Thursday, January 21, 2010

Future group's home retailing sees turnaround

Kishore Biyani’s Future Group has seen a turnaround in home retailing after months of decline, on the back of improved consumer sentiments and focused merchandising plans, a key group executive said.

Home retailing was a laggard among the group’s flagship Pantaloon Retail’s three business segments — value, lifestyle and home. The home segment registered nearly 10 per cent fall every month since November 2008. It had stopped giving same-store numbers since June 2009.

Same-store sales compares sales of stores that have been in the business for a year or more, which allow investors to determine what portion of new sales has come from sales growth and what portion from opening new stores. Future group’s home retailing segment comprises furniture and furnishings, electronics and durables, among others.

However, the home segment has been seeing over 10 per cent growth in same-store sales since November 2009, said Mahesh Shah, chief executive of Home Town, a home improvement retail chain of the Group. “Positive sentiment is back. A lot of people are buying new homes and such homes being delivered. The increase in real estate activity has had direct impact on our business,’’ he said.

In terms of revenue growth, the home segment is likely to see a jump of 15 to 20 per cent in the current financial year, Shah said. The segment had seen a fall of 12 per cent in 2008-09.

“The slowdown helped us to focus on individual categories and individual consumers, as to what they want. We followed a 360-day approach to the business,’’ said Vivek Biyani, director of Home Solutions Retail (India) Ltd, which runs formats such as Home Town and eZone, among others.

The chain launched new categories such as plywood wardrobes, plywood kitchens, solidwood furnitures, fabric sofas and marble dining sets to cater to growing demand for such products in Indian cities. The chain also launched eight-seater dining sets in cities such as Delhi and Kolkata where homes are bigger in size. “We are selling 1,200 wardrobes a week now compared with 350 a week earlier,’’ Biyani says.

“While others were concentrating on cost cutting, we were using our learning during the slowdown,’’ Shah says.

According to Shah, the average spending in Home Town has gone up by eight to 10 per cent in January, compared to the same month last year. He expects it to go up to 20 per cent in the coming months. “Due to improvement in sentiments and increase in our merchandise, customers are buying two-three products instead of the one they used to buy earlier,’’ he adds.

Home Town on Wednesday opened a store of over two lakh sq ft in Vikhroli, a central suburb of Mumbai, taking its store tally to 10. The chain claims it is the country’s largest home improvement store. It has invested Rs 30 crore on the store and another Rs 10 crore on merchandise. It plans to open three more such stores in the country.

“Last year, our strategy was increasing top line and making margins was easier, as commodity prices were down. Now, since prices have shot up, we want to increase volumes and increase our margins,’’ Shah says.

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