With an aim to increase its presence across India, Delhi-based wellness products manufacturer and retailer Nature’s Essence has set aggressive expansion plans for 2009. From a company worth Rs 50 thousand eleven years back, it is currently a Rs 50-crore enterprise and is aiming to be a company worth Rs 100 crore by the end of this year. In an exclusive interview with IndiaRetailing, Saurabh Nanda, executive director, Nature’s Essence, shares his thoughts about the company, the industry and his dream project. Excerpts:
IndiaRetailing (IR): From a producer of wellness products and retailing them through MBOs and department stores, you have recently entered into retail, opening EBOs. What is the idea behind this shift?
Saurabh Nanda (SN): The idea behind opening the salon-cum-showroom is to give a larger brand perspective. In MBOs, the brand exists as one among many. These days, opening a store requires lot of investments. So, we have opted salon-cum-retail format for cross promotions. Women coming to the salon for various beauty treatments can be encouraged to pick up products from the showroom and walk-ins to the showroom can be enticed to get some beauty treatments. The main advantage is that due to big spending on weddings these days, such a comprehensive outlet can help us earn up to Rs 1 lakh from a single bridal order.
IR: What are your preferred locations?
SN: We prefer high streets to malls. For our kind of business if you are in high streets, the costs can be taken into care whereas if you open in malls, it takes 3-4 years to turn around. We think of malls basically for branding. Also, Nature’s Essence caters to middle and upper middle class people and high-street is where the customer base is. We offer a premium service at mass price that remains the ideology of our business model.
IR: How many stores do you currently operate and what is the expansion plan?
SN: We have already opened four outlets and talks are on with our franchise partners. We will have 20 such outlets soon and by the end of this year, we will be having 100 such outlets across India. Further, as part of our overseas expansion, we have entered in six countries during the last four weeks and are going to launch in 10 more countries this year, which will effectively give base of over 35 countries in the world.
IR: What is the ideal size of your store?
SN: The ideal size of our store is 800 square feet to 1,200 square feet. The blend of salon-cum-retail store is because having a store of around 1,000 square feet for retail orientation only, the cost is too high to recover the money easily. In this format, with a very modest investment of around Rs 10 lakh, one can get profitable in less than three months time. Our turn around period is less than three months. The expenditure is very low, but the revenue comes excitingly.
IR: Are all outlets company owned?
SN: Of these four stores across north India — two in Kanpur and one each in Ludhiana and Delhi, only two of them are company owned outlets and the others are franchise. But in franchise also, family orientation is there. But in the proposed 100 stores by 2009-end, over 80 stores will be totally franchise, 15 family owned and 5 company owned.
IR: What are the franchise criteria?
SN: For a franchise, the person should have the space and be capable of investing around Rs 10 lakh for merchandise and other investments.
IR: Nature’s Essence primarily caters to women. Are you planning to add men’s products in the portfolio?
SN: We have certain products for men also. But since women are quite generous and spend a lot in this segment, our appetite is still there and we are still looking forward for more business from the segment. We do not even realize that we have just one per cent of the true potential on offer for the segment. Once we reach to around 20 per cent saturation, we will get into men’s segment too. Our products might be used by women more, but lot of products are used by men also and basically these are unisex products.
IR: Any new products coming up this year?
SN: We are launching products every week. We have a huge portfolio of around 200 products and 1,000 SKUs in our portfolio. Recently we have set up a soap factory and plan to launch around 30 variants of soaps, both for treatment as well as general use.
IR: Apart from EBOs, who else is selling your products?
SN: In organised retail space, our products are sold through Big Bazaar, Big Apple and Reliance Retail stores. But basically we are selling largely through regular cosmetic stores, not the organised but the unorganized segments. We sell around 80 per cent of our products through this segment. Currently our products are sold through 50,000 salons and 20,000 retail counters across the country.
IR: Do you have any product differentiation for salon and retail formats?
SN: We have different products for retail and for use in salons. Initially we were in salons only, but for the last three years we have been doing very well in retail and it has overdrawn the salon segment.
IR: Your proposed investment in 2009?
SN: We have planned to invest more than Rs 15 crore in enhancing our business. Out of this, Rs 10 crore will be invested for branding and Rs 5 crore will be spent in buying the retail spaces and opening stores in association with franchisees by 2009-end.
IR: In September 2008 you had announced that by mid-2009, you would have around 100 stores. What are the reasons for delay?
SN: When we ventured into the business, the property prices were at a peak and those were unreasonable for our formats. Suddenly what happened is that there was a crash in the property and we were expecting more. Further, in the mean time we got one factory space which was on high priority because basically we are a manufacturing company. Thus the entire plan has been delayed by one year.
IR: What is your expected turnover in this year?
SN: We are targeting total revenue of around Rs 1 crore by the end of this year. We are on track and we have recently clocked sales of Rs 60 crore and we are trying to upgrade further.
IR: How is your brand faring across regions?
SN: We have a very strong north India perspective but we are growing very well in south and west as well. I will say 50 per cent of our revenue comes from the north, 20 per cent each from south and west and 10 per cent from the east. North and west are giving more than 145 per cent growth for the last one year.
IR: What is your approach for metros vis-à-vis tier II and III towns?
SN: We have a balanced approach because if there is more competition in metros, there are more opportunities also. Again when there is less opportunity in tier II and III towns, there is lesser investment required and lesser players available. So, ideally the objective is to tap those markets where the response is good and give the best rather than wasting all energies in chanelising in those areas where the market is not responsive to us.
IR: Are you satisfied with the growth of the company?
SN: The company was started 11 years ago with less than Rs 50 thousand borrowed money. Currently it is Rs 50-crore enterprise. So from being Rs 50 thousand to Rs 50 crore in 11 years is a great achievement.
IR: How is the slowdown pinch?
SN: Repeating Koran Johar ‘Bollywood and cosmetics are recession safe’, I must say that we are privileged enough. We are not firing people, rather hiring people in a very big way. This is a very good time and people who want to make a mark in the industry can join Nature’s Essence.
