The Hindu Business Line : RPG plans a Giant step for hypermarkets

(Right) Mr Harsh Goenka, Chairman, RPG Enterprises, with Mr Raghu Pillai, President & CEO, Retail Sector, at the Giant hypermarket at the InOrbit Mall, in Malad, Mumbai, that will throw open its doors on February 21. — Shashi Ashiwal

Mumbai , Feb. 19

RPG Enterprises has identified and "locked in" 17 properties all over the country, with "clear delivery dates," slated to be developed as Giant hypermarkets, according to officials.

They are also in negotiations regarding another 4-5 Giants.

A hypermarket is a large format store that is a single point contact between brand owners and customers.

Expansions are also being planned for FoodWorld, Health & Glow and MusicWorld, and the company expects to increase its turnover to over Rs 3,500 crore, of which Giant's revenues would comprise Rs 2,500 crore.

It is opening a 50,000-sq-ft Giant Hypermarket store at the InOrbit Mall, Malad, Mumbai, on February 21. This is the second of the estimated 21 large format department stores that the company hopes to set up by 2006-07, and which would entail Rs 400 crore in investments. The next one will come up in Vizag in June.

According to Mr Harsh Goenka, Chairman, RPG Enterprises, the company was looking to improve value propositions in its core competencies and was aiming to build the company to be globally competitive.

On how the company was going to fund the expansion, Mr Goenka said alternatives such as IPOs were being evaluated, and it would take about a year to decide on the best course.

He added that the retail function was important for RPG, and its challenge was to give the consumer a quality product at a good price. Indian customers, he said, looked for "sasta, sundar aur masboot" (cheap, beautiful and strong). He added that its supermarket chain, FoodWorld, had today become an enviable brand in South India.

As to whether FoodWorld would open shop in Mumbai in the future, he said issues such as Octroi and VAT would have to be resolved.

The company is also looking to its private brands to raise revenues significantly. The products, similar in quality to leading brands, would be priced 10-15 per cent lower and are expected to account for 20-25 per cent of Giant's turnover in two years. Product discounts will range from 4 per cent to 40 per cent.

According to Mr Raghu Pillai, President and Chief Executive (Retail Sector), RPG Enterprises, the company is hoping that Mumbai's Giant will see footfall levels rise by 30-35 per cent, especially over the weekends.

He added that in terms of the supply chain, the company was dealing directly with the farmer, eliminating the fragmentation in the distribution system and wastage. The benefits are likely to accrue to farmers — mainly better advice and improved offtake of their produce, and consumers will get better value for purchases.

The target audience earns over Rs 75,000 per annum, and the company estimates the size of this market at Rs 75,000 crore-Rs 80,000 crore.

It plans to set up stores in Delhi, Chennai, Vizag, Chandigarh, Jaipur, Kochi and Pune. However, its largest Indian store is due to come up in Kolkata.