Spencer's to rejig retail business; close formats, relocate stores, expand network and seek partnerships

Spencer’s to rejig retail business; close formats, relocate stores, expand network and seek partnerships

August 5th, 2008 · No Comments

Spencer’s Retail, a wholly owned subsidiary of CESC and retailing arm of over $4 billion RPG Enterprises, which currently operates 400 plus stores, 32 of which are large format Spencer’s Hyper store, is going in for a massive restructuring of its retail business. According to media reports and announcements made at CESC AGM, Spencer’s is taking a number of major initiatives:

The first of the many changes envisaged by the company is to leverage on the falling real estate prices by increasing the size of stores. As the prices are expected to decline by as much as 40%, the company will merge its three small supermarket stores into one. It will prune two of its small formats “Spencer’s Daily” and “Spencer’s Express” and rename tthe same to “Spencer’s.” With this change, Spencer’s Retail will have only two formats to be called: “Spencer’s” and “Spencer’s Hyper.”Of the two, the first format will be a supermarket format, while the second format as the name suggests will be a Hypermarket format. The supermarket format stores are expected to occupy between 2,000 and 10,000 sqft of retail space, while the hypermarket format stores are expected to occupy 40,000 or more sqft of retail space.Currently, the Kolkata-based company is operating 368 plus Supermarkets and 32 Hypermarkets. The company has already prepared a blueprint to increase the number of its hypermarket stores from 32 to 75, by March, 2010. Overall, the company expects to have 300 new stores in the next one year. Immediately on the anvil are two hypermarket stores at Thane and Vasai in Greater Mumbai.

Spencer’s Retail has also decided close down around 40 of its unprofitable stores. The move comes in the wake of these stores making losses. The losses are mainly on account of very high rents, bad hinterland and poor sales. These stores will be to shifted to viable locations.The company has already begun relocating some of these unviable stores to new viable locations in Kolkata, Hyderabad and Kerala. The process will continued in other parts of the country as well.
Spencer’s has also been active in changing its product offerings with a view to increse its profitability. It has begun focusing on fashion retailing as it wants to change the ratio of business in favour this category.
Spencer’s is also stitching up partnerships with MNC speciality retailers by using the single brand retail route in FDI to bring in MNC brands, mostly in the non-food space. It has already formed joint ventures are made franchisee arrangement with world famous retail brands like the UK-based Woolworth’s for sale of ‘Chad Valley’ Toys and the US-based ‘Au Bon Pain.’
Spencer’s has also increased its attention on offering private labels. It is expected to increase their number from around 5,000 to 10,000. This will help the retail to increase the share of its private label business from 15% to 25%. Apart from building customer loyalty for these brands, Spencer’s will be able to further improve profitability as private labels offer higher margins than branded products.
Spencer’s is also executing innovative ideas with a view to increase customer inflow in its stores. Among others, it had recently organised successful theme-based food festivals across the country for Thai and Brazilian foods.
Realising the increasing need for home like food, and to contain inflation, Spencer’s will soon be introducing Home Meal Replacements (HMR) at its hypermarket stores.
Among other new initiatives to bring in more customers, Spencer’s will launch contact programmes for women and school children.

Tags: JV/ Franchisee · Indian · Expansion/ Investment/ Launch · RPG (Spencer's/ Other) · Supermarkets · Hypermarket/ Supercentre