‘India’s retail landscape is highly influenced by local cultures and regional diversity’: More Retail MD Vinod Nambiar

Vinod Nambiar is the managing director of More Retail in India. He brings in a rich experience of more than 35 years of transformational leadership experience across top consumer goods and retail companies. Nambiar has been leading More Retail through a period of significant transformation, positioning it as a leading omni-channel food and grocery retailer in India since 2020.

Nambiar has had rich international and national experience. He spent more than two decades at Colgate Palmolive, where he led regions of increasing scale and complexity, spanning Romania, Italy, Greater China, and the broader Asia Pacific region.

Equipped with an MBA from IIM Calcutta and a Bachelor of Engineering from BITS Pilani, Nambiar is known for his ability to build and grow businesses in diverse markets.

In a freewheeling conversation with THE WEEK, Nambiar touches upon different aspects with regard to the retail segment in the country and also organised retail in India and why both online and offline segments will continue to flourish in the retail segment in India.

 

Q/ More is expected to go in for an IPO in the near future. What is the aim for this IPO and what will be achieved through this IPO? Broadly how this IPO help in your go-to-market strategy in India?

 

A/ We plan to go public in the next 12 to 15 months. Over the last three to four years we have built a good business model and a profitable model but now we believe that we need primary capital to build our network and to fund our expansion.

In the next 12 to 15 months, we plan to around 150 stores. The IPO will enable us to raise primary capital to fund new store expansion in our existing geographies and penetrate further into Tier 2-3-4 towns. The IPO will allow us to bring our unique blend of great prices, convenience and large selection to even more customers.

Modern trade retail in India is still very nascent compared to the West and parts of Southeast Asia. So IPOs in retail in India have been very few. For instance, DMart went public around a decade ago. Part of Zomato's food service went public around two years ago.

Nykaa went public and recently Vishal Mega Mart also went public. There have been good and successful public offerings but I would still say that retail IPOs in India are still very new and we have ample opportunities to tap the capital market over the next decade.

 

Q/ You have a hybrid business model with both online and physical stores. How do both the models fare and which is getting more traction and why? Is the trend the same for both urban and tier 2 and 3 cities, do people in smaller towns prefer more physical stores than online shopping?

 

A/ We have a hybrid business model which allows us to serve the consumer in a way that they prefer to shop. We are a neighbourhood store—we are at a ten-minute walking distance from one's home, customers can come to our stores and enjoy a vast selection of products at good pricing.

Amazon is our shareholder and we are the fulfilment partner for Amazon Fresh. Amazon offers a two-hour slot in delivery.

The hybrid model is just a business model—the shopper may or may not be hybrid. It allows us to use the same store for offline and online business. This is economically very progressive. Consumers in metro cities are far more online today than they were and the pandemic accelerated that phenomenon.

However, it is no longer a metro phenomenon—it is now present in tier 2 and 3 locations. We serve online even in small towns today. Today, if one goes to small towns in Karnataka, and if Amazon Fresh is available in those towns, it comes through us. We have built that business model for years.

Through our hybrid business model, we are able to leverage the same infrastructure to serve both offline and online demand without compromising customer experience in either channel.

This is due to our own technology stack that we have developed and the technology-enabled processes we have in place. As a result of this, 25 per cent of our sales now come from Amazon Fresh with Amazon's share in metros at 35 per cent and 14 per cent in the rest of India.

Due to our hybrid model, we are gaining share in metros from both offline and online retailers as we are growing at 35 per cent YoY on a Like-to-Like basis (Q3 FY25). In tier 2 and 3 towns where online shopping penetration is lower, we are driving online shopping behaviour by providing an option to order Amazon Fresh while also offering an in-store shopping experience for the majority of customers who walk into our stores.

 

Q/ What kind of level of competition do you face from the quick commerce segment? Is it eating up on your business or do you also plan to venture into it gradually? Can you give an overview of the quick commerce segment in India? Is it really a threat to the conventional retail segment?

 

A/ I think of quick commerce as one metric of the consumer. Consumers want good pricing and they tend to add selection, the consumers tend to add convenience. I think quick commerce is a metric of convenience if one orders one gets it in 10 to 15 minutes. However, that is only one factor. We definitely believe that online commerce is important. We currently do two-hour commerce and despite not doing ten-minute commerce we are growing as fast as them. I do not think that it is eating into our business. It is possibly eating into the traditional trade though I do not have facts but I suspect that the pie is not growing as fast as it should.

 

Q/ What are the recent trends in the Indian retail segment and how does it fare when one compares urban versus rural demand? Which among the both are showing an increase in demand and consumption?

 

A/ If one takes the last two quarters, I will say, that the demand is slow in both urban and rural but we are growing and our last quarter's growth has been around 30 per cent. We are not feeling a shortage of demand. But I feel that just by quarter to quarter, it is not the correct way to look at the larger picture.

As a country with a huge population, the ability to grow the retail business in India is very high. Though there could be tough quarters in the short term, in the longer term, India is a very good growth story.

Organised retail trade in India is still very small. It is just around 15 to 16 per cent of the overall retail market in the country. The ability of organised retail trade to grow in India for the next ten to fifteen years is really very huge. We do not see any problem there.

 

Q/ Can you give an overall view of the retail segment in the country and the kind of growth it may witness in the near future? How has it grown post the pandemic?

 

A/ I expect retail in India to grow 7 to 8 per cent a year in total—that includes organised and unorganised retail, etc. However, the shift is clearly in favour of organised retail and it will grow upwards of 25 to 30 per cent.

Post the pandemic, the growth has been slightly varied in between as we have seen few inflation peaks after the pandemic. Whenever there is an inflation peak companies raise prices and in the short term there is growth and then when the prices start there is slower growth.

We are in the slower growth phase in total retail now. But if one takes a two to three-year window India is at a 7 to 8 per cent easy growth market.

Of the overall percentage organised retail is about 15 to 16 per cent of the overall retail market. It is growing at 30 per cent currently but I think it will double in five years. This has happened in countries across the world.  

Q/ How does the Indian retail and FMCG market compare with developed markets such as in the US and Europe? How different it is from these markets?

 

A/ Retail markets in the US and Europe are highly developed markets. In Australia, the US, and the UK, modern organised retail trade is around more than 90 per cent. Then there are the middle growth markets such as South East Asia and Thailand, China and Korea where organised retail is around 55 to 60 percent. Then there are emerging markets where modern trade is around 35 to 40 per cent. India is still very nascent and it is around 15 per cent of the overall organised retail market.

I feel that in another ten years' time, organised retail trade in India will be around 30 to 40 per cent from the current 15 to 16 per cent. It evolves with time and GDP. Broadly in India food and grocery market is largely unorganized (85 per cent) and there is enough room in a growing economy like India for multiple models and channels to do well.

Markets close to India such as the Philippines and Malaysia are far ahead but it is only a matter of time before India catches up with them. Countries like Indonesia (24 per cent) and the Philippines (39 per cent) have higher organised trade penetration at GDP levels, which India will soon reach.

In India, consumers buy smaller packs and buy more frequently as homes are not as large and consumers are more price-conscious. Besides this India’s retail landscape is highly influenced by local cultures and regional diversity, unlike the more standardised preferences in developed markets.

 

Q/ What are your future expansion plans? Do you also plan to expand in tier 2 and 3III cities of the country?

 

A/ At present, one-third of our stores are in metro cities and two-thirds in non-metro areas (largely upcountry cities and towns). Our expansion will be focused on tier 2, 3, and 4 cities and towns in our core geographies of South India (in Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Kerala) and in the East in West Bengal. We plan to open 150 stores in the next 15 months but there is a headroom to open 1,000 stores in the next 5 years in the country.

 

Q/ You also have private labels; how do they fare when compared to the established brands and what is more preferred by your customers?

 

A/ Nearly 50 per cent of staples category sales come from our private labels (Selecta and Choice) and our customers appreciate the superior quality and price of our products. A private label in our minds is any product where the customer is relying on ‘More’ to guarantee quality. For instance, fruits and vegetables in our stores are differentiators for us versus our competition as we strive to put up the highest quality produce. We also have private labels in food (Feasters, Kitchen’s Promise) and home care (Vow, Prarthana, Essentials, etc.).

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