From roadside vending to a chain of vegetable stores

Father Natarajan and his son Senthil.

Senthil Natarajan is the son of no ordinary vegetable and fruit vendor. He is the son of N. Natarajan and if the name doesn't ring a bell, Natarajan Senior is the man who founded 'Kovai Pazhamudir Nilayam' (KPN).

KPN's is definitely a rags-to-riches story. Natarajan Senior dropped out of school at age 10 after his father's death and he and his brothers in 1965 started career by selling fruits and vegetables at road-side shops in Coimbatore. Slowly, with their knowledge of fruits and vegetables, especially on their procurement, they decided to open their own shop. The argument, as Senthil recollects, was "When footwear is sold inside an outlet, why should food items be sold on pavements?" Thus, KPN became the first retail outlet in Coimbatore to sell fruits and vegetables from inside a shop.

There were challenges. Making people buy fruits and vegetables from inside an outlet was difficult. To make matters worse, they had a fixed pricing system! It was difficult to change people's mindset from bargaining to fixed prices. And they had to meet quality despite low sales and margins. Their strategy was: "As good as you buy, as good the business is!"

KPN has a unique business model. They sell a large variety of fruits and vegetables, 40 to 50 varieties of fruits and 60 to 70 varieties of vegetables. That's a lot more than others. Uniquely, they also allow people to lay their hands on the vegetables on display and choose exactly what they want. There is a grading system and only quality products come to the shelves. The staff clean the racks every few hours.

Their selling points:

One, the number of juices and shakes they whip up is astounding. They sell around 40,000 cups of juices every day. Fresh juice is what made them famous. They are really fresh! Two, fixed pricing. Three, they changed the billing from numbers or dozens to kilograms. The customers can pick whatever quantity they want and they will be charged only by weight. Four, a lot of men visit the stores, a change from 'only ladies' visiting to buy vegetables. Five, they sell at the right price and give the right quality. KPN is a crowd puller and Senthil says "Crowds pull the crowds."

They have 7 outlets in Coimbatore, 2 in Tiruppur and Erode, 17 in Chennai, 3 in Pondicherry and one each in Trichy, Tanjore, Pollachi, Karur, and Cuddalore. Three more were to open before Diwali. They are planning to open an outlet in Cochin by December. KPN has ten different source points for different vegetables.

Using modern technology to manage the supply chain has become easy after Senthil, who worked with Microsoft, gave up his lucrative job to join the family business. He had brought in several initiatives, like importing fruit from eight countries, including the USA, Australia, South Africa, Egypt, and New Zealand, and exporting to the Maldives and Sri Lanka. He has been trying to reach more people by Facebook, providing health tips and facts about various fruits and vegetables.

Senthil says:

"We are planning a two-fold strategy for development. One is to build our back-end infrastructure – our warehouses, cold chambers, distribution, supply chain... which is essential for sustained growth. Second, is to simultaneously increase the number of outlets in the cities that we are already present in and also reach other cities which are logistically viable.

"Ultimately we will go national. But that is a long, long way off. We are focussing on regional reach at present. Last year, we had Rs. 150 crore turnover and are looking at a 8-10 per cent rise on that this year.

"We employ close to a thousand persons across all outlets put together. Of late, most of the staff recruited are women.

"There is a lot of improvement that's pending. Right now I am on a programme visiting farms, supply chain companies and fresh produce supermarkets and strongly feel that we are still 20 years behind compared to what's happening elsewhere. So the improvements have to happen from farm level.

"As for ourselves we are keen on introducing newer and healthier varieties of fruits and vegetables and passing on the knowledge that we acquire to our farm friends and others connected with the business to improve the overall standards."

Concentrating on procurement, quality and business, KPN has become a brand and not just a shop. – (Courtesy: Industrial Economist)