Spencer's: Is it inThe World's Shopping L

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   Spencer's Retail a part of the RPG Group with a legacy of 150 years has traversed a path fraught with obstacles and thorns. The five Format strategy of Daily, Fresh, Express, Super and Hyper pursued in 2006 led to the opening of 350 stores in 50 cities from 48 stores in 10 cities. The initiative of the management has led to the closing down of 150 stores with 1000 employees being fired. The top management has been snapped up by by Reliance Retail. Spencer's efforts at competing with the kirana stores by focussing on small, neighbourhood stores have met with resistances. The staff costs of Spencer at 919 Rs per sq ft are clearly 2 times that of Pantaloon's 400 or Shopper's Stop 565 or Trent's 588 Rs. The highest revenues per sq ft is Spencer with 9651 Rs compared with a Pantaloon's 7788 or Shopper's Stop's 8585 Rs. The revenues jumped from 521 crores in 2006 to 815 crores in 2007 to 1087 crores in 2008-09. The net loss during the period increased from 52 crores to 89 crores and finally to 177 crores.

The company is presently sticking with two formats- hypermarket encompassing an area of 25,000 sq ft and supermarket under 10,000 square feet. Pantaloon with 160 Food Bazzaars or Reliance Fresh with 800 stores or More with 600 stores have found it difficult to compete with local stores.

The top retail companies were shifting focus from an expansion driven strategy to an optimisation driven one. The company would invest 100 crores towards expanding presence in the two formats. Spencer intends to bring down it's cost by a further 100 crores. Spencer would double the floor space from the present 1.1 million sq ft by the end of fiscal 2010. Pantaloon the market leader would not add more than 2 million sq ft this year. The turnover of Pantaloon has been scaled down to 8000 from 10000 crores for 2009. Spencer has an excellent in-store experience and wide choice of international products appeals to consumers with high disposable income and possesses knowledge of modern retail trade. Retailers are increasingly focussing on value retail in the months to follow and move away from life-style goods. Spencer is expected to be aggressive on hypermarkets and tier-1 cities. Spencer is expected to breakeven by 2012. Dilution of 10% equity to private equity is on the cards.