We are penetrating deeper into markets where we already operate

Written by Vaishnavi Bala | Updated: Oct 28 2013, 06:11am hrs
At a time when retailers are holding back their expansion plans, Aditya Birla's More chain of supermarket has a target of opening around 60 stores a year. Vishak Kumar, CEO, Aditya Birla More, tells FE's Vaishnavi Bala about the company's growth plans and the new model in residential apartment complexes.

Retailers are going slow on expansion and are closing unprofitable stores at a faster rate. What is More's strategy in this regard

We are looking to open 50-60 stores a year and this has been the zone of expansion even last year. The important thing is that the scale of operations cannot be scattered. To get maximum benefits, it makes sense for stores to be present in a tight geography, rather than looking for new geographies altogether. So, we are penetrating deeper in markets where we already operate.

We've seen an aggressive double-digit growth. While we do hear about sentiments being down, for us it has been a good year so far. We closed six stores in the last six months.

Currently the average store size is about 2,400 sq ft. Are you also looking to experiment with the sizes

Yes, although our store size on an average is 2,400 sq ft, we also have models that work on 1,000 sq ft. If a residential apartment complex with 2,000 flats can give us a 1,000 sq ft, we would definitely take it. We have 7-8 such stores in Bangalore where our stores are a part of the community living. Bangalore is leading in this, while Hyderabad is catching up. In such stores, maybe customers would not get the entire assortment, but daily need for vegetables, fruit and grocery will be fulfilled. We are looking at this model as these stores are more efficient as they are smaller and have a high catchment.

You have maintained that Mumbai is not your priority. Any change in plans

Our business model is tight and margins are low in this business. Where store costs are going to be disproportionately high, opening a store does not make sense. Mumbai has high real estate costs and so far we have not been able to overcome the challenge. Unless we find a solution to the real estate problem, Mumbai will not be on our priority. We have to find a way through which we can create an efficient real estate.

At a time when supermarkets are working on thin margins, what is the company's foremost focus

There is no radical shift in the way we are thinking. But incrementally, we are becoming more obsessed with quality. We are driving freshness in even FMCG products, not just fruit and vegetables, by working closely with vendor partners in supply-chain level.

This is also leading to a better turnover of inventory. We have a freshness index of 79%, by far the highest among our competitors.

A large number of More stores are present in smaller towns. Was this a conscious decision

Small-town India has responded extremely well to us, particularly in the south where we are very well distributed. We have built a network around south, where our supply chain, distribution, etc, has been centered. We have not penetrated with the same depth in the rest of the country. Frozen and dairy food are picking up growth in smaller towns.