Spencer’s Retail Ltd, a part of the RP Sanjiv Goenka Group, is betting big on omni channel model and is looking to expand both brick-and-mortar stores and scale up online sales even while it continues to expand its high-margin categories, including non-food sales mix to tap into the growing demand in the country’s organised retail market.
The company operates in three retail formats, including small-format stores (store size ranging up to 5000 sq. ft), large-format stores (store size over 5000 sq. ft.) and value market stores (average store sizes between 5,000-24,000 sq. ft), is looking to expand its trading area by one lakh sq.ft. during the current financial year in some of its existing clusters, the company said in the latest annual report (2023).
During 2022-23, Spencer’s witnessed nearly nine per cent growth in turnover at ₹2,180 crore and sustained a gross margin of 19 per cent on a standalone basis. Nearly 85 per cent of its total sales currently come from large format stores, while small format stores (including Natures Basket) account for 15 per cent of total sales.
Omnipresent Retail India Private Ltd (ORIPL), the company’s e-commerce subsidiary, which serves as a platform through which Spencer’s engages with its customers, registered its first-ever positive EBITDA at Gross Merchandise Value (GMV) of Rs 302 crores in 2022-23.
“Our strategies are mainly focussed on our omni-channel growth along with our new value market proposition. The structural shift to online e-commerce is expected to bring more financial leverage to our company along with the value market model, we are endeavouring recently. We are witnessing traction in both footfalls and digital platforms,” Sanjiv Goenka, chairman, Spencer’s said in the report.
With the retail industry poised to grow with a robust momentum and macroeconomic stability back on track in almost every aspect, the company hopes to register good growth moving forward.
Spencer’s Retail benefits from favourable demographic trends as the number of middle-class customers steadily increases, and nuclear households are predicted to reach 74 per cent by 2025. Nuclear households spend 30 per cent more per capita than combined families. This growth is driven by a young working population with a median age of 24, expanding metropolitan nuclear families, rising working women, and opportunities in the service sector. These demographic advantages position the company to tap into the growing demand in the Indian retail industry, it said.
The company is expanding its footprints with a cluster-based approach so that serving the customers can be addressed proximity-based. It would also lead to economies of scale in procurement, inventory management, and marketing expenses.
“The Indian organised retail sector demonstrates a positive outlook, driven by policy reforms and the growing trend of urbanisation. This industry’s expansion is fuelled by a consumption boom, resulting in greater disposable income, a focus on hygiene, evolving lifestyles,” it said.
Spencer’s caters to nearly 72 per cent of India’s overall organised retail market, comprising food and grocery, apparel, general merchandise, consumer durables, mobile and IT, furniture and household items and footwear. With only around five per cent market penetration, the grocery industry offers significant growth potential for modern trade, and the company is set to benefit from these potentials given its capabilities, market understanding and diversified offerings, it added.