‘Expansion of chains only in 2010’

Faced by a declining ‘same store’ sales across all formats, retailers would now look at operational efficiencies to take them through the first half of 2009, say retail analysts.

Mr Gibson Vedamani, CEO, Retailers’ Association of India, says that retailers would resort to shutting down some ‘unviable’ outlets, while at the same time cautiously opening new stores. “In my opinion, expansion of chains would only happen in 2010. Though some amount of new sales could come from newer categories and regions, the projections for the year are more or less stagnant.”

“Retailers would move to more sensible customer acquisition models,” says Mr Vijay Bobba, Founding CEO and Managing Director, i-mint. The target would be the spending consumer rather than footfalls or walk-ins.

Mr Arvind Singhal, Chairman, Technopak, foresees retailers spending more on promotions to retain existing customers.

The immediate strategy for Hindware Home Retail to beat the downturn is consolidation of different categories. “The market is witnessing a downturn and it will take a couple of quarters before it springs into normalcy. This means that large and hyper formats will pave way for smaller specialty categories,” says Mr D.K. Jairath, Vice-President and Business Head, Hindware Home Retail.

On increasing efficiencies in stores, Mr Bobba says retailers would integrate their supply chain and systems across all formats. Rental renegotiations are also high on the agendas of retailers. “There is an opportunity during slowdown as rentals can be negotiated. Unlike retailers in the food and grocery business, categories such as lifestyle and luxury stand to benefit as they can get good deals. In lifestyle retailing, ambience achieves significance,” said Mr Thorsten Allenstein, Managing Director, Triumph International (India and Sri Lanka).

But for the recession, the rural retail concept could have added value to the bottomlines of these retailers, feel retail experts. “But it will be a while before retail achieves what telecom has done,” according to Mr Bobba.