What’s in store: Fewer, smaller outlets

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SummaryRetail biggies tread cautiously on expansion as industry feels the pinch of economic slowdown

For Gopal Mane, 38, a veteran in the retail industry, the last two years have been one of the most dynamic phases in his professional life. It was a period when stores were constantly reinventing themselves and job roles demanded timely upgrade of skills like knowledge of new products and management of existing merchandise in less space.

Retail companies that were gung-ho about India’s shining consumption story and were aggressive about their expansion strategies till a couple of years ago suddenly found themselves on the other side of the spectrum. They started becoming prudent about opening new stores, while opting for smaller outlets and even closing ones they did not see becoming profitable soon.

India’s biggest retailer, Kishore Biyani’s Future Group, closed six Big Bazaar, four eZone, two Food Bazaar and two Home Town Express stores this year. It opened three new Big Bazaar and five eZone stores during that period. Last year, the company shut down nine Big Bazaar stores, five Food Bazaar supermarkets and 20 eZone stores that were not profitable.

“Profitability of stores is the main focus right now. This year, we will only open at places where we would be able to ramp up faster,” says Future Group joint managing director Rakesh Biyani.

Future Group is not alone. Tata’s retail arm Trent closed four Westside stores during FY13, of which one was shut down in the January-June period, in NCR. Trent, which is known to be a cautious player in the industry, did not open any Star Bazaar outlet last year. It opened seven new Westside stores though.

Aditya Birla’s More has closed about 50 supermarkets in the past one year after it went on an expansion spree in 2007. K Raheja’s Shoppers Stop has been cutting the frills at its bookstore chain, Crossword. The company has closed six Crossword stores since the beginning of the year, while opening four new ones. The company also shut one HyperCity store in Ludhiana.

“The market is still very uncertain with the sliding of the rupee and the lack of economic reforms. So, people are not too optimistic. We are working towards higher sales, but I would not bank upon higher growth for the next few quarters,” said Govind Shrikhande, managing director of Shoppers Stop.

RPG Group-owned Spencer’s Retail, which has 25 hypermarkets in the country, shut down nine stores in Pune in December. Rajan Raheja-owned Globus Stores closed its prominent Globus store in Mumbai’s upmarket

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