Over 400 Café Coffee Day outlets are likely to be converted to neighbourhood retail stores called ‘Coffee Day Essentials’
Coffee Day Enterprises, best known for its cafes, has outlined a blueprint to aggressively storm neighbourhood retailing in India and is expected to dot its landscape with atleast 450 neighbourhood retail stores – ‘Coffee Day Essentials’ in the near future.
The company, which has diverse interest ranging from cafes to logistics, through a subsidiary, had earlier in April 2019 formed a joint venture with a Japanese company – Impact HD. At the time, it was announced that the JV will operate and manage Coffee Day Fresh & Ground business and also offer consultancy services in the retail sector.
Coffee Day Group controls 51% in the joint venture, while the publicly-held Japanese company Impact HD will hold the rest.
Impact HD Inc. is a sales floor support service company and it provides solutions in the field marketing related services.
According to Impact HD, in India, about 350 million people live in the upper middle class. “With about three times the population of Japan in the same standard of living as the Japanese, the multi-retail market environment in which food and daily necessities are purchased on a daily basis remains unexplored. In India, kirana stores accounts for 98% of the total, and the remaining 2% are hypermarkets and supermarkets that incorporate foreign capital and know-how,” Impact HD detailed on its plans for India.
The Japanese major further added that small multi-retail convenience store businesses in India is still only 0.1% of the early Indian food retail market.
Impact HD has detailed that it plans to set up 425 stores, majority of them in Bengaluru and scale this number to 2,000 over the next five years. Impact HD is also considering eat-in formats as well, but in addition to selling packs, “we are planning to promote take-out as fast food,” it stated.
The joint venture is expected to focus majorly on poorly performing Café Coffee Day cafes and convert them to Coffee Day Essentials neighbourhood convenience stores.
This development by the Japanese company Impact HD comes almost parallely with another Japanese conglomerate 7-Eleven forging a pact with India’s retailing major Future Group to open a slew of similar convenience stores in India.
Arvind Singhal, CMD of Technopak, a retail consulting firm, feels that the $750-billion Indian retail market, which is growing at a rate of 10-11% on a yearly basis has room for a convenience format because of the emergence of new categories of consumption and the changing consumption pattern, driven by millennials and knowledge workers, who want food, beverages, OTC medicines on-the-go, 24x7.
Interestingly, Impact HD was started by senior professionals who have had extensive stints with 7-Eleven in Japan.
The joint venture with Impact HD was one of the last major decisions which Coffee Day Group founder and chairman VG Siddhartha had taken during April 2019, before he allegedly took his own life during July 2019, owning to heavy debts.
The group since July 2019 has been deleveraging its business and had off-loaded its technology parks development business to global private equity major Blackstone at a deal valued close to Rs 3,000 crore.
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Last Updated Oct 12, 2019, 1:46 PM IST