With an eye on growth, Spencer works on Natures Basket turnaround

Over the past year, Spencer’s Retail has integrated Nature’s Basket operations by embracing cross-selling, replicating parts of Nature’s Basket operations, and streamlining its stores.

Spencer’s acquired a 100 percent stake in Nature’s Basket from the Godrej group for Rs 300 crore last July.

Shashwat Goenka, Sector Manager – Retail and FMCG at RP-Sanjiv Goenka Group, said: which were unique but complementary to everyone’s offerings.

The Healthy Alternative brand, for example, has been launched in a few Spencer’s stores, which have added a specialty option to its existing line of private labels: Spencer’s Finest, Smart Choice, Tasty Wonders, Clean Home, Care & Essentialz and 2BMe.

The acquisition of Nature’s Basket came with private brands such as Nature’s, L’Exclusif and Healthy Alternatives accounting for 12.6 percent of its overall revenues.

The numerous integration measures have resulted in savings in areas such as (but not limited to) supply chain, technology, inventory management and marketing, Goenka said.

The other step in the restructuring exercise was to rationalize the non-viable stores. Spencer’s took over 36 stores from Nature’s Basket and the number is now 33, including a new store on Park Street in Kolkata.

Does that complete the rationalization exercise? Goenka explains, “Streamlining operations in any business is an ongoing process, and we will actively review the performance of the business. We took corrective action where we saw no potential for long-term recovery. ”

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So far, the acquisition has weighed on Spencer’s financial performance. In fiscal year 2019-2020, Spencer’s recorded a pre-tax loss of Rs 57 crore, while on a consolidated basis it stood at Rs 130 crore. The total income of the business was Rs 2,671.88 crore.

Spencer’s has two wholly owned subsidiaries: Omnipresent Retail India and Nature’s Basket. For the fiscal year ended March 31, 2020, Nature’s Basket achieved a turnover of Rs 268.67 crore and a pre-tax loss of Rs 69.31 crore.

However, the year was also marked by a slowdown and low consumer confidence. Spencer’s had ended fiscal 19 with a pre-tax profit of Rs 4.2 crore.

“We are working on a turnaround for Nature’s Basket, and the main areas of focus will be growth and cost optimization within the company. We have already seen a significant improvement between when we took over the business and now, ”said Goenka.

Spencer’s annual report mentioned that there was a noticeable quarter-over-quarter improvement in Nature’s Basket performance as revenue increased, inventory decreased, cash flow strengthened, the business turned negative. in working capital and losses were declining quarter over quarter.

Spencer’s believes Nature’s Basket’s business would gain momentum from that point on and soon reach breakeven point.

But as Spencer works to topple Nature’s Basket, plans are underway to expand the brand. Goenka says: “Nature’s Basket is a strong brand with enormous potential, and we will continue to develop the brand – both in the new micro-basins available in our existing operating markets and by bringing it to new cities, as we did when expanding into Calcutta.

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