lowest in a decade—has affected people’s appetite to buy clothes and consumer durables. This added to the woes of the organised retailers who were facing shrinking sales and inventory pile-up after the economic slowdown, which started in late 2008.
The FY13 private final consumption expenditure (PFCE) growth rate was at an eight-year low. Fitch’s India Ratings does not expect any significant improvement in PFCE for the second half of this year.
During FY14, Future Retail will add 1.25 million sq ft of space, lower than the 2 million sq ft it added last year. The company will invest R400 crore on expanding its formats, 33% lower than its investment levels last year.
Tata Group’s retail arm Trent said it is on track to open eight Westside stores this year at a store size of roughly 20,000 sq ft. This amounts to space of 0.16 million sq ft being added this year, compared to an area of 0.21 million sq ft it added last year. K Raheja Group’s Shoppers Stop will be adding roughly 0.32 million to its total area as it plans to add eight to nine stores this year but of smaller sizes. This would be slightly lower than the 0.35 million sq ft that the company added through seven stores last year. Shoppers Stop has earmarked R125 crore this year on expanding, a tad lower than its last year’s investment levels.
Small is smart
In addition to shutting down unprofitable stores and opening fewer new ones, retailers are shrinking the size of stores to save on rental cost. For example, Shoppers Stop has now reduced the store size of its loss-making hypermarket chain of stores, HyperCity, for the third time. The company has now opened a store of 30,000 sq ft, way lower than the 1,50,000 sq ft size the HyperCity stores began with.
Future Retail has also merged the operations of eZone and Hometown, while reducing the size of Hometown. Last year, the company also halved eZone store size to 6,000 sq ft. During the April-June period, the company opened five eZone stores ranging from 500-5,000 sq ft—these small stores