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With the change in consumer demand in the wake of volatile economic scenario, biggies of Indian retail such as the Future Group and Tata’s Trent are on a restructuring drive aiming efficiency in operations.
While Future Group’s Panataloon Retail is making a serious effort to realign its overall business, Trent has recently closed down several loss making formats.
Pantaloon Retail has formed a high powered ‘review committee’ with the mandate to consider various options for realignment and divestments.
“The board of directors believe that a new approach needs to be devised which may lead to realignment, re-organisation, strategic partnerships or divestments,” Pantaloon Retail said in an investor presentation.
The committee is expected to submit its recommendations within a short time frame and achieve some or all of these objectives within this financial year, it said.
The company has also been working on various initiatives including monetisation of non-core business, it added.
Pantaloon has also closed down some stores and is re-vamping some of the formats.
With an aim to focus only on five cities, eZone that sells electronics and appliances has shut down 11 stores in cities while opening 5 new stores.
Similarly, Trent Ltd that has closed down five loss making Fashion Yatra stores, which also impacted its financial performance for the quarter ended December 31, 2011.
The company is also restructuring the Sisley franchise operations.
Trent was appointed as the master franchisee for the Benetton Group’s Sisley brand for five years in 2007.
“This restructuring exercise is expected to be completed in this financial year,” Trent said in a BSE filing.
According to experts companies are required to take re—structuring decisions from time to time.
“In the usual course of business, companies do make a conscious effort to structure their businesses to make them more viable. With the change in consumer taste, sentiment and demand, correction in overall business model is required,” Technopak Vice President Retail and Consumer Goods Purnendu Kumar said.
He said there are a lot of factors like cost to revenue ratio that have to be constantly looked into.
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