop shop for the widest range of niche vegetarian and non-vegetarian foods, imported and premium food products with the highest focus on quality, sourcing, importing, selection and merchandising standards, MagSon is redefining modern-day food retail and food lovers’ shopping experience.

In-store experience and customer-first approach

The smallest MagSon store measures 360 sq.ft. while the largest store is in Udaipur spanning 3,300 sq.ft. which opened 3 years ago. Irrespective of their size, all stores follow a uniform design and layout, which creates a consistent brand identity across all store locations. This consistency helps customers recognize and trust the brand, whether they are shopping at the flagship store or a branch in a different location. Uniformity in store design and layout also simplifies store operations. Employees can be trained more efficiently, and they can move between store locations with ease, as they encounter the same processes, procedures, and layouts.

“To add to the shopping experience, we maintain a standard shopping experience across all of our stores to make customer shopping easy and quick,” adds Francis.

MagSon’s merchandising strategy for allocating shelf space is mostly store-specific and depends on the store’s locality, customer demand and seasonality. MagSon stores have a dedicated shelf space for healthy snacks, showcasing them prominently. This visibility increases consumer awareness and accessibility for such products leading to higher off-take and demand.

‘‘People are more informed about the nutritional content of foods than ever before. They often read labels and look for snacks that are lower in calories, sugar, salt, and unhealthy fats, while also being higher in fiber, protein, vitamins, and minerals. As such, healthy snacks are experiencing significant popularity and sales growth due to a combination of consumer trends, lifestyle changes, and evolving dietary preferences, ” points out Francis.

To increase the reach and promote its products to a wider audience, MagSon frequently organizes flagship events. Examples of such events in the recent past include the MagSon Grand Festive Food Fest, MagSon Tasty Shopping Fest, MagSon World Food Shopping Fest, MagSon Big Chips and Dips Shopping Fest, among others. These events allow us to explore multiple co-branding opportunities with our partners and offer greater value to our customers, thus incentivizing footfall and customer acquisition to a great extent,’’ says Francis.

This year itself, The US Department of Agriculture (USDA) promoted their property called “Taste of America” in Ahmedabad, and they chose to roll out their campaign across MagSon’s 25 stores. The campaign was hugely successful and generated a lot of publicity and awareness for US-based food products in India. Following that success, there’s another promotional campaign on US-based blueberries that is currently running across our stores. The important part of these campaigns is that it’s being done in Indian nonmetro cities for the first time and they chose to launch it in Ahmedabad across our stores, which is very heart-warming and encouraging. It’s a very big achievement and a great value-addition for the MagSon brand and its stores,” reveals Francis.

Commitment to quality supported by strong distribution network

MagSon’s parent company MRDL operates a Distribution Center from its rented warehouse in Ahmedabad, which is more than 14,000 sq.ft., from where it manages its inventory management systems to keep track of products’ movement accurately. The warehouse also houses a dedicated 25,000 cubic foot cold storage area to maintain the frozen temperature of the food products.

MRDL has a subsidiary arm by the name of Maximum Retail Distribution Ltd, which acts as distributors to the stores owned by its shareholders and also to other retailers. “We supply our partners the products they need at their stores and they pay us the distribution fees but we don’t charge any royalty fees from them,” says Francis, adding that it earns the distribution margins by supplying to its shareholders and the other retailers from its Distribution Center.

The retailer’s strategy is to buy products directly from the importers, which is supplied directly to its Distribution Center, and from where the goods are channelized for distribution across all its 25 stores. This is the pattern being followed all along ever since the brand’s inception. The advantage of following this strategy is that the retailer has been able to eliminate the role of intermediaries like distributors, and save on the margin that it would otherwise have to pay to distributors

MagSon sources raw materials from only reputed suppliers and it asks for quotations from multiple suppliers. As a policy, it procures a major part of raw materials from selected suppliers and typically avoids entering into long term agreements with suppliers. “We track the supply-demand dynamics and regularly negotiate prices with our suppliers in case of significant fluctuations in raw material prices or foreign currency fluctuations,” reveals Francis.

MagSon’s imported, frozen, and chilled products are supplied directly by a network of around 60 vendors to the company’s distribution center in Ahmedabad. Products such as eggs, dairy and juices are supplied to the stores directly and constitute its direct store supply products.

About 80% of its products are sourced directly from the manufactures, thereby eliminating the role middle men and distributors, thus enabling the brand to offer products with the freshest quality and at a competitive price to the customers, besides also maintaining a good profit margin.

Gourmet foods require specific storage conditions to maintain their quality and freshness. “We have temperature control facility in our warehouse. Quality control is critical when dealing with gourmet foods and frozen food, so in our warehouses we have rigorous quality control measures in place. This includes testing products for freshness, taste, checking the expiry of product and overall quality before they are shipped to customers,” reveals Francis.

MagSon’s Distribution vertical is also focused on its own-store products under the RF Gourmet and My Fav labels. Products under these white label brands are sourced from top vendors, which ensure premium quality and are packed and marketed by MagSon under these brands. All the products under these 2 white label brands have been introduced after analyzing the prevailing market gap and increasing demand for MagSon products.

Retailing challenges

‘‘The biggest challenge that I faced when trying to set up my first few store branches in Ahmedabad was finding a suitable rented space. There was a strong reluctance on the part of landlords to rent out their premises to a store that also sold nonvegetarian food. Many property owners were just not open to the concept and could not understand our value proposition,” says Francis.

Traditionally, Ahmedabad is a city populated and dominated by non-meat eating people. In cities with strong vegetarian or vegan communities, there is cultural or ethical opposition to the sale of meat products. Property owners and landlords are hesitant to lease space because they nurture preconceived notions and are apprehensive that a store selling non-vegetarian products would probably have low cleanliness and hygiene standards that would reflect unfavorably on the image of the property and cause negative publicity.

In fact, even today after opening 25 stores, Francis says he still faces a stiff challenge in getting the landlord agree to rent out the property for opening a store.

“Another challenge in our early retailing days was finding the kind of importers to tie up with for our imported foods. But I was able solve this issue in our favor thanks to my habit of attending various food trade exhibitions and industry events. I have been attending Aahar –The International Food & Hospitality Fair every year since 2005 – and other food events like Gulfood, Annapurna, and India Food Forum, which has helped us connect with a wide set of importers and suppliers. We share a very good rapport with all leading food importers and distributors in India,” says Francis.

Committed to technology investments

The company has invested in software and technology for customer relationship management, inventory management and other internal controls to manage the retail business efficiently and stay connected with customers. It has also developed a mobile app for online orders, where the customers can view the wide range of products and place orders, locate stores and get updates on products and offers.

MagSon’s 25 stores now are connected by single software, which integrates all stores under one centralized system. This way, the retailer can gather good analyses and data across its entire store network on different retail metrics like sales, demand, inventory, movement of products, fulfillment rates, customer preferences and buying patterns, and so on and so forth.

The retailer is constantly working to delight its customers and a major part of its operational efforts is to optimize the availability of stocks at all times, at each point of its supply chain. It has managed to efficiently tackle this with the help of its adaptive information systems and reliable forecasting methods, which have resulted in the successful backward integration of its operations.

MagSon has also started testing the use of business analytics to make more informed in-store merchandising decisions so as to optimize first-time conversions across varying seasons for offering attractive loyalty programs for its customers. Through the software that connects all its stores with its centralized server, it is able to track the sales performance of stores, their footfalls, peak sales periods and also the times when sales are slow. It can analyze all this data to boost operational efficiency and sales growth.

MagSon started its online ordering business with effect from 17th March 2020. The online business is yet to pick and currently the online ordering business is still in the initial stage contributing just about 2% of total sales. “We are today open for online orders at places like Surat, Vadodara and Udaipur. For Ahmedabad, we are in negotiations with an online App player that enables retailers to compete in today’s digital commerce landscape with ease, through its advanced, cloud hosted platform. If everything goes well, we will start our online play in Ahmedabad, Rajkot, and other cities by December,” reveals Francis.

The road ahead

MagSon has kept its eyes on the best retailing practices put in place by different players in different parts of India and even overseas. It has tried to replicate some of those practices into its own systems with an eye to providing the best services and solutions to its customers.

Since MagSon entered the food and grocery business some 14 years ago, a lot of new players have entered into food retailing in Gujarat and in cities like Ahmedabad. This trend became more pronounced during the covid-pandemic because food and grocery was one of the select businesses that were allowed to run unhindered during the pandemic, which induced many players to throw their hat into the ring. But today, a majority of these new players have exited the business, the reason being that while they were lured by socio-economic lure of the business, they had not grasped the way to run this high volume-low margin business successfully.

“During the two years of covid, we opened 7 new stores and expanded some of our smaller stores. To give an example, we were running a store in the Chandkedha locality of Ahmedabad, which we relocated and expanded to a 1,200 sq.ft. store from its earlier size of 440 sq.ft. In fact, we have added more space to some four stores in Ahmedabad alone. Similarly, we have added more space to our stores in Rajkot and opened a new store in Surat,” discloses Francis.

Ahmedabad remains MagSon’s top profit engine among all its stores located in different markets followed by Surat.“We opened our first store outside Gujarat in Udaipur, Rajasthan three years ago. We have plans to soon enter Madhya Pradesh starting from Indore first and moving to Bhopal next. As per the plans, we will have our new store in Indore by December this year” reveals Francis.

By 2026, MagSon plans to add 25 new stores in the stable. These stores will come up in different parts of Gujarat, Madhya Pradesh, Rajasthan, and Maharashtra, where the brand is already currently operational and has existing stores. Most of these stores will operate under the franchise/shareholder model followed by the company since it turned public. “We estimate that our turnover will touch around Rs. 120 crore in another two years from now. We are working on it in a much focused way and we will achieve our targets,” signs of Francis.

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