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Lucknow-based Sahara Group made a Rs 3,000 crore entry into retail sector last year under the brand Sahara Q Shop. Sahara planned to launch outlets in 998 towns and cities by March 2013, but consultants and its peers say the group’s retail venture is moving at a very slow pace.. Romie Dutt, executive director, Sahara Q Shop, talks to Raghavendra Kamath and Siddharth Kalhans about the chain’s operations and strategy. Edited excerpts:
The group has opened only 72 stores so far. Your comments?
We did a pilot run for our franchisee/exclusive retail operations in five states to understand the feasibility and acceptance of this model in December 2012. As pilot study, we had set target for only 100 exclusive retailers. However, we received good response from our franchisee/ exclusive retailers and hence over achieved our set targets by 50%. Today, we have 150 operational, active franchise/exclusive stores to provide high-quality products to our customers. Now we are ready to expand and looking to set up 1000 retail outlets by end of March 2013 across the country.
How will you open 1,000 stores by March 2013 when you have opened only 150 so far?
As I said, we have received very good response for Sahara Q Shop exclusive retail franchise operations pilot project. While we opened only 150 shops till end of February, we had request from more than 2,500 businessmen and small entrepreneurs who want to open exclusive outlets along with us across states.
Since then, we have been working relentlessly on finalizing the business trade agreements with more than 2,000 interested parties. We have already finalised more than 820 stores. Our team with over 125 persons are in field finalizing the agreements. We are hopeful that by March 25, everything will be in place. Besides, final stage of agreements is on with another 200 and we are confident that target of 1,000 will be achieved by March 31.
But, why did you slow down the operations in the last one month or so?
We have not slowed down. On the contrary, due to heavy demand, we had to use two parallel platforms. One, to expand aggressively our exclusive retail outlets. Two, to go through the distributor network and make our products available at the earliest.
Is it true that you are focusing on government canteens and corporate offices more than on core retail operations? Why?
As our aim is to be the largest FMCG retail hybrid model, it is important to open up all channels of sales and distribution. Government institutes and canteens, corporate are important part of value chain. The objective is to reach out to people through all possible distributor routes.
What is the kind of revenues you are looking at from retail operations for financial year 2013? What's your growth projection?
It has been six months of operations which has been on a ramped up mode. We plan to end financial 2012-2013 with seven months of operations at about Rs1500-2000 crore. We plan to open 15,000 exclusive retail stores in the next financial year, with aggressive distribution through general and modern trade and other avenues; we plan to close the financial year 2013-2014 at about Rs 3000-4000 crore.
When do you expect to break even?
Operational break even is expected within 18 months.
