With the pandemic hitting India, modern trade faced a variety of issues including consumer hesitancy leading to lower footfalls. According to Shashwat Goenka, Sector Head - Retail and FMCG at Spencer’s Retail Ltd and the RP-Sanjiv Goenka Group, consumers will be back at stores as vaccination picks up and re-opening happens. Initial trends suggest better off-take of discretionary spends. In an interview with BusinessLine , Goenka said offline and online will coexist with omni-channel “being the future”. Spencer’s will continue to explore “profitable growth” coupled with acquisitions, he said. Excerpts:

What is the outlook for FY22?

I think recoveries will happen as vaccination picks up and people start moving out. Right now, reopening is happening across markets and the trends in some segments like white goods or discretionary items are encouraging. There is pent-up demand while in some markets there is propensity to spend.

High margin product sales should restart unlike last year when people were stocking up. This time, despite the lockdown, there was no such pantry stocking.

Moreover, if I look at our results in Q4 FY21, then footfalls were up and recovery was happening.

Can you provide some details on the recovery?

We were witnessing a month-on-month recovery post-unlocking in FY21 which continued well into Q4. We were impacted due to the resurgence of the pandemic towards the second half of the March quarter. Despite recovery in non-food business not fully happening in Q4, our profitability on a consolidated basis has improved.

But with a shift towards online shopping, is offline grocery sales under threat?

To be fair, online sales or e-grocery sales is just 4 per cent of the market; and that too despite the huge jump over the last few quarters. We do not see it becoming 50 per cent anytime soon. So as the situation normalises, people will be back at stores.

Now, there are some people who will prefer an online model because of convenience.

So what we anticipate: there’ll be a set of people who would order online only; another who would prefer visiting the stores and then a new customer base who’ll both order online and visit the store say once fortnightly rather than twice a week. So as I would like to put it, omni-channel will be the future of retail in India.

We already have a presence in e-grocery through the Spencer’s app and Nature’s Basket, the upmarket food retail chain, also has an omni-channel play. We are adding new features like taking orders over phone or through Whatsapp; adding new payment options, et all.

So will you look at acquisitions?

Yes. We are in talks with a couple of players, particularly in omni-channel. But, our acquisitions will not derail the objective of profitable growth.

When Nature’s Basket was acquired, a lot of questions came about profitability. Approximately 18-20 months down the line, Nature’s Basket is EBITDA positive for the first time in its history. We turned it around. Over the quarters, the bottom-line at Spencer’s (including Nature’s Basket) will be strengthened.

But retail in India is becoming a big player game. Major names are coming in. Are you then going to do the same?

We are in retail for the long term. Store expansions are happening too. In FY21, we added 10 stores, both brands put together. This fiscal we are targeting 15 stores at least, presuming we get the right real estate and they are ready on-time.

comment COMMENT NOW