Tuesday, December 1, 2009

Spencer’s Retail to launch private labels food products

Spencer’s Retail, a leading Indian retail company, will soon launch private label processed food products like potato chips, biscuits, pasta and is currently testing standalone stores of fish and meat.

“In fast moving consumer goods (FMCG), we want to quadrapule contribution from private labels in the next 18 months. We enjoy 40% share in the nectar category in juices. We are launching potato chips, biscuits, pasta and so on. We are testing standalone stores of fish and meat,” Mr. Vineet Kapila, President,Spencer's Retail, said.

Mr. Kapila said that the growth primarily depends on how much more space you have added and what is your same-store sales growth. While the latter is going up, the amount of sales has not gone up significantly; we have not added much, as we were addressing challenges before us. But we will add space now. In food and grocery, we are seeing same-store growth ranging from single digits to double digits. But we are struggling in discretionary verticals such as durables. There are challenges on margins, too — we are not getting the kind of margins we would want to have.

“We are focusing more on category margins, category assortments and so on to build top line and margins. We are building partnership, strengthening our private labels portfolio, choosing geographies carefully, building back-end in certain categories to improve our margins,” Mr. Kapila said.

He said, “We neither want be nor do we aspire to be the biggest retail player in the country. We want to be among top three in whichever market we enter in. Based on this criteria, we expand or vacate. We will open larger stores. Currently, we have an equal number of large and small stores. Going forward, it will be more skewed towards large stores, which will be 70-80% of our store count”.

“In the past 12-18 months, we had thought hard on these, such as what cities to enter, size of stores to be opened, cost structures, including rentals, and so on and rectified these. We also built a strong technology platform to link all of this. Till the challenges were understood and corrected, there was no point in going ahead with expansion,” Mr. Kapila added.


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