RPG sees retail share at 30% of revenues by ’11
COMPANY TO ROLL OUT 2,000 OUTLET
Speaking to mediapersons on Friday, RPG Enterprises vice chairman Sanjiv Goenka said: “Going forward, retail business will contribute a substantial chunk towards the group’s turnover in terms of revenue.” Outlining the group’s retail plans, Mr Goenka said, Spencer’s Retail is ramping up its retail business by rolling out some 2,000 new outlets covering approximately 10 lakh sq ft by 2009. Currently, the group has 400 outlets, including 8 Spencer’s Hypermarkets, 5 Spencer’s Fresh Stores, 5 Spencer’s Express Stores and 104 Spencer’s Daily Stores.
All this will require an investment of Rs 1,200 crore by 2009. Bulk of the requirement will be funded by internal accruals. The balance requirement will be met through funds mopped by an initial public offer or private placement or private equity funding.
“The first tranche of the public funds is expected to come up in the next 12 months. We will appoint a merchant banker for the same. It is still too premature,” Mr Goenka added. Incidentally, the Goenkas have adopted a cluster model approach across the country to expand their retail business under Spencer’s. This, they feel, will help in better economies of scale in sourcing, logistics and promotional activities. Under the proposed scheme, a cluster can house between 2-3 of Hypers, 3-5 of Supers, 10-15 of Dailies, 30-40 of Express and 5-10 of Fresh.
The group’s expansion into new markets largely depends on the success of the proposed cluster model. The cluster formula will also give the group a competitive edge by increasing the number of consumer touch points in face of emerging competition. Instead of restricting the expansion activities to Tier-I cities, the group also intends to foray into lucrative Tier-II markets as well such as Aurangabad, Trichy, Madurai, Mangalore and Durgapur.
courtesy:economictimes
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