‘We are a food-first retailer and we want to stay that way’

Twenty-four-year-old Shashwat Goenka — son of Sanjiv Goenka, RP-Sanjiv Goenka Group chairman — bets on hypermarket or large format stores to bring Spencer’s Retail back in the black. In an interview to Business Line , Shashwat, Sector Head – Spencer’s Retail, talks about the road ahead for the retail chain. Edited excerpts:

What are your expansion plans?

Last year, we set a target of having 80 hyper-market stores in the next 4 to 5 years. We are sticking to that. In 2013-14, we opened 9 large stores.

This year we are targeting at least 11 big stores. On Friday, we opened the first outlet at Greater Noida, a 31,700 sq ft store at Ansal Plaza. This our thirty-fourth hypermarket store. Typically, investment in each store varies between ₹3 crore and ₹6 crore. There will be no immediate expansion in the smaller format stores till we achieve profitability.

So will you focus on the hypermarket format only?

There will ’ll be no immediate expansion in the smaller format stores till we achieve profitability.

When will Spencer’s turn profitable?

I am not going to give any timeline. But we should be there soon.

In 2013-14 our losses (before tax) have come down to ₹166 crore; from ₹209 crore in the previous year. Average sales per sq ft increased from ₹1,220 to ₹1,300.

While there is no fixed formula to break-even; we look to add stores that generally break-even in the first year of operations.

We are a food-first retailer and we want to stay that way. Food (and other FMCGs) accounts for almost 80 per cent of our business. The focus would be on having higher margins. We will also concentrate on apparels and general merchandise. It’ll be mix of private labels and brands.

We have to increase our share of private labels.

The idea is to have a mix of regional and local brands that are important to the customer. There are a lot of private labels in which we have not invested. We want to change that.

Will there also be more of ‘Spencer’s’ branded FMCG offerings?

Potentially yes. But we are still finalising the strategy.

Any noticeable change in consumer sentiments?

We have seen a delta impact from April onwards. Sales in some stores grew from around 9 per cent (last year) to 13-14 per cent in April-May this year. There has been a change in attitude of the consumer; and, shows that they are willing to spend.

There were plans of listing Spencer’s. Is it still on?

It will come only after we achieve profitability. And we are preparing for all possibilities and studying modalities.

Any back-end tie-ups with other retailers or foraying into e-commerce?

We have not made any attempts for back-end tie-ups (with other retailers). Nor are we in e-commerce. The immediate focus is the hypermarket format. Once we turn profitable we would look up other modalities.

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