Despite slowdown, retailers post record same-store sales growth

Shoppers Stop posted a 12% growth in its same-store sales growth in the June quarter

Despite prolonged slowdown in the economy, the same-store sales growth (SSG) of retailers such as Future Retail, Shoppers Stop and Reliance Retail has improved a lot. SSG means the growth coming from stores which are in the business for a year or more and not for opening new stores. It is a key indicator of a retailer’s performance.

Take, for instance, Kishore Biyani’s Future Retail. The company recorded SSG of 10.4 per cent in value retail in the June quarter of 2013, which was the highest growth in the last five quarters. Home retail saw a turnaround in SSG after seven quarters and witnessed a 3.7 per cent growth.

During the height of slowdown in 2008-09, Future’s SSG in value segment went down four per cent in the December quarter, which was the first in the previous four years.

“We have rebuilt categories and assortment for in the last six quarters, which is bearing fruit now. We are focusing on providing good quality merchandise and sharp prices to customers and customers are responding well to that,” said Rakesh Biyani, joint managing director at Future Retail.

Future closed 0.37 million sq ft of space, which included six Big Bazaars and four eZones, among others, in the June quarter.

Shoppers Stop posted a 12 per cent growth in its same stores sales growth in the June quarter, while its hypermarket arm Hypercity posted a record 14 per cent SSG, outperforming its peers.

Reliance Retail witnessed strong SSG ranging from 10 per cent to 22 per cent in the June quarter across format sectors over the corresponding period last year.

According to Abneesh Roy, associate director - institutional equities — research at Edelweiss Securities, besides the low base last year, work done by retailers also helped. “India is undergoing slowdown for the last two to three years. Retailers are also working hard on activations, rationalising space and so on which has helped them.”

Retailers and analysts believe that the second quarter is also expected to be a good SSG period.

“I think we should be able to maintain the momentum in the coming quarters given the customers are liking our offerings,” says Biyani.

However, Walmart, the world’s largest retailer, posted a 0.3 per cent dip in its same-store sales growth in the last quarter against the analysts’ prediction of one per cent. The company’s new outlook is that sales will rise two-three per cent against the earlier forecast of five-six per cent rise.