Time for non-core retailers to exit

Font Size

Print

Feedback

Email

Discuss

Related Articles

Vishal Retail signs CDR pact with lendersRosebys plans 500-700 stores over next 5 yrsTitan's watches stores to number 300 by March 2010Gitanjali forays into exclusive retail; plans 60 s...

: mass retail is low margin and high asset velocity. For companies with a background of high margins and low asset velocities, retailing is in complete contrast to their basic business models.

With the chickens coming home to roost, one can expect a lot of change in the next 12-18 months. The market will split substantially between players who see retail as their core business and those who see retail as one more business. Many of what we see as non-core retailers will quite slow down or move on to the next big opportunity.

Core retailers, who anyway know nothing else, will fight and put in place their plans for survival and growth. In fact, as the economy weakens, this is possibly the best time for aggressive retailers who have the business understanding right and the cost structure and processes in place. In a way the weakened realty market is the best time for retailers to sign properties.

After all you sign properties for 15 years and if you can get properties deadbeat over next 1-2 years, you have the opportunity to shape your costs for the better.

Foreign Direct Investment (FDI) is clearly on the backburner. There is no hope in sight of FDI at all and the weak stock market anyway makes market cap in billions a distant.

In a way the high inflation times are great for organised retailers. Consumers aggressively watch prices even more in such times and the value add of retailers who can get their act right is perceived even stronger in such times. At Subhiksha we see the current environment as a golden opportunity.

High inflation anyway increases the appeal of the discounter. And in tough times the cost structures matter even more. We are wholly geared for growth. If the last year was 1,000 store-year, this will be 2,000 store-year for us.

After storming the mobile retail market and gaining leadership we now have our guns trained on leadership in the consumer durable IT retailing space. More blood to sweat but more smiles to see.