Durable retailers target smaller formats , Tata’s Croma & Videocon’s Next In Talks With Outlets For Revenue, Stores Growth
IN A bid to ramp up revenue growth and stores growth, national durable retail chains like Croma, a Tata-Woolworth joint venture and Next, led by the Videocon group, are learnt to be in discussion to buy out several smaller retail outlets across the country. The large formats are in talks with players like Sumaria, Sony Mony and Kohinoor in Mumbai, Shubham in Bangalore and Shah’s and TMC in Hyderabad although expectations of high valuations may delay deals, sources said. However, relatively larger chains like the Vijay Sales in Mumbai and Vivek’s in Chennai are believed to be opting for private equity investments to expand and eventually tie up with international players like Dickson or a Best Buy. Organised retail chains like Next, Croma and Vijay Sales did far more brisk sales than the smaller players during Gudi Padwa this year (traditionally considered an auspicious time to buy). Industry experts say consumers now increasingly prefer to make purchases in larger specialised formats which have put the smaller players under tremendous pressure for volumes. According to industry estimates, organised durable retailing is expected to grow from 4% last year to over 10% this year while the overall industry growth is pegged at 8%. “Given that the business is about scale, we are looking at acquisition possibilities with like-minded chains. But at the same time we are equally focused on setting up new outlets across the country” said Croma CEO Ajit Doshi. National players are stepping up expansions at a time when heavy-weights like Reliance, Godrej and Pantaloon’s Home Solutions Retail are setting up specialised national durable retail formats with a focus on high-volume business models Being price-competitive in a technology-led market, understanding the Indian consumer’s requirements, handling the back-end supply chain and distribution systems is a complex process especially given the country’s geographical diversity. Currently smaller chains have realised they need to expand operations. Says Kohinoor proprietor Ram Mewani: “Unless we scale up and get competitive, it would be tough to be in business in the long run. We are open to tie-ups but we need to get the right price.” “We are in discussions with smaller chains for a complete buy-out. It is crucial to expand faster to keep growth rates high” said a senior official from Next. Spends in promotions and offers are shifting to retail formats, which are bargaining for higher margins from manufacturers.
No comments:
Post a Comment