IndiaRetailBiz

“Consumers are spending more on value for money products. All categories in food and fashion are doing well. In fact, the same store growth of 50 per cent in value formats is a record increase for us.” — Kishore Biyani, CEO, Future Group.

While, the entire world is battling with unprecedented decline in retail sales, as the U S is about to announce lower October sales (4th consecutive monthly decline; worst since 1974), few, and we repeat only few, of the Indian retailers are bucking the trend by registering hefty growth in their sales.

Pantaloon Retail, India’s largest listed retailer, part of Kishore Biyani-led Future Group, has reported 87 percent increase in October, 2008 (over October, 2007) sales from its discount retail chains– Big Bazaar and Food Bazaar. Even, when the ‘value’ format sales of ’same’ stores (stores, which also existed a year ago) are compared, the increase, according to a BS report, was also very impressive at 49.26 percent.

The growth for ’same’ stores sales in lifestyle and home durables (Home Town and e-Zone) segments in October, 2008 was, however, slightly lower at 33 percent and 23 percent respectively, this year.

“Before Diwali when the markets were down, we saw a dip in the sales of furniture and electronics. That picked up again during Diwali,” said Biyani.

During October 2008 sales of value chains of the group were placed at Rs. 455 crore compared to Rs 243 crore a year ago. Compare this to 25 percent dip in growth during October 2007 and seven percent growth in October 2006, over the same period in their previous years.

September, October, and November are three most important months in festive season of India. Depending on configuration of Hindu calender, festivals like Ganesh Chaturthi, Durga Pooja, Dashera, and Diwali, in one form or the other, are celebrated during these months across the country. Even equally important festivals of joy other faiths like Paryushan (Jains), like Id-ul-fitr (Muslims) and Navroz (Parsis) also celebrated during this period. In 2008, by coincidence, most of the major festivals from Dashera to Diwali and Id-ul-Fitr fell in October, 2008.

These festivals are important in India because most consumers not only buy new clothes, shoes, etc, during this period, but also spend a lot on items like sweets, crackers, and exchange of gifts.

Most of the Indians also prefer to buy durables like consumer electronic and home appliances as well as precious metals, during these festivals both for religious and economic reasons. While, purchase of gold and silver during Diwali is considered auspicious, almost all organised and unorganised businesses distribute annual bonuses to their employees during Diwali festival. No wonder, even marketers wait for this period to offer best deals on their merchandise during this period.

It is interesting that while most big ticket retailers like Reliance, Spencer’s, Birlas, among others, are rejigging their formats and structures, Future group has added 150 new stores across all formats during August -October, 2008 period. Apart from targeting 15 to 16 million sqft of retail space, Kishore Biyani is also aiming to cross gross revenues of over 10,000 crore in 2008-09 (financial year ending June, 2009).

Besides, Big Bazaar and Food Bazaar, Future group has interestingly also begun to push its low cost, no-frills, convenience, value formats like Big Bazaar Deals, KB’s Fair Price Stores, and rural format Aadhar.