|
| 'We've shifted gears to top line, margin building' | | Q&A: Vineet Kapila, President, Spencer's Retail |
| Raghavendra Kamath / Kolkata Nov 27, 2009, 01:30 IST |
|
 Spencer's Retail, a unit of RPG which runs 220 stores, is trying hard to become profitable after it made losses of Rs 220 crore last year. After closing or relocating 140 stores in 2008-09, it has again started opening stores and entering new markets. In a telephonic chat from Kolkata with Raghavendra Kamath , Spencer's Retail President Vineet Kapila talks about learning in the slowdown. Edited excerpts:
What kind of sales growth have you seen in the September quarter and in October on a year-on-year basis?
Growth primarily depends on how much more space you have added and what is your same-store sales growth. While the latter is going up, the amount of sales has not gone up significantly; we have not added much, as we were addressing challenges before us. But we will add space now. In food and grocery, we are seeing same-store growth ranging from single digits to double digits. But we are struggling in discretionary verticals such as durables. There are challenges on margins, too — we are not getting the kind of margins we would want to have.
How far are you from achieving profits?
Some of our clusters are already profitable, but we will take some time to break even. We should be worried more about trend lines, cost structures, margins and so on. Hence, we are looking at category management seriously. We are focussing more on category margins, category assortments and so on to build top line and margins. We are building partnership, strengthening our private labels portfolio, choosing geographies carefully, building back-end in certain categories to improve our margins.
Consumer sentiments seem to have improved. What is your expansion strategy?
We neither want be nor do we aspire to be the biggest retail player in the country. We want to be among top three in whichever market we enter in. Based on this criteria, we expand or vacate. We will open larger stores. Currently, we have an equal number of large and small stores. Going forward, it will be more skewed towards large stores, which will be 70-80 per cent of our store count.
What is your private label strategy?
In fast moving consumer goods (FMCG), we want to quadrapule contribution from private labels in the next 18 months. We enjoy 40 per cent share in the nectar category in juices. We are launching potato chips, biscuits, pasta and so on. We are testing standalone stores of fish and meat. We are doing a similar experiment for Beverly Hill Polo Club Shirts. We will also do it outside our stores.
Will you continue your cost-cutting exercise?
Yes. We will squeeze out Rs 140 crore in savings in FY 2010. Rent as a percentage of sales is 6 per cent. We want it around 4 per cent. In manpower, too, we want our costs to come down by 200-300 basis points. While cost cutting continues to be a long-term game, we have shifted our gear from costs to top line and margin building.
What did you learn from the slowdown?
We under-estimated the challenges. In the past 12-18 months, we had hard thinking on these, such as what cities to enter, size of stores to be opened, cost structures, including rentals, and so on and rectified these. We also built a strong technology platform to link all of this. Till the challenges were understood and corrected, there was no point in going ahead with expansion.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
