Spencer's Retail to restructure stores to break even

Plans to open 11 large format stores this year

Spencer's Retail Limited, an RP-Sanjiv Goenka group company, is restructuring its retail store model. The company will now focus on opening large format stores, ranging between 20,000-40,000 square feet. Also, in offing is an initial public offer to raise funds for expansion.

The retail chain is planning to open nearly 80 new hypermarket stores in the next four years, which will entail an investment between Rs 240-480 crore.

"At present, we are focusing only on hypermarts. It will help us break even faster. As far as small stores are concerned, we will take a call on whether to keep them open or shut them. They continue to be a part of our portfolio, but growth will come from big stores," said Shashwat Goenka, sector head, Spencer's Retail.

"We expect to break even very soon. Once we break even, we will take a call on listing the company," Goenka added.

This year, the company will open nearly 11 large format stores, with area between 20,000-40,000 square feet, he said. Last year the company had opened nine big stores. Each large formal store entails an investment ranging between Rs 3-6 crore.

The company will focus on eastern, northern and southern zones for opening the stores.

The new stores while focusing on food section would also focus on apparel section, said Goenka.

Spencer's operates in two distinct retail formats. The first - convenience store model stores that cater to the daily and weekly top-up shopping needs of consumers. The second retail model is hypermarkets, or megastores that combine a supermarket with a department store. 

India's retail market, which in 2013, was estimated at $520 billion, is expected to grow at a CAGR of 13% to reach around $950 billion by 2018, according to the a report called Pulse of Indian Retail Market, March 2014. Organized retail penetration, currently estimated at 7.5%, is expected to clock a 19-20% growth per annum, to reach 10% by 2018, the report said.