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Future Group’s consumer durable retail format E-Zone is bracing up to launch more stores in spite of sales slowing down in the key metros. Although there has been speculation that E-Zone may seek partners or even go in for an acquisition to grow the business, it continues to expand operations in a stagnant market.
Speaking to Business Line , Mr Rajan Malhotra, President Retail Strategy, Future Group, said, “It may not be the best of times, but we have to grow in spite of a difficult economic situation. We already have 41 stores and will add another 8-10 stores this year.”
Margins have been under pressure for most consumer durable chains and E-Zone also has been feeling the slowdown chill, especially in the metros. “Mumbai is a tough market for durable retailing. There is an overkill in the smaller metros such as Bangalore and Pune,” he said.
The group brought down its debt by almost Rs 2,500 crore. . There is speculation that E-zone may look at a new partner to build its business. As Mr Malhotra says, “We will always look for synergies for all our businesses and this applies for E-Zone as well.”
Real estate
The acute slowdown in the real estate sector is expected to have a cascading effect on the demand for consumer durables. “Discretionary spends have been impacted in sectors such as home and consumer durables. When people stop buying homes, the demand for durables gets affected and it tends to have a cascading effect on the entire category. We are trying to induce more spending through a lot of initiatives, which includes live demonstration at the store,’’ added Mr Malhotra.
The Future Group has seen a couple of high profile exits in the recent past and saw the departure of Mr Manoj Kumar, the Chief Executive Officer of its consumer durables and electronics business, early this year.
Putting all speculation to rest that E-Zone too may be put on the block with a likely stake sale, a Future group official said, “There is unlikely to be any more stake sale in the Future Group except in the insurance business. We are unlikely to exit the business completely and are hoping to find a partner to build the business.”
Meanwhile, there are other durable retailers who are seeking a stake sale and have stopped expansion of their stores. Recently, the Videocon group-promoted Next Retail announced the possibility of a stake sale and has currently limited the number of its stores.
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