Retail chains bet big on smaller stores

It is increasingly becoming difficult to find large spaces to open stores and retailers are also realising that rents for large spaces are not justifiable

After big-box stores, retailers like Kishore Biyani’s Future Group, Tata’s Trent and Mukesh Ambani’s Reliance Retail are betting on smaller ones.

The Future Group will open 4,000 stores in various formats — KB's Fair Price, Nilgiris, Easy Day and other formats — by 2021, Trent Hypermarket will set up 400 neighbourhood stores under the brand Star Daily, and Reliance Retail will open one Reliance Fresh store a week.

Arvind Singhal, chairman of Technopak Advisors, said it was increasingly becoming difficult to find large spaces for stores and retailers were also realising rents were not justifiable.

But he warned there was an optimum store size for every category and product. “For supermarkets, it should be 4000 sq ft and for electronics it should be 4,000-5000 sq ft. Otherwise, you will not be able to do justice to the category.”

However, retailers said it was matter of providing convenience to customers. “In urban areas, where travelling takes longer, neighbourhood stores cater to people who can come mid-week and quickly buy groceries,” said Rakesh Biyani, joint managing director at Future Retail. The Future Group’s convenience stores are over 1500-1800 sq feet and keep 600-1,500 stock keeping units (SKUs). “The stores have a smaller assortment and smaller pack sizes,” he said.

The Future Group recently launched a new brand of upscale supermarkets, KB's Conveniently Yours, in Mumbai and Delhi.

Trent Hypermarkets, which has a joint venture with the UK’s Tesco, is also focusing on neighbourhood stores. After eight such stores in Pune and Mumbai, it will open several others in Maharashtra and Karnataka.

The Star Daily stores, which range from 2000 sq ft to 5000 sq ft, stock meat, dairy, bakery and other products. They open at 7 am, two to three hours before the large stores of the chain.

“Modern retailers should think about going to customers rather than customers coming to them. A customer’s time is precious and he is always looking to save time on shopping,” said a senior Trent executive.

Added Damodar Mall, chief executive, grocery retail, Reliance Retail, “Shopping for food happens near the home or from home. We are catering to that.”