Retailers back in groove after a 4-month lull

Kolkata | Mumbai: India’s biggest retailers have started to accelerate new store openings for the fiscal year after losing four months to lockdowns, some in greater numbers than before, as part of a strategy to exploit low rental costs and weakening competition.Reliance Retail, Tata-owned Croma, Aditya Birla Fashion & Retail, DMart and RP-Sanjiv Goenka Group’s Spencer’s Retail and Nature’s Basket chains will together open more than 650 stores during this fiscal with some signs of recovery being visible, executives said.Despite consumers increasingly shifting online for their purchases, the companies expect physical retail will bounce back to pre-Covid levels in the next few months. In addition, for several retailers, their brick-and-mortar outlets are becoming fulfilment points for ecommerce orders.“We are bullish about the long-term prospects of our category in India, not at all bullish about the pandemic,” said Ritesh Ghosal, marketing head at Infiniti Retail, which plans to add more than 40 Croma stores this year, the most in a single fiscal year. He said the company has grown 12% since July till date on back of 21% growth in August.India’s largest retailer, Reliance Retail, has plans to expand its ecommerce business led by JioMart on the hyperlocal model with orders delivered from its nearest stores. As per the latest investor presentation, Reliance opened 69 stores in the April-June quarter despite the lockdown and will add 250 stores soon. Food and grocery retailers have reported high double-digit growth for food, hygiene and healthcare items driving sales, prompting chains such as DMart, Spencer’s and Nature’s Basket to expand.78050902‘Bullish on Property Acquisitions’For instance, Nature’s Basket reported double-digit sales growth last quarter and became Ebitda positive for the first time, turning around the business, said managing director Devendra Chawla.Last month, Neville Noronha, managing director of Avenue Supermarts, which owns the DMart outlets, said the company is “very, very aggressive” on property acquisition. “That is not in any way impacted by the pandemic,” he said. “We are still very confident and we are continuing the acceleration of store additions in terms of acquisitions.”Aditya Birla Fashion and Retail Ltd managing director Ashish Dikshit told investors that in the worst-case scenario, the company would still be opening 200-plus stores in lifestyle brands and between 25 and 30 stores of departmental chain Pantaloons.78050909“It’s also the time to actually look for attractive real estate, good opportunity in terms of rental deals and structure of rentals, and build a more efficient and widest retail network more aggressively,” he said on an earnings call. “And, as things evolve, we will perhaps accelerate it towards the end of this year.”Expansion Plans DelayedSeveral retailers said they had to scale back expansion plans due to hurdles such as construction being held up because migrant labourers went home, landlords had delayed municipal permissions and project teams found it difficult to travel for store fitouts.For instance, Shoppers Stop had earlier planned to set up 12 stores but now expects about half will get delayed due to lockdown-led restrictions. Similarly, Croma said the initial plans for this fiscal had been for more than 75 stores. “We have lost a quarter plus a month at least in terms of scale-up,” Ghosal said. A recent study by the Retailers Association of India (RAI) grouping said there had been a marginal recovery of business in August, hampered by localised lockdowns, with large chains performing better. RAI CEO Kumar Rajagopalan said retailers have started to see some green shoots of recovery, especially in states that are allowing retailers to operate with fewer interruptions. If localised lockdowns are withdrawn, sales will recover sharply during the upcoming festive season to 80% or even the same level as last year, he said.

from Economic Times https://ift.tt/3ij9dAB
via IFTTT