So what if you are not able to shop at a Walmart or Metro store, where you could buy provisions and groceries in bulk at wholesale prices. You could step into a Savemax store and complete your shopping at wholesale rates.

Established in 2011 by the then 23-year-old Vaibhav Singhal, Savemax – short for save the maximum – is a multi-brand FMCG retail chain selling a range fruits, vegetables and groceries at wholesale prices.

‘Wholesale club’ model The chain, started in New Delhi with Rs 15 crore from the founder’s family, plans to expand across the country. Based, on a ‘wholesale club’ model, the chain is looking at investing close to Rs 300 crore, through a mix of own funds and borrowings, to open 17 stores by 2015. It now has three stores, all in New Delhi, spread over 40,000 sq ft each. The company is targeting a turnover of Rs 125 crore this fiscal against Rs 55 crore last year.

“The wholesale club model allows the consumer to buy commodities at wholesale prices as the purchase happens to be in bulk,” Singhal said. The store is based on the experiential shopping format with a bakery, restaurant and other facilities. How does he manage to sell at wholesale price? “The biggest challenge that retail sector faces today is a smooth, sustainable and economical logistics. We are trying to work out a 100 per cent direct store delivery SCM model that will help us achieve all of the above,” Singhal said.

He said that getting right talent and location are two big challenges.

For Singhal, his family background has helped him in terms of sourcing staples cheaper. His family is into commodity trading business since 1968 and primarily focuses on rice. “We are on the route to being profitable outlet and hope to achieve it by the end of this fiscal. The essence is by building efficiencies into the day-to-day functioning of the outlet which cut down on unwanted expenses,” Singhal added.

According to Singhal, the supply chain is on pure direct store deliveries thus saving near 100 per cent on warehousing costs. It sources fresh produce directly from farmers.

The company invests a lot of time in studying consumer behaviour. Singhal said that in Delhi, customers have actually forced the company to discontinue the smaller pack sizes in most categories. “Moreover, we are looking at innovative packaging in order to make it more appealing and easier for customers to shop,” he adds.

Focus on customers The chain focuses on consumers and is not present in the B2B segment. “We are a more organised wholesale player rather than a retail player. We merchandise our store little differently with all major categories getting representation though each sub-category would be represented by the leading products / brands in respective markets only,” he said. This, Singhal said, is to ensure that customers are not confused with shadow brands and schemes which add to convenience of shopping.

“We spend more time in deciding how to increase margins of the customer than our own as one leads to the other,” he said.

The idea of opening a ‘wholesale club model’ came up while Singhal was studying International Business Management at Fairleigh Dickinson University in Canada. He did an internship at BBB (Better Business Bureau) working on various retail research projects. He also worked in various e-commerce retail projects in India and overseas.

Singhal interacted with several shoppers in India before opening Savemax. While the format is new in India, there are several global chains such as BJs and Costco (which is the largest membership wholesale club chain in US).

From just a team of four people, the company has grown to over 200 employees, including both corporate and on-ground operations.

> priyanka.pani@thehindu.co.in

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