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In the quarter ended March, promotional events and the wedding season boosted same-store sales growth of retailers such as Future Retail (erstwhile Pantaloon Retail), Shoppers Stop, etc.
Growth in same-store sales is the sales growth for stores operating for at least a year.
The retailing business of Future Retail, which comprises Big Bazaar, Food Bazaar, as well as a few other businesses, recorded same-store sales growth of 8.1 per cent in the quarter ended March, compared with 2.7 per cent in year-ago period and 3.1 per cent in the quarter ended December 2012. “We worked on a lot of things such as improving categories and rationalisation of stores. We have also seen very good traction in fashion,” said Kishore Biyani, managing director, Future Retail.
Future Group’s lifestyle segment recorded same-store sales growth of 9.6 per cent, compared with 3.5 per cent in the corresponding quarter last year and 12.7 per cent in the quarter ended December. However, the home segment saw contraction of 4.1 per cent in same-store sales, against contraction of 7.3 per cent in the year-ago period and contraction of 3.4 per cent in the December 2012 quarter.
“Fashion was a big drag in the last two years. Now, demand in this segment is becoming consistent. Raw material prices have stabilised and the exercise duty has gone,” said a senior Future Group executive. “There were quite a few weddings in the March quarter, which helped same-store sales growth,” the executive added.
During the March quarter, Shoppers Stop saw same-store sales growth of 10 per cent, one of the best growth figures for the retailer. Shoppers Stop’s arm Hypercity recorded same-store sales growth of 11 per cent, compared with nine per cent in the year-ago period.
Retailers said in the March quarter, the short discount period helped them record better margins.
“We curtailed the discount period and reduced discounts in some of the items. The more full-price sale, the better the margins. Our gross margins rose 120 basis points in the last quarter,” said Govind Shrikhande, managing director of Shoppers Stop.
While Shoppers Stop offered discounts for seven weeks in the March quarter of 2011-12, in the quarter ended march this year, it was limited it to five weeks.
“This year, most retailers concluded discounts by February 12, unlike last year, when there were discounts till February-end,” said a Future Group executive.
Sangeeta Tripathi, senior equity analyst at Sharekhan, believes the customer sentiment has improved compared to the corresponding quarter of the previous financial year.
Analysts, as well as retailers say the quarter ending June wouldn’t be as good as the December and March quarters. “We expect seven to eight per cent like-to-like growth in the coming quarters, given the slow growth in GDP (gross domestic product) and the bad news flow. Consumers do not go for shopping when things on the ground are not good,” said Shrikhande of Shoppers Stop.
“The June quarter wouldn’t be as good as the March quarter, but it would be a decent one,” said Sharekhan’s Tripathi.
HARD TIMES AHEAD
- Same store sales growth, a key metric in retail industry, refers to sales growth coming from stores which are in the business for a year or more
- Growth in quarters ahead to slow down because of lower GDP growth
