Indian Retailer

“To close unviable stores; expansion to be funded from internal accruals, debt and possible equity.”

Department store chain Shoppers Stop plans to open 12 more outlets with a total area of 650,000 sq ft in the next three years by taking advantage of the fall in mall rentals, reversal of service tax thereon and possible revival in the economy, a top company official has said.

The company required a capex of Rs 91 crore on the store openings (Rs 1,400 a square feet) and Rs 32.50 crore on the inventory (Rs 400-500 a square feet) for these 12 stores, the official said.

The company was planning to fund the expansion from internal accruals, debt and possible equity infusion, the official said.

The company plans to open four stores this fiscal, in Bangalore, Ahmedabad and Hyderabad, and four each in the next two fiscals, each store measuring around 55,000 sq ft. Mall rentals have fallen 35 to 40 per cent in some cities from their peak in the past couple of years.

“Property rates make it lucrative to expand. We also have undrawn limits of Rs 90 crore,” Govind Shrikhande, chief executive of Shoppers Stop, said during a conference call today.

While expanding their network, retailers have shut unprofitable stores and unviable ventures to save cash during the downturn. Shoppers Stop closed down over a dozen unviable stores in FY 2009.

Shoppers Stop recently pulled out of a catalogue retailing venture with UK’s Home Retail group under the Hypercity-Argos brand. It also moved out of the food business after announcing that its Café Brio outlets would be replaced with Café Coffee Day outlets over the next couple of months.

“We have taken a call to close those ventures which are taking a longer time to break even,” said BS Nagesh, managing director, at the call.

In March, the company closed three of its ‘Crossword’ book stores – one at the Mumbai airport and two in Chennai and New Delhi. The company also closed its airport retail store, ‘Stop & Go’, at Mumbai airport.

Most big retailers have shut stores to remain profitable. While Aditya Birla Retail has closed 75 stores so far, Reliance Retail has shut 45.

“The last fiscal was one of the toughest for retailers and we feel the first quarter will also be difficult. We expect things to pick up after Diwali this year and a good year thereafter,” Shrikhande said.

Besides 26 Shoppers Stop stores, the company runs speciality formats such as Home Store, Mother Care, Crossword and Arcelia, among others, and an airport retailing venture with Nuance, a European firm.

However, the company does not have plan to expand its speciality business in a big way this fiscal, according to Nagesh.

The company’s stock went up by 3.73 per cent to close at Rs 115.50 on Monday.

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From jaded showbiz personalities endorsing 'divine gemstones' and miraculous 'weight reducing products' at unearthly hours to 24 hour shopping channels, the virtual retail market on the idiot box has come of age. Selling almost everything from latest gadgets to beauty products with on-air demonstrations and multiple ordering options, shopping channels on television look set to don the cap of potential virtual sellers, say market experts. The launch of Network18 group's Home Shop18 last year, added a new dimension to this genre of shopping. Boasting of India's first 24 hour shopping channel, it is an online and on-air platform operating on the web, catalogue and print in tandem with TV. Joining this new shopping bandwagon is another leading media and entertainment company, Star TV. The company has announced a 50:50 joint venture with CJ Home Shopping, a Korean based regional home shopping group to launch a 24 hour home shopping channel in India, along with an online version in the second half of 2009. "India remains a fast growing retail market and the formation of this joint venture represents yet another step in our growth trajectory," says CEO of Star TV, Paul Aiello. PTI

India has moved up from 44th spot last year to 39th in terms of being the preferred designation ranking, according to global real estate consultant CB Richard Ellis (CBRE), which also adds that the ranking, does not justify the size of the country’s economy.

UK tops the global list while China is numero uno for the Asia Pacific region followed by Japan; India earns the 11th spot, Chairman and MD Anshuman Magazine  of CBRE reportedly said in a statement.

He said even China has moved to the 6th position globally from 10th place last year. Among the Asia Pacific countries too, India is behind the smaller countries like Singapore and Indonesia.

“This ranking is not only because FDI in retail is not allowed but also due to relatively lower purchasing power, cost and availability of real estate, besides infrastructure and supply chain management issues,” Magazine said.

However Magazine cautioned the retail business corporations outside India that adding a market like India could be not ignored too long and it would continue to move up in the ranking and attract more and more international players.

Addition to the organized retail will be a boom in disguise to the wine industry as it will increase the availability and ease the distribution blockages existing at the present moment. It is expected that states like Delhi will soon follow the example set by Maharashtra, Karnataka, Haryana, Punjab and Chandigarh