Retail companies opt for lean & mean ramp-up mantra

Jul 21 2013, 05:25 IST
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SummaryFocusing on smaller shops in select locations, the top three listed Indian retailers will add about 1.98 million square feet of total space this year.

Focusing on smaller shops in select locations, the top three listed Indian retailers will add about 1.98 million square feet of total space this year, 22% lower than the space they added during 2013 fiscal. India’s biggest retailer, Kishore Biyani’s Future Retail, will add 1.25 million square feet of space in 2014 fiscal, lower than the 2 million square feet it added last year, said the company’s joint managing director, Rakesh Biyani.

Tata Group’s retail arm Trent said it is on track to open close to eight Westside stores this year with a store size of roughly 20,000 square feet. This amounts to space of 0.16 million square feet being added this year, compared with an area of 0.21 million square feet added last year.

The company has not indicated plans to expand its Star Bazaar chain of stores. It did not open any Star Bazaar store during FY13.

K Raheja Group’s Shoppers Stop will be adding roughly 0.32 million to its total area as it plans to add eight-nine stores this year, but of smaller sizes than last year. This space would be slightly lower than the 0.35 million square feet that the company added through seven stores last year.

“The primary focus is on making stores profitable. We will only open at places where we would be able to ramp up faster,” justified Future Group’s Rakesh Biyani.

Last year the company shut nine Big Bazaar stores, five Food Bazaar supermarkets and 20 eZone stores that were not profitable.

This year, the company will invest R400 crore on expanding its formats, 33% lower than its investment levels last year. Shoppers Stop has earmarked R125 crore this year on expansion, a tad lower than its last year’s investment levels.

“We are being cautious in our approach to expansion and even in picking properties. We are not being too aggressive right now,” Trent’s CFO P Venkatesalu said.

Tata’s retail arm Trent closed four Westside stores during 2013 fiscal that were located in declining malls, the company said. Also, during the year, the company did not open any store of its hypermarket chain of stores, Star Bazaar, which is yet to break even. Star Bazaar’s high cost of operations have curtailed the format’s ramp-up, the company said.

Shoppers Stop’s (standalone) space addition was 9.7% over the last year to 3.4 million square feet in 2013 fiscal compared with 29.2% in 2012 fiscal. However, among the listed players, Shoppers

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