Friday, June 14, 2024

The NEW Shop’s Vision Beyond Borders: International Expansion and IPO

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In the ever-evolving retail landscape, The NEW Shop (TNS) stands resilient, symbolizing global  vision and transformative success.Overcoming initial hurdles, TNS is redefining convenience retail with visionary leadership and innovative strategies, boasting a unique franchise model fueling its growth to 150 strategically located stores in India.

Celebrating this triumph, TNS hosted its inaugural Entrepreneurship Conclave, spotlighting core growth pillars: hypercustomization, efficient setup, technological innovations, among others. Notably, TNS unveiled its global expansion plans and an impending IPO that will reserve 2% of shares for franchisee partners.

In the ever-changing world of India’s grocery retail, The NEW Shop (TNS) has crafted a story of resilience, innovation, and remarkable growth. The tale of Aastha Almast and her founding team at TNS is a shining example of how their visionary entrepreneurship has transformed challenges into opportunities.

After facing setbacks with two earlier start-up ventures, the TNS founding team sat down in 2018 to conceptualize The NEW Shop, culminating in the establishment of their omnichannel, 24/7 convenience retail store chain a year later in 2019.

The turning point for the founders had come during a pivotal meeting with Kevin Harrington, a luminary in the entrepreneurial realm and the Original shark and investor at Shark Tank (USA) “As Tech Founders, you guys often pursue ambitious dreams. However, it’s important to recognize that Tech serves as an enabler.

Instead of merely chasing dreams, why not utilize technology as a mechanism to bring about positive change in your country? The retail and FMCG sectors are incredibly powerful. By employing technology, you can revolutionize and bring order to the currently disorganized sector in your country, leading to something immensely powerful and rewarding.”

Harrington’s sage advice set the course ablaze for the three founders. With a renewed vision and determination, Aastha and her team came to view technology not merely as a tool but as a catalyst for positive change in the country. Fueled by Harrington’s inspirational guidance, the three-person entrepreneur team embarked on the audacious mission of redefining convenience commerce in India. The journey, as it has unfolded over the past four years, has seen The NEW Shop evolve from a nascent venture into a trailblazer of runaway growth in the grocery retail sector.

A story of transformative franchise-led growth

At the heart of their success lies a unique franchise model that has propelled TNS into a network of  over 150 sleek and modern convenience stores. Strategically positioned at major transit hubs, including railway stations, airports, highways, tourist attractions, and petrol stations, as well as dense residential clusters, TNS has embedded itself into the fabric of Indian daily life.

TNS operates through Franchise-owned and operated model, while it operates company-operated stores at some marquee locations. The stores, ranging from 600-800 sq.ft., boast an inventory of 2,000 SKUs on average. Impressively, the average monthly revenue per store stands at Rs. 15 lakh, with sales per sq.ft. reaching a remarkable Rs. 2000 — far surpassing industry standards.

The stellar business economics of TNS has created a magnetic pull, attracting a swarm of entrepreneurs eager to align themselves with the brand through franchise partnerships. In the matrix of aspirations and opportunities, The NEW Shop has emerged as an exemplar of  transformative entrepreneurship, a testament to the dynamic fusion of ambition and impact.

As The NEW Shop continues to redefine the grocery retail landscape, its story stands as

a beacon of inspiration, proving that with determination, technological innovation, and a commitment to positive change, one can transform setbacks into triumphs in the ever-evolving world of business.

In a celebration of their successful expedition into franchise-led retail, TNS recently organized its inaugural ‘TNS Entrepreneurship Conclave’ in the heart of Delhi. This event served as a rallying point, uniting current and prospective franchise partners in an immersive evening of camaraderie. Designed to cultivate an open exchange of ideas, the conclave provided a fertile ground for discussing and exchanging insights on optimizing shared objectives and mutual interests. With a vision to fortify the ties within the TNS franchise family, this initiative breathed life into a collaborative spirit, which will propel the brand towards new horizons.

TNS’s impact in creating entrepreneurs

For Aastha Almast, the visionary force behind driving this new-wave retail revolution, The NEW Shop is more than just a brand; it is a catalyst for empowerment, a conduit for dreams to metamorphose into reality.

“I’m super excited to be here today, as the conclave becomes the catalyst propelling the spirit of entrepreneurship among our cherished existing and potential franchise partners. It’s not just an event; it’s a cause that resonates deeply with me. My vision is to empower 10,000 entrepreneurs in India by 2030 through the The NEW Shop franchise network,” exclaimed Aastha with contagious fervor.

Explaining her zeal for encouraging and fostering entrepreneurship, Aastha reminisces about what her maternal grandfather used to hark at: “Become a job creator, not a job seeker.” The NEW Shop’s journey is an ode to this philosophy. “Our mission is clear – to create more kings and queens of their own lives, steering towards wealthiness and an elevated standard of living,” avers Aastha.

Having laid the foundation for entrepreneurship, The NEW Shop currently prides itself on a network of 150 entrepreneurs who own and operate TNS stores across various regions in India. What’s particularly noteworthy is that 10% of TNS franchise owners are women. A proud moment for Aastha, who recently encountered a female franchise owner from Allahabad (now Prayagraj), who said, “I’m the highest bread earner in my family now.” The resonance of empowerment reverberates, echoing the sentiment that lie at the heart of The NEW Shop’s mission – to make people sovereigns of their own destinies, architects of their wealth, and purveyors of a better standard of living.

Acknowledging India’s latent passion for entrepreneurship, Aastha says she was struck by a revelation some years ago when reading a report – a staggering 80%-83% of Indians harbored aspirations to be entrepreneurs, yet societal complexities and cultural mores often curtailed these dreams. Recognizing this untapped well of potential, The NEW Shop has set out to redefine the narrative, not aspiring to create unicorns but to empower individuals, to elevate lives, and foster prosperity.

“In the TNS franchise-led retail model,” Aastha says: “The NEW Shop has found a medium to weave people’s entrepreneurial dreams into the fabric of reality. Franchising, for many, is not a quest for creating unicorns; it’s a pursuit of wealth, a desire to elevate living standards. Through The NEW Shop, the brand has positioned itself as a solid ‘Made in India’ entity poised to impact the lives of people in the country. At its core, The NEW Shop is a movement, a grassroots initiative that breathes life into the entrepreneurial spirit, and aims to create

hundreds of success stories.”Aastha paints a vivid picture: “Here’s a fascinating nugget – all our entrepreneurs are under the age of 35. Many are college students or spirited young individuals who realize that while a corporate job may offer 30,000 40,000 or 50,000 rupees, TNS franchise ownership gives an opportunity to take home a lakh or 2 lakh rupees per month. Now, that’s a huge difference, isn’t it?”

Looking ahead to further expand its network of franchise stores, which is growing at the rate of 15-20 new stores per month, TNS has put a laser-like focus on two aspects of the business: Hyper-customization and Hyper-localization. As The NEW Shop continues to expand, it has recognized that franchising is the key to growing the brand. The reasoning behind this is simple: an entrepreneur in a specific region understands their customers far better than the TNS leadership team sitting in air-conditioned offices at their head office in Delhi. “This distinction became evident when comparing the company-operated stores with franchise-operated ones. While our company-operated stores are profitable and generate a certain amount of revenue, the real game-changer happened when we transitioned a store to a franchise-operated model. With our approval, the franchisee made about a 20% change in their product and service mix. The outcome was astonishing — a remarkable 40% increase in revenue. This hyper-local customization, where the person running the store directly engages with the customers, turned out to be immensely successful. They understand the local market better than we do,” admits Aastha.

In essence, TNS’s belief is that businesses empowering grassroots-level entrepreneurshold the key to understanding consumer needs. It’s impossible for them to know everything about every part of the country from their central offices. Even within a region like Delhi-NCR, TNS operates six stores in Meerut, each serving customers within a 1.5 to 2 km radius.

“Every customer to us is a franchise partner, and they unfold a unique narrative about what the local customers desire, even down to the specific spice levels in dishes like butter chicken or pasta. It’s incredibly diverse, and we realized that the answer to this complexity lies in letting the entrepreneur decide how to grow the business,” explains Aastha. Significantly, 47 out of the 150 TNS stores have originated from franchise referrals, showcasing the impactful role of recommendations in the network’s growth.

TNS expansion strategy: Hypercustomization and hyper-localization

However, to ensure that its franchise partners don’t incur losses, especially considering that most retailers in India operate at a loss, TNS is approaching its expansion strategy with caution. “We were hesitant about having someone invest their money and potentially face losses. Therefore, we decided to operate the store for them initially, adopting a kind of build-operate-transfer model. The idea was to assess whether we were providing the right technology, infrastructure, and products,” says Aastha.

To test-bed its approach, TNS took on itself to run its first store in Meerut, for the initial three months. Fortunately, it turned out to be profitable, reassuring the leadership team about the viability of their approach. “We analyzed the potential return on investment, estimating it to be between 18 to 24 months. This success story is unique to convenience retail in India, and perhaps globally, as this store continues to thrive, maintaining profitability and experiencing double-digit growth. The key lies in addressing the just-in-time needs of consumers,” avers Aastha.

Formula for sales increase and franchise prosperity

 Aastha’s articulate depiction of TNS’s triumph in the realm of franchise-led retail found an enthusiastic resonance among the myriad franchise partners gracing the TNS Entrepreneurship Conclave. Among them was Sachin Rana, owner of a TNS franchise store, who also doubles up as Operations Manager at TNS. Sharing his success story, Rana said that despite joining TNS during the challenging times of the pandemic, when retail operations faced industry-wide difficulties, TNS succeeded in adapting its operations to be Covid-proof. Remarkably, even during the pandemic, Rana’s store witnessed a significant 33% increase in sales, turning the crisis into an exclusive opportunity.

Expressing gratitude for the chance to own a TNS franchise under their “Employee to Entrepreneur” scheme, Rana emphasized how this experience has enriched his journey into entrepreneurship. He extended his thanks to TNS for the transformative opportunity. Continuing with his narrative, Rana highlighted TNS store operations, emphasizing the focus on sales figures, top-performing categories, brands, and products. He noted that the sales figure for TNS in November 2023 reached an impressive Rs. 11 crore 59 lakhs. Focusing on sales strategies, he emphasized key parameters, highlighting that 30% of sales come from three specific categories, with beverages leading the way. Notable brands and top-selling products like Amul milk, energy drinks, and burgers were discussed as key sales driver for TNS’s convenience retail model.

Addressing TNS franchise partners among the audience, Rana said: “What parameters can you check regularly to further improve your store sales? You all know that our store has multiple categories but do you know that 30% of our sales are generated from only 3 categories – where beverages are the topmost leading category, and we are selling 5,500 beverage bottles on daily basis.”Discussing the top-selling brands at TNS, Rana emphasized strategic brand focus as key to optimizing the performance and profitability of the store. “While our store features 500 brands, Amul stands out as the top seller, holding the #1 position. We are consistently generating sales of Rs. 10,000 every hour from Amul alone. By prioritizing and focusing on your top 3 selling brands, you have the potential to enhance foot traffic in your store and substantially increase overall sales.”

Next, Rana spoke about the fastest-moving products at the store. “Let me share with you the products that are flying off the shelves every minute. Once again, Amul milk takes the lead, with a remarkable rate of selling 3 packs of milk per minute. Following closely is our energy drink, where a jar can be sold out in just 1 minute, and then comes our high-margin item – burgers. To give you an idea, we’re proud to say that we sell 3 burgers every alternate minute. This trend is not just a momentary spike; it’s indicative of future success. In fact, we’ve already sold out 3 burgers even before we finished cooking up the recipe for Maggi. This highlights a consistently strong demand, making it an excellent sales proposition for us.”

Rana unveiled yet another insight: Operating 24/7, TNS achieves a substantial 40% of its sales within a concentrated three-hour timeframe – between 10 pm and 1 am, every day of the week. A relatable analogy is watching Netflix at night – if someone starts a series at midnight, by the time they finish, the store will likely have hit 40% of its sales. Recognizing this pattern is crucial for maximizing store sales, and cashing in on the trend could potentially lead to a 10 or 20% increase in sales. He emphasized the importance of understanding and leveraging these parameters as essential for maintaining a strategic focus on sales growth.

Impressive set-up time and cost efficiency

Addressing the franchise partners, Vivek Kant, who heads real estate projects for TNS, shared that the convenience retail chain stands out in the industry for its remarkable store set-up time and cost. This dual accomplishment shows TNS’s commitment to both aesthetic excellence and operational efficiency. “We’ve got an impressive network of 150 stores, and we have a set-up time of just 20 days against 60 days by other brands to set up this kind of store plan. We take pride in building a store at Rs. 15 lakh, a stark comparison to the Rs. 60-70 lakh expenditure seen with other brands. This commitment to cost-efficiency is a testament to our dedication to providing value without compromising on quality and aesthetics.”

Kant highlighted that TNS has received numerous awards for its premium store design, and this recognition is well-deserved. He explained, “Our success is rooted in the careful investment of time and effort into scientific research on elements like color palette and lighting, ensuring that our space stands out and has been recognized as the best store design in the industry. But it’s not just about design; we’re also proud to be recognized as the most cost-efficient store in the country.”

Reflecting on TNS’s commitment to smooth operations and the overall reliability of its services, Kant noted the importance of meeting deadlines amid rapid expansion and said that TNS vendors are now organized state-wise to streamline operations. Sharing concerns about machine breakdowns, he reassured that proactive measures, including training sessions and quarterly visits from equipment brand partners, would alleviate approximately 50% of such issues.

Additionally, he shared that TNS is actively working on finalizing annual maintenance contracts, aiming to manage unforeseen expenses more efficiently during machine breakdowns. To tackle machine challenges, Kant disclosed ongoing work with brands to introduce smart AI-equipped devices. These devices will offer outdoor temperature updates and fault notifications, streamlining maintenance processes at TNS stores.

“Our training team is here to walk you through the guidelines, and I can assure you that half of the issues at the store and with the machines can be resolved through troubleshooting. Often, the problem lies in your store staff not recognizing that certain issues can be troubleshooted, leading to an increase in complaints. Regarding our equipment partnerships, we’ve scheduled quarterly visits to service the machines, a crucial practice that we’ll be implementing starting next month. It’s a must for everyone – addressing machine issues promptly prevents them from escalating into major problems. Regular visits ensure most issues are nipped in the bud.”

Another TNS initiative involves innovative merchandising solutions, particularly addressing slow service in the cafe section. A smart equipment designed for ready-to-eat cafés will be displayed at the cash counter, ensuring efficient service. The café team will further discuss recipes and its implementation with all franchise partners.

Kant also unveiled TNS’s upcoming expansion plans across India and internationally, introducing the innovative “store in the box” concept. This portable store, foldable and easily installable within 5-6 hours, aims to simplify store deployment and international expansion. “We’re gearing up to introduce a groundbreaking concept where we pack the entire store into boxes and dispatch it in a 10-feet vehicle once we receive an order. This innovative approach includes making all our assets, like racks, gondolas, counters, etc., foldable and easy to assemble. It takes just 5-6 hours for anyone to set it up. Plus, it’s designed for flexibility – if you ever need to shift it to another store, we’ve got you covered.”

Technological innovations: POS, ticketing, and customer experience

Yogesh Mehta, TNS’s IT Manager and Trainer, remarked that the conclave serves as an opportunity for all franchise partners to look ahead into the possibilities of the future. “I am delighted to announce that TNS stands as the world’s first company to boast its own Point of Sale (POS) option. As a successful company, our prowess in Information Technology is unparalleled, evident in accolades like the 2023 Coca Cola Golden Spoon Award for technology implementation of the year.” Mehta shared some recent updates that TNS has implemented on the technology front.

The first challenge, he said, that franchise partners face is the issue of one-way communication. “It was unclear who to contact for assistance. To address this, a ticketing system has been implemented. Now, if assistance is needed from any department, a ticket can be raised, and the TNS IT team will promptly resolve the issue. While some problems can’t be resolved through the ticketing system, such as billing or issues with the Goods Received Log (GRL), a 24-hour helpline is in place. Customers can call anytime to get a swift solution to their problems.”

In a strategic move to amplify human interaction, TNS has designated a specialized team that is avaliable 24/7 to address technology and IT-related concerns specifically within franchise stores. This ensures personal and attentive service. With regard  to customer transactions, certain franchise member have encountered perplexity concerning the precise transparency amount to collect from customers. “A streamlined solution has been implemented — now, not only can payments be seamlessly processed at the TNS store,, but there is also the capability to maintain comprehensive record of each customer’s outstanding balance. This innovation eradicates any ambiguity regarding the exact amount owed,” shared Mehta.

When it comes to preparing fresh food, TNS has implemented a new approach that will contribute to transparency within the community. “The ingredients from our café used in burgers, sandwiches, and wraps, which were previously not subtracted from the inventory system, now have a solution. When a burger or sandwich is prepared, the system will automatically deduct the exact quantity of ham patties and filling in grams, ensuring accurate tracking of the ingredients used,” said Mehta

Talking about integrating TNS’s online orders with Zomato, Mehta said: “When a customer places an order at TNS, the current process involves our staff handling the delivery, impacting our workforce. However, in the near future, Zomato riders will take care of the delivery. This means that when a customer orders from TNS, there will be no need to deploy our own staff.”

He added that currently, managing orders from different platforms like Swiggy, Zomato, or Magicpin involves opening separate tabs in the system, making the process complex. However, on the TNS dashboard, all orders, regardless of the platform, are now efficiently logged and managed, simplifying inventory tracking. Referring to the accounting system, Mehta said that while it was initially a challenge, a solution has been found now. “We are actively working on a feature that will allow you to download any file related to your profit and loss, streamlining the accounting process. Additionally, you will have the capability to import files from any accounting feature, providing further flexibility and ease of use.”

Discussing the range of services offered by TNS stores, Mehta highlighted that features such as ticket booking and courier services will be seamlessly integrated. “This integration aims not only to enhance the foot traffic to your store but also to boost overall sales. In addition to making purchases, customers will have the convenience of booking various tickets — be it for buses or trains — directly at our store. Furthermore, if they need to send a courier, the process can also be completed efficiently from our shop.”

Food and beverage strategy: Trends, challenges, and innovations

Saurabh Bhattacharjee, Corporate Trainer at TNS, shared some crucial information about food and beverages. Leveraging insights from a recent survey of 30,000 consumers, he underscored a compelling trend: 28% of TNS customers, predominantly Millennials and Gen Z individuals, under the age of 35, purposefully visit the store for its exceptional food offerings, positioning this category as the highest-margin segment.

Bhattacharjee emphasized the uniqueness of their F&B offerings, pointing out the cost-effective setup of cafe stores and the swift return on investment within 2-3 months. Enumerating five challenges, Bhattacharjee discussed  the following issues:

-Data forecasting

-Quality maintenance during dispatch

-Adherence to SOPs for taste consistency

-Low F&B orders impacting fee charges

-Need for strategic implementation of processes across all stores

To address time constraints faced by customers, TNS has now introduced a new “on-the-go” food with a specific take-out cafe menu, featuring items like processed sandwiches and waffles. He revealed plans for a 24-hour experience center with professional chefs to train franchisee owners and staff, along with a do-it-yourself machine allowing customers to create products like smoothies and shakes. Bhattacharjee also detailed the work done by TNS on various robotic steps to streamline recipe generation, significantly reducing preparation time to 2 minutes and minimizing dependency. The audience was treated to a live demo showcasing the efficiency of the process.

Incentives and royalty payment

The interaction between TNS representatives and their franchise partners concluded on a positive note with TNS unveiling several incentive plans to reward franchise sales. The sales team will establish targets, and incentives will be granted upon achieving these goals.

Additionally, TNS is introducing a cash-back system for paying royalties.

A crucial development is the adjustment of the royalty date. Recognizing the initial workload in the first week, TNS is modifying the royalty date to alleviate any excessive burden during this period.

Next chapter: Global expansion, IPO ambitions, and stock ownership

As TNS basks in its current success, attracting eager entrepreneurs with its distinctive franchise model, Mani Dev Gyawali, Co-founder & Technology Head, The NEW Shop, brought a dose of reality. Reflecting on their journey, he acknowledged the trio of failed startups preceding The NEW Shop’s triumph, emphasizing the mental and physical toll entrepreneurship can exact, especially for first-timers. Gyawali stressed the unwavering determination needed to surmount challenges and thrive in the entrepreneurial landscape. However, despite the hardships, Gyawali urged franchise partners to seize the moment and approach the future with optimism. He unveiled TNS’s upcoming chapter, envisioning expansion beyond national borders into the international market.

Disclosing plans for The NEW Shop’s global presence, Gyawali said: “TNS will target South Asia initially, including countries like Nepal, Sri Lanka, Bangladesh, and eventually venture into Africa and Eastern Europe. Moreover, we have outlined an ambitious timeline, aiming for an IPO within four years, with a distinctive twist — allocating 2% of the shares for franchisee partners.”

Kevin Harrington, the inspirational force behind TNS’s journey into the world of 24/7 convenience retail and quick commerce, sent a heartfelt recorded message, extending his congratulations to the TNS team for their continuous triumph in the retail arena. “I want to share my experience and talk about our investment in a company called The NEW Shop. It became evident to me that shopping for everyday items in India poses unique challenges, especially when compared to the retail setup in developed countries. The scarcity of convenience stores in India is a notable concern. That’s why I decided to support TNS, the largest convenience shop pioneer in India, as it is actively working to bridge this gap.’’

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