The Hindu Business Line : Spencer’s Retail to enter bakery café segment

Mumbai, June 30 The RPG Group-promoted Spencer’s Retail would be entering into a joint venture with a US-based bakery café chain and setting up stand alone stores under its brand name. “We are going to form a joint venture with a US-based café chain, one of the biggest in the world, and set up standalone stores. The announcement would be made within the next 10 days,” Mr Sanjiv Goenka, Vice-Chairman, RPG Enterprises, said.

Currently, in the US market, there are companies such as Panera, Atlanta Bread Co and Au Bon Pain, which are the largest in the bakery cafe segment. Besides, there are other chains such as House of Bread, Cheese Cake Factory and Frullati Cafe & Bakery which also have a significant presence.

Going forward, Spencer’s Retail is expecting its future ventures to contribute between 15-20 per cent of its total turnover. In the recent past, it had formed a distribution arrangement with the UK-based chain Woolworths.

“In the next 18 months we expect our joint ventures and distribution arrangements to contribute between 15-20 per cent of the turnover,” says Mr Samar Singh Sheikhawat, Vice-President Marketing, Spencer’s Retail. Currently Spencer’s Retail, under its two formats, generates a turnover of Rs 800 crore.

Poised to enter new ventures with international companies, launching a new brand in the bakery café segment is now imminent. Without disclosing the name of its proposed venture partner, Mr Sheikhawat added, “As part of the joint venture formed would be shop-in-shop cafes within our large format stores before being set up as independent cafes.”

Ramping up portfolio

Other joint ventures planned are in the area of fashion wear for children and men. Being more of a food intensive retailer, Spencer’s Retail is now ramping up its apparel portfolio with future plans of spinning off independent fashion stores as part of specialty retailing initiatives. Having launched independent electronics outlets (which are currently at an incubation stage), there is a possibility of having a fashion format in the future. According to Mr Sheikhawat, “In future there could be independent fashion stores and at the moment we are focusing on the fashion portfolio at our stores.”

With intentions of becoming a serious player in the fashion business, Spencer’s is also looking at enhancing its private labels under brands such as Mark Nicolas and Island Monks, apart from its existing fashion portfolio. “Currently, fashion as a category contributes 10 per cent of the turnover. We plan to take it up to 25 per cent in the next 18 months,” says Mr Sheikhawat.

In spite of steep real estate costs there are no plans to explore the franchise route as the retailer expands its number of stores and formats across the country. “The franchise route would not be explored and all our stores would continue to be owned by the company and we intend breaking even in our operations by 2010,” says Mr Sheikhawat.

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