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Retailers kick growth plans into action

By Raghavendra Kamath in Mumbai
June 01, 2009 09:11 IST
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With confidence creeping back into the market place and rentals down up to 50 per cent, large retailers are back to drawing up aggressive growth plans. In the next one year, Aditya Birla Retail, Bharti Enterprises, Reliance Retail, Trent, Mahindra Retail and others hope to open new stores spread over five million square feet.

At the moment, large retailers have space of around seven million square feet. In the last one year or so, several retailers had closed unprofitable stores and put growth plans on the backburner because of the economic slowdown which had dented severely consumer confidence in urban markets.

Thus, the Future Group had extended the deadline for its target of 30 million sq ft of retail space from 2011 to 2013. Reliance Retail closed 30 stores in the past one year and Aditya Birla Retail shut 75 stores.

But now new stores are back on the drawing board. "In the last 6 to 12 months, retailers have realised what went wrong and what worked well. They have done many pilots in terms of formats, merchandise, offerings and have a better idea now about what works and what doesn't,'' said Boston Consulting Group partner & director Anand Raghuraman.

Aditya Birla Retail plans to open 60 supermarkets this year (2009-10) and 12 hypermarkets by 2011-12. The retailer runs 660 supermarkets and 2 hypermarkets at the moment. "We have seen an improvement since February. Economic conditions have some bearing on hypermarkets, where we sell apparel and consumer durables, than on food and grocery retail. But we will run great hypermarkets despite the current economic conditions," said Aditya Birla Retail CEO Thomas Varghese.

Trent, the retail arm of the Tata Group, plans to add 2 million sq ft of leased space by the end of 2009-10 with 13 Westside apparel stores, five Star Bazar hypermarkets and four stores each under the Sisley's and Topshop brands.

Despite a slow start, Bharti Enterprises has chalked out plans to open 125 stores in the current financial year, each measuring about 5,000 sq ft. Bharti Wal-Mart, the joint venture between Bhart Enterprises and Wal-Mart, plans to open 10 or 15 wholesale facilities in the country under the name Best Price Modern Wholesale.

"For the next 18 months, we will focus on the North where we have set up our back-end and after that we will go across the country," said a Bharti official.

Mahindra Retail, a part of the Mahindra Group, is looking at opening 100 lifestyle stores in the next three years in the top 20 cities in the country. Currently, it has six pilot stores under the name 'Mummy & Me' in the country.

"There is much more confidence in retailers today due to prospects of faster economic growth in the economy and they have seen an improvement in sales. The fall in property rentals has also helped them expand in a fast way," said Arvind Singhal, chairman of business consultancy Tehnopak Advisors.

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Raghavendra Kamath in Mumbai
Source: source

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