How The New Shop is becoming the fastest growing convenience retail chain

Entrepreneurship
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In conversation with Aastha Almast, founder of The New Shop

1.   What is The New Shop all about?

The New Shop is India’s first startup building a Pan-India chain of 24/7 convenience stores with omni-channel presence. TNS serves all daily needs products – snacks and beverages, personal care, electronic gadgets, stationery, home care, pet care, confectionery, Tobacco, hygiene needs, ready to eat food, Over-the-counter drugs, and grocery staples; along with a live café that serves on-the-go food, beverages, scoop ice creams and desserts.

The New Shop aims to make convenience retail more accessible to the masses by taking retail to where people live, work, travel, study etc. The New Shop’s focused segment is transit retail (railway stations, bus stations, highways etc) (USD 22 B market size); residential areas (USD 50B market size). The company wants to become the largest 24/7 omni-channel convenience retail store chain in India, with a strong 10,000+ brick-and-mortar stores presence and instant hyperlocal online delivery service. TNS is an asset light model and technology enabled India’s answer to 7Eleven.


TNS is using deep tech to increase the bottom-line through block-chained operations, automated processes and predictive Inventory Management (IM) which brings efficiency, transparency and higher sales/sq. foot.

2.   What were the challenges faced while setting up The New Shop?

i) As with most startups that are category creators, the biggest challenge was to educate the need and readiness for convenience retail in India to investors and vendors. India has gone through a tremendous societal change – it is the youngest country in the world with rise of nuclear families, singles, working professionals, late night shifts and travels, working couples, etc; who live a very different lifestyle. The upwardly mobile class of people with new aspirations, new wave of infrastructural development and modernization of transit points in India such as highways, railways, metros, airports, bus stations; All these boost the need for 24/7 convenience stores and instant commerce. Even brand vendors, were so far only used to GT and MT concepts and didn’t understand omni-channel convenience retail too well.

ii) Hiring talent – Retail talent has not evolved in India primarily because of stagnancy in growth of business models.

Eg: Dearth of talent in Visual merchandising. All grocery stores are promoted as discount stores in India and very little has been done on using VM for anything other than promoting discounts and offers.

Founders, (L-R)Charak Almast, Aastha Almast & Mani Dev Gyawali

3. How is your company different from a normal kirana store?

There are 3 types of brick-and-mortar store formats that are predominant globally – General trade, Modern trade and Convenience retail (Cstores).

A Kirana store (or mom & pop stores of the West) is a form of general trade, owned and operated by families, sized at 100-200 sq ft, with SKUs limited to grocery and small household needs in small quantities. These typically exist in neighbourhoods and form part of the unorganised sector.

Modern trade stores are supermarkets, hypermarket and mini-market formats that are large format organized retail chains, run by corporates and trained management teams.

Convenience stores have a primary emphasis on providing products and services to the public at a convenient location to quickly purchase from a wide array of consumable products (predominantly food or beverages and gasoline) and services such as fresh food and beverages, restrooms, car wash, fund withdrawals and transfers, home deliveries, ticketing etc.

While the first two have triumphed in India, convenience retail or Cstores format never truly developed in India until now. But, India is a ripe market for Cstores now and at a cusp of Cstores revolution.

The table should be self -explanatory

FormatGeneral StoreModern Trade StoreThe New Shop Convenience store
DefinitionA Kirana store (or mom & pop stores of the West) is a form of general trade, owned and operated by families, sized at 100-200 sq ft, with SKUs limited to grocery and small household needs. These typically exist in neighbourhoods and belong to the unorganised sector. Non-standardized.Modern trade stores are supermarkets, hypermarket, mini-market formats that are large format organized retail chains, run by corporates and trained management teams.A convenience store is a small store that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, tobacco products, and newspapers. Such stores may also offer money order and wire transfer services. They differ from general and are used as a convenient supplement to larger stores. A convenience store may be part of a gas/petrol station. It may be located alongside a busy road, in an urban area, or near a railroad station, in an airport or other transport hub.
Checkout timeHighly unpredictable, lack of inventory management and unorganized ques make it a time consuming activity.Long waiting lines, average time 30 minsVery quick, 4 mins is average
Working hoursDifferent for each store. Non-standardized, un-regulated 8-12 hours a day, 6 days a week, usually 11 am to 8 pmStandardized operating hours 9 AM – 9 PM, 7 days a week24 hours, 7 days a week
Consumer NeedEmergency – Mostly services the neighbourhood and local communityPlanned monthly purchases, once/twice a month – Large customer base and service areas that could include thousands of customersEmergency + hangout place + discovery of new products + Add-on services. – Captive & loyal customer base.
Size100-200 sq feet1500 sq ft – 10,000 sq ft500-1500 sq ft
LocationsNeighbourhoods, residential areas and residential community markets, mostly in congested narrow streetsCommercial areas, away from residential areas, malls, outskirts of cities.Neighbourhoods, residential areas, transit points, offices, educational institutions
SKUsLimited grocery & sundries in small quantities. No to limited temperature-controlled SKUs, small quantities. Unorganized replenishment, no inventory managementExtensive range of SKUs, covering every brand in every category. Huge inventory managementProvide both need riven products & services. Data driven and curated, need driven for the location, All relevant categories, but fewer brand options – fresh f&B, packaged food and beverages, grocery, home care, personal care, beauty, pet care, baby care, OTC drugs, electronics and gadgets, tobacco products, meat, milk, breads and eggs, confectionery; along with live café food, bakery products, ice creams and sundaes, and milk shakes. Just in time inventory with strong brand alliances.
Infrastructure– Standard equipment e.g. racks – Limited space available for equipment placement – single billing counter, non-commercial electricity meters, non-airconditioned, non-accessible by customers.

– 1 or 2 manpower required per store, generally members of a family, non-professional.
– Require specialised equipment – Multiple points available to display or cross-promote products

– Hugely manpower dependant, from warehousing, logistics, replenishments, promotions, VM, sales, billing.
2 people per 500 sq feet.
– Centrally air-conditioned, chillers, freezers, microwaves, grillers, LEDs, shelves, multiple billing counters, online ordering and self-checkouts, state of art tech.

– 2 people employed per store, in 3 shifts.
Scalability– Unorganized, family run businesses. – Aggregation also a challenge due to lack of professionalism and tech know-how.– Extremely high Capex and Opex involved, which makes these chains slow and expensive to expand. – Limited location options – Long Pay-back cycles– Very low Capex and Opex driven – High churn products, short pay-back cycles – Highly scalable
PricingMostly MRP, or customer relationship driven discounts, unstandardized.– Retailers can absorb costs, often sell products as a loss leader or give promotional discounts to drive purchases-Pricing matches locations TG – Can charge MRP or higher than MRP due to location advantage. – Promotional discounting on festivities, special days.
Technology– Mobile phone or smartphone, and limited technology such as personal computers– Enterprise point-of-sale (POS) scanning, vendor management inventory (VMI) and electronic data interchangecross-platform end to end inventory management system, Dashboard for real estate partners, POS system, automated GST/accounting report system and – analytics system to identify top products, categories, stores, etc. – Demand forecasting, Automated Purchase Order and Category Management systems
Demand– More seasonal — stop selling certain products during off-seasonConsistent demandConsistent demand due to need and intent driven product mix.
Margins & PromotionsLimited bargaining powerCentralised margin and promotion negotiationsCentralised margin and promotion negotiations
Procurement– Mostly procure products through intermediaries, such as distributors and wholesalers – Purchase for a single store – Owner or manager makes the procurement decision – Out of Stocks are very common, and substitute brands based on availability at wholesale or distributor level– Purchase directly from manufacturers – Centralised procurement – Require sales teams to provide detailed information e.g. sales, pack contribution, trends – Negligible out of stocks with improved inventory management– Deep Brand partnerships – Purchase from manufacturers and distributors – Mostly centralised procurement – Automated procurement through Inventory management tech, negligible out of stock – Mostly brand agnostic customers
Financial Flow– Cash and short credit cycle – Often provide credit to customers based on relationships– Long credit cycle & bank transfers – Customer loyalty programs– Long credit cycle & bank transfers – Customer loyalty programs

4.   What is so unique about The New Shop?

  • The New Shop serves Anything. Anytime. Anywhere
  • Only country wide retail chain in India which is open and delivering 24/7.
  •   Distribution platform for home-grown brands: 80% SKUs are Made in India unlike other retail chains where 80% of SKUs are foreign brands
  • Location advantage – residential areas and transit points
  • Data driven product mix curated to the needs of each location
  •  India’s fastest growing Convenience store chain
  • Partnerships with Indian railways, Cube Highways, airports, petrol pumps, and tourist locations.
  • Most affordable and industry’s best franchise with highest ROI

Innovative business model: 

1) Built on a variable cost model, with Revenue Share instead of fixed rentals. Also, with expansion economies of scale kick in – costs keep decreasing and our margins keep increasing.

2) Micro retailing: Our store setups cost 70% lower than other retailers.

3) TNS works with high gross margin products. This however doesn’t mean we are overpriced. The prices of products we sells are either equal or lower.

4) TNS is a technology company. We have already built our own  cross-platform end to end inventory management system, Dashboard for real estate partners, POS system, automated GST/accounting report system and a simple analytics system to identify top products, categories, stores, etc. We are building Demand forecasting, Automated Purchase Order and  Category Management systems going forward. Our tech helps keep the backend team lean and efficient. This also helps us maximize bottomline directly.

 5) Location advantage – We always set our stores in high traffic areas that have a captive audience where the footfall is known and predictable. We work out our product mix backwards on calculation of revenue potential and known customer profile, hence carry a lean SKU mix.


 6) Franchise model : Most lucrative FOCO(Franchise Owned Company Operated) model – No security deposit, no franchise fees, no initial stock investment

  • Lowest franchise cost of under Rs.15 lakhs, all inclusive
  • 10-12 months payback period
  • Rs. 15 lakhs annual profit
  • Most attractive ROI of above 20%
  • We also provide Franchise Financing to franchise owners via NBFC/Fintech partnerships
  • -Licensing, documentation, 24/7 backend support and no operational hassles

5. What is the vision of the company?

To become the convenience store within walking distance and delivering to doorstep within 15 mins.

6.How has your experience been being an entrepreneur?

Been an entrepreneur for almost a decade, I think entrepreneurship is a way of life, it’s a mindset of a problem solver, of a solution seeker. When you are an entrepreneur you have to think and live long term and be unperturbed by short term fluctuations.
I am still at the beginning of my journey, but feel extremely fortunate at the opportunities that have come my way. Entrepreneurship for me is a tool by which I can make a difference and solve people’s problems and create what people need towards a better and more convenient way of life.

7. Who has been your biggest inspiration?

In general, I find my inspiration during travels. I love to observe people, learn about their cultures, history, traditions, society, problems, achievements – there’s inspiration and great ideas all around if we observe!
My biggest inspiration has been my late grand-mother – a leading gynaecologist (and one of India’s first!) of her time, who taught her children and then her grand children to live a life full of purpose in serving others. She was a leader who fought against all societal norms to become a leading doctor at a time when women weren’t even getting basic education in India, teaching us to rise above prejudices, discriminations and inequalities and be of service to the world. She taught us to embrace failure and that nothing is permanent; neither failure nor success; so we have to maintain our equanimity in all circumstances.

8. What do you do in your free time?

  • All my free time is family time and I like to do lots of activities with and for my family.
  • I love animals and love to spend my free time with my dog, who’s my daughter, stress reliver and best friend! I’m also deeply involved with taking care of street animals.   
  • I like to read, cook, and explore the world.

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