Retail cos skip announcing sales outlook as buyers stay off

Retailers entering new segments have turned extremely cautious as consumers, hit by falling incomes and uncertain future, turn wary of spending.

Reflecting the cautiousness some of the local retailers, who had announced new ventures recently, have skipped announcing future targets and plans. Future Axiom, a 50:50 JV between India’s biggest retailer Future Group and Gulf region’s mobile retailer Axiom, has announced a $40 million investment without any revenue targets for FY09.

“We do not want to announce any revenue target as of now. We want to do realistic expansion instead of going haywire with aggressive expansion,” said Ashey Sehgal, CEO, Future Axiom Telecom.

Even though the company plans to increase its workforce from 1,200 to 5,000 by December 2009, announcing any revenue target was not possible at the moment, Sehgal added

“There is uncertainty in the market and the companies would not like to discuss the revenue targets as they may have to revise them in the future,” said Arvind Singhal, chairman, Technopak. The growth of Indian retail sector has come down to 15-16 per cent this year as compared with 25-30 per cent last year.

Reliance Retail, known for aggressive expansion plans and setting up high revenue targets recently entered a new format, Reliance Living furnishings. “We do not have any targets in terms of revenues. We are testing the waters and the customers’ response. The coming months will decide our expansion strategy as well as revenue target in the future,” said Manu Kapur, senior VP & business head, Home Furnishing & Decor.

The company plans to open seven stores by January, but after that there is no target even for opening the number of stores.

“A retail company entering a new format sets its revenue targets on the basis of performance by other players (big and small) and some market research. In the current scenario, when all the retailers are experimenting with their store’s format, size and model; it may not be viable for them to share their expansion plans with the public, said, C Ravishankar, Manager - Strategic and Commercial Intelligence (Transaction Services).

Bharti Retail recently entered into compact hypermarket segment with Easyday Market. “Organised retail is very new to India and retailers have had many hiccups in the past year. We believe in going slow but steady instead of announcing big expansion plans and than revising them later,” said a Bharti Retail spokesperson.