"We don’t operate on the price parameter"

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We have to cover the whole of the catchment area. So Delhi would work only if we also have a Spencer’s in Faridabad, Noida, Gurgaon and Ghaziabad, or Meerut for that matter. Our policy is to saturate the cluster with different format stores. At present Spencer’s has 29 clusters across India.

How is this market organised? How do you rate yourself among organised retailers such as Subhiksha, Reliance Retail etc?

They are not our competitors. At the bottom of the pyramid are the kirana stores. Then come entry level, modern trade brands such as Subhiksha, Reliance, Big Bazaar, Wal-Mart, More etc, because their reason for existence is price. What most of them follow is a single-point, communication platform, that is, every day low price (EDLP) strategy or what is known as the Wal-Mart strategy. They compete on price, period. The last on the scale is luxury retail, names like Armani’s, the Versaces or the Hugo Boss’ of the world. Spencer’s positions itself in between EDLP and luxury brands.

You do a lot of SMS, Internet activation, don’t you?

Yes, we have a loyalty programme called Happyties. We also do a lot of outdoors, hoarding, road shows, food festivals, in-store decoration, virtual merchandising etc. Apart from that we advertise on print medium and cable television. We plan to be on TV, as well in the future.

What portion of your sales goes into marketing activities?

Nearly 2-3% of our sales turnover. Since we are launching new stores almost everyday the sales turnover keeps changing but on an average it is Rs 100 crore per month. We grew by over 75% nationally, in 2007-08 versus 2006-07.

What are the unique challenges on the supply side?

Supply chain management is the trickiest part of this business. Different product categories will have different supply chains. Foods and vegetables, being perishable obviously cannot be stocked indefinitely. On the other hand, apparel work on a six-month cycle. Managing the supply chain, because of infrastructure hurdles is only part of the problem. Specific to every organisation, you have to manage your warehouses etc. Retail is a very complex business. It entails buying in bulk from hundreds of vendors, selling in hundred stores to millions of consumers. So, complexities of the operations are huge. We grow our own fruit and vegetable supply at a farm in Bangalore. Almost 75% of our stock is sourced from there.

Any protests from the custodians of the unorganised sector?