Shwapno is one of the most important retail brands in Bangladesh. With its over 62 outlets and 11 franchisees, it is the largest grocery chain in the country. Started in 2008, the company has grown significantly over the past years and claims to serve over 35,000 customers a day. The retailer has also launched its ecommerce initiative recently and has also been investing in its own private label brands for a while now.
In a recent long-form interview with Future Startup, Mr. Sabbir Hasan Nasir, Executive Director of Shwapno discusses the current state of Shwapno, the evolution of the grocery chain over the past few years and its future ambition. What follows is a select part of the interview where Mr. Sabbir discusses Shwapno, you may read the full interview here.
Future Startup
Please give us an overview of ACI Logistics.
Sabbir Nasir
ACI is one of the largest conglomerates in Bangladesh. We have 4 major divisions comprising Agribusiness, Pharmaceuticals, Consumer Goods, and Retail. I look after the Logistics division that is actually the retail chain Shawpno. Shawpno has been doing well over the past few years. We have been experiencing a rapid growth.
ACI is here to change the lives of Bangladeshi people. We provide inputs to our farmers in the form of seeds and other relevant essentials for agriculture which results in the best output that we take to the consumers through Shawpno.
The ambition is to connect all the dots in the entire value chain and link people and process together so that we can give people a better tomorrow. ACI believes in technology, innovation and development and changing lives of the people through science and technology.
For Shwapno, I visualize it to be a company where people would love to shop, work and invest. With the EBITDA being positive, we can say that we will be achieving break-even in the near future.
Our target is to win the minds and hearts of our consumers by implementing the idea of ‘Everyday Better Life’. Our core strengths are our customer-obsession, pragmatic decisions, innovative technology, creativity and perfectionism in customer experience.
We source 50% of our fresh produce and fish directly from growers, helping to keep their dreams alive, giving them a proper value with convenience, and offering their products directly to customers.
We employ a lot of students who come from distant places with little other than their dreams, and as an organization, we are also trying to help them with good jobs and opportunities that support their dreams as well.
Future Startup
Are you involved in any kind of manufacturing or contract manufacturing from Shawpno as part of your sourcing strategy?
Sabbir Nasir
We have launched a few private label brands that come through contract manufacturing which contribute around 6% of our entire portfolio. Our ambition is to take it to 20 %to 30% level over the next few years.
Future Startup
Can you please tell us more about Shwapno in terms of your size of operations, team and all?
Sabbir Nasir
We have 62 stores and 11 franchisees and growing. We are a team of 2000 people and all together we have over 335,000 Square Feet of retail space. We have 3 different types of stores. The first one is convenient-store that can be less than 2000 sq feet to 5000 sq feet. The second type is superstores that are around 2000 to 8000 sq feet and lastly, we have mega stores as large as 24,000 sq feet.
Around 23% of revenue comes from our fresh goods, fish, and similar items, around 44% from consumer packaged goods (CPG) and the rest come from commodity and lifestyle products. We have launched a few private label brands which contribute around 6%.
Future Startup
What is your ambition with private label brands?
Sabbir Nasir
As I mentioned, our ambition is to have 20 to 40% revenue from that. We identify them as buckets of freshness and buckets of safety. Most of our private label brands are in commodities (including rice, sugar, etc), cookies, and similar types of categories.
We want to ensure the lives of our children are safe through food safety. We want to make these products the way it should be, with love and care. We consider ourselves as transformers. Our ambition is to transform the retail landscape of our country.
Around 23% of revenue comes from our fresh goods, fish, and similar items, around 44% from consumer packaged goods (CPG) and the rest come from commodity and lifestyle products. We have launched a few private label brands which contribute around 6%.
Future Startup
You joined Shawpno in 2011 and this is 2017, how much has Shwapno evolved over the past six years in terms of innovation and other major areas?
Sabbir Nasir
In terms of store format, machinery, and equipment, we have evolved significantly. In many areas, we are an entirely renewed organization. We for the first time brought live chicken and fish in the store.
The customers can see live fish and chicken and buy. It was a complex decision. We had to manage odor in the store, the temperature for the chickens as well cleanliness to ensure the perfect experience for the customers. We designed special environment for chicken so that it does not create a bad smell and also chickens feel comfortable with the right degree of temperature.
Ours is a complex business. Every morning we have to make sure that we are providing fresh produces to our customers. It means when our customers are sleeping at night, our people are sourcing the best produce from the farmers all night long so that we could provide fresh foods to our customers in the next morning.
This is a complex and long process. It demands a lot of innovation and cross-functional integration to make the entire logistics system works effectively and efficiently. Over the past few years, we have brought in more efficient systems that have improved our performance across logistics.
On the top of that, improving the service experience and getting the right products in front of our customers on the right time are a few of changes we face in-store. We have evolved our interaction between customers and employees. The bonding is stronger and lively now resulting in better shopping experience for our customers.
We have recently launched our eCommerce platform. We understand that ecommerce has a huge prospect in the coming years and we don’t want to be left behind. We have just launched the platform and figuring things out. You will see more activities from us in the coming days.
We have also been investing heavily in technology including SAP, DSS, JDA and a host of other analytics software to make work easier for our employees and create new offers and value proposition for our customers.
Ours is a complex business. Every morning we have to make sure that we are providing fresh produces to our customers. It means when our customers are sleeping at night, our people are sourcing the best produce from the farmers all night long so that we could provide fresh foods to our customers in the next morning.
Future Startup
Please tell us about the organizational culture at Shwapno. How people work, collaborate etc?
Sabbir Nasir
We are a fun working place. Enjoying your work is a precondition for your productivity and optimal performance. We try to ensure that we are collectively enjoying our work.
We have a flexible office hour. People can come anytime between 8:00 am to 10:00 am and leave accordingly.
There is very little office politics here in Shwapno. We consciously discourage it. We are a progressive bunch, always doing new things and embracing and enjoying new developments.
I believe that retail is a war without blood. You have to win this war on a daily basis. You need to create something new every day. You have to surprise your customers on a near constant basis. For that to happen, we need fresh minds working in a flat hierarchy and in an open culture.
We have a combination of young and experienced people to have more energy, rhythm, and ideas in the organization. In that way, the new ideas can be mixed with experienced ideas to create something that works – combinatorial creativity in a way.
We have recently launched our eCommerce platform. We understand that ecommerce has a huge prospect in the coming years and we don’t want to be left behind. We have just launched the platform and figuring things out. You will see more activities from us in the coming days.
We have people from diverse backgrounds. Some are good at graphics and contents, some are good at data analytics and mining and some are good at communication or technical works.
Bringing this diversity into one place results in a brilliant new culture which helps everyone to reach out to their goals and targets and allows them to challenge their own ideas and predispositions.
No matter how hard the target is given, we could devise a way to overcome that together. Given the retail landscape, we need to ensure adaptation and new learning every day just to survive in the market. In order to achieve that goal, you need a conducive culture that supports it.
I believe that retail is a war without blood. You have to win this war on a daily basis. You need to create something new every day. You have to surprise your customers on a near constant basis. For that to happen, we need fresh minds working in a flat hierarchy and in an open culture.
Future Startup
It is a fairly big team, how do you align people when you make a major decision or strategic change?
Sabbir Nasir
I break the barrier and engage people. I put my people in one room and we call it ‘War Room’. In there, we sit together and solve the problem. After breaking the ego, favoritism, and biases, I push them hard to solve the problem. When they see that they must solve the case and it is a difficult one, they unite together to achieve the one goal.
My job is more of a facilitator and guide and to ensure that the facts are right, numbers are right and the direction is right. If they do not move in the right direction, their numbers would never add up. I have to make them align in the right direction.
I also get into strategy, creatives and other staffs. I work with almost all the teams in all their works and try to help them bring their solutions into life.
Future Startup
What are the challenges for Shwapno now? If you look into the future what challenges do you see down the line 5-6 years?
Sabbir Nasir
In the past, our main challenge was to attract customers from traditional shops and bazaars and convert them to supershop users. We have succeeded in doing that. Almost 50% of the people now have experienced the shopping in super shops.
The challenge is now is finding a balance between value creation and value capture. The shareholders would always want to capture value and have their return as soon as possible whereas the market is demanding more about value creation. As the leader, my challenge is to balance between these two and deliver at an optimal point that makes both parties happy.
The second challenge for Shwapno is the shift and transformation from brick and mortar to e-commerce and then an omnichannel retailer. I can feel and sense the change of business and that is why I have to prepare both my organization and myself.
The world has changed. Today, anything that happens in any part of the world is bound to happen in everywhere in the world sooner or later. It means you have to be perpetually active and innovative. My responsibility is that we continue to evolve as a company along with the changes in the market.
Future Startup
What are your future plans for Shwapno?
Sabbir Nasir
The future plan is to be one of the strongest retail players across Asia. In that way, the employees and the investors can have more opportunities and we will be able to serve more people.
We plan to scale Shawpno and take it to as many places in the country as possible in the next few years. It does not mean that everywhere we will be opening up retail shops of Shwapno, it can even be an order fulfillment center or even a kiosk. And we plan to connect the world with Shwapno through its e-commerce platform.
We plan to build more intimate and strong relationship with the farmers, craftsmen and our supplier so that we can give our customers best value proposition.
The future plan is to be one of the strongest retail players across Asia. In that way, the employees and the investors can have more opportunities and we will be able to serve more people.
Future Startup
Technology is changing almost every business. How do you use technology in Shwapno?
Sabbir Nasir
The core system is SAP ECC 6 and we are trying to migrate into a better version of SAP. On top of this ERP system, we have some DSS and Analytics Software.
We have an analytics team who works with the technology team to gather data and generate customer insight. In the near future, we plan to invest in artificial intelligence, augmented reality and VR to improve efficiency and customer experience.
Future Startup
How do you use data, in terms of collection and implementing, in your decision-making process?
Sabbir Nasir
We are data rich company. We collect a huge amount of shoppers’ data that too about the most important area of their lives: spending pattern. These are invaluable if you can put it into proper use.
Apart from that, we collect data how our customers interact within the shop through devices and also collect data from other pertinent sources. As I mentioned, we have a data team who work constantly to generate actionable insights from these data points.
Future Startup
Retail is struggling in many developed markets. The Atlantic, the US-based magazine, named the phenomenon as the great retail apocalypse. There have been nine retail bankruptcies in the first few months of 2017—as many as all of 2016. J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. What do you think about the future of retail in Bangladesh?
Sabbir Nasir
My answer is that only e-commerce is not the solution. Equal importance has to be put on both the brick and mortar model and the e-commerce. That is why I prefer the term, Integrated Retail Experience. That said, doing this integration will not be an easy task.
Technology should receive the top priority along with HR management. Aligning the programmers, engineers and IT experts as well as creative and business people around a single objective is a tough ambition. And without the talented, skilled and dedicated people, it would not work.
So the point is about becoming an omnichannel retailer. If you look at the US market, retailers who have adopted technology are doing pretty well. Amazon being the ecommerce leader just bought the Whole Foods Market. We see that Amazon, being an e-tailer, is doing well and Walmart, being mostly brick and mortar, is also doing well. The same goes for Target. They are investing heavily in technology. They first introduced the self-checkout and price-checkout concepts in Target stores in the US.
I do not think that the only ecommerce is the answer in the long run and only brick and mortar is not either. The human-machine interactions can happen but not on a disruptive scale to transform the industry. There has to human-human interactions at the end in order to make it sustainable. I never think that robots and machines will occupy our brick and mortar shops and we will only shop online because we humans want to see and touch the products.
In our country, I would say that the brick and mortar retailing is very strong and has a great future. We are still learning about e-commerce and it will take some time to make a meaningful progress in that area. That said, ecommerce is the future.
In short, I think the future of retail is integrated omnichannel experience where customers would have options and go back and forth. My answer is that only e-commerce is not the solution. Equal importance has to be put on both the brick and mortar model and the e-commerce. That is why I prefer the term, Integrated Retail Experience.
That said, doing this integration will not be an easy task. Technology should receive the top priority along with HR management. Aligning the programmers, engineers and IT experts as well as creative and business people around a single objective is a tough ambition. And without the talented, skilled and dedicated people, it would not work.
Future Startup
Retail is a business of experience in many ways. How you shops look, your lighting, in-store experience make a lot of difference in customer behavior. How do you design a great retail experience?
Sabbir Nasir
I consider myself a designer. From that perspective, I have conceived many of the things you can see in our stores. We have a great design team. I give the preliminary ideas of the store and they add their magic and aesthetics over it and together we build something.
While designing a store, the first thing we look at is the shapes of the space. In our country, we hardly get a square or rectangle shape space. Mostly, we get uneven and crazy shapes.
Then we consider where to put different categories of products in the store. This is an intricate affair because you have to consider the aisle and movement of customers and put things accordingly.
We then look at the lights and colors of the store. The lighting and color usually highlight features, products, items, and categories visually that help customers make decisions.
We are now planning to control the natural smell of the store. I am planning to implement different odor for different parts of the store to influence the customer experience.
Each of our stores has different design, style, and structure based on a host of parameters.
As you rightly mentioned, in the retail business design of the store influences customer experience. We are constantly looking for the changes to improve the shopping experience of our customers. We are applying new building materials and lightening parts and other components.
Previously, our environment was more flashy but now it is warmer. We are designing warmth where customers find them at home. If you look at the new Shwapno stores from the outside you will be seeing a golden box with lighting focused on different corners, shelves, and zones. We are trying a lot of things to give our stores an aesthetic and convenient look.
