At a time when retailers are holding back their expansion plans, Aditya Birla's More chain of supermarket has a target of opening around 60 stores a year. Vishak Kumar, CEO, Aditya Birla More, tells FE's Vaishnavi Bala about the company's growth plans and the new model in residential apartment complexes.
Retailers are going slow on expansion and are closing unprofitable stores at a faster rate. What is More's strategy in this regard?
We are looking to open 50-60 stores a year and this has been the zone of expansion even last year. The important thing is that the scale of operations cannot be scattered. To get maximum benefits, it makes sense for stores to be present in a tight geography, rather than looking for new geographies altogether. So, we are penetrating deeper in markets where we already operate.
We've seen an aggressive double-digit growth. While we do hear about sentiments being down, for us it has been a good year so far. We closed six stores in the last six months.
Currently the average store size is about 2,400 sq ft. Are you also looking to experiment with the sizes?
Yes, although our store size on an average is 2,400 sq ft, we also have models that work on 1,000 sq ft. If a residential apartment complex with 2,000 flats can give us a 1,000 sq ft, we would definitely take it. We have 7-8 such stores in Bangalore where our stores are a part of the community living. Bangalore is leading in this, while Hyderabad is catching up. In such stores, maybe customers would not get the entire assortment, but daily need for vegetables, fruit and grocery will be fulfilled. We are looking at this model as these stores are more efficient as they are smaller and have a high catchment.
You have maintained that Mumbai is not your priority. Any change in plans?
Our business model is tight and margins are low in this business. Where store costs are going to be disproportionately high, opening a store does not make sense. Mumbai has high real estate costs and so far we have not been able to overcome the challenge. Unless we find a solution to the real estate problem, Mumbai will not be on our priority. We have to find a way through which we can create an efficient real estate.
At a time when supermarkets are working on thin margins, what