Spencer's to shift focus from food to apparel

Spencer’s Retail, the Rs 1,000-crore retail arm of RPG Enterprises, has decided to focus on fashion and apparel retailing to arrest dwindling profit margins, while increasing revenue per square foot.

It has created a separate division to look after its fashion and apparel business. “This division will be headed by a separate CEO, who has already been hired,” said a company official, who did not want to be identified.

The company’s apparel business currently contributes 10-12 per cent to the total turnover. The target is to take this up to 30 per cent in a few years.

Spencer’s has traditionally been associated with food retailing, which earns it a margin of 6-8 per cent. “The fashion and apparel category gets us a margin of 20-35 per cent, more than double what we get in food,” explained the official.

In private labels, a retailer’s margin from fashion and apparel could go up to 35 per cent, while it is about 20 per cent in the case of retailing another company’s fashion labels.

As part of the apparel thrust, Spencer’s is setting up at least 20 standalone multi-brand stores for selling only fashion products. Each of these stores would be around 5,000 square feet. Spencer’s smallest store is 1,000 sq ft, while the largest is 75,000 sq ft.

The company has to set up larger standalone stores, as apparel retailing needs more display space, as well as trial rooms. A spokesperson for Spencer’s Retail declined comment.

Spencer’s also intends to expand its international apparel retailing in India by introducing US-based Marc Ecko apparel brands in the country. It has already signed an exclusive licensing pact with the company, under which it is expected to open at least 10 standalone Marc Ecko stores.

Interestingly, two out of every four of Spencer’s partnerships with global brands are in the fashion and apparel segment. It already has exclusive partnerships with the Ladybird and with US casual wear brand, Beverly Hills Polo Club (BHPC).

For its existing international tie-ups, Spencer’s has set up four standalone BHPC stores in the National Capital Region (NCR) and is selling the Ladybird range through its chain of hypermarkets.

“A very negligible part of our sales comes from international brand tie-ups. Overall revenue contribution from international brands across categories is 5 per cent. This is expected to double in the next two years,” said another official.

Spencer’s has also launched a designer wear range by Samant Chauhan (western wear for men and ethnic wear for ladies), Studio Smriti (ethnic for ladies) and the ‘Club Jodhpur’ range by Raghavendra Rathore (ethnic for ladies). These are priced between Rs 1,600 and Rs 5,000.