|Jubilant Retail to expand hypermart network|
|Monday, 07 March 2011 06:05|
Hari Bhartia controlled Jubilant Retail plans to open eight new ‘Total’ hypermarkets in Bangalore as it attempts to focus on its home market to gain a larger share of the customer’s wallet. “We’re investing around Rs 450 crore per city and we want to focus on catchment areas we understand well and prioritise those markets. We plan to open eight more stores in the Bangalore region as we believe the scale will help us break even faster on a companywide basis,” said Dinesh Malpani, CEO of Jubilant Retail.
The company claims that its stores have already started generating operating profit, which has emboldened the Bhartias to fund the rollout of more Total hypermarkets in Bangalore with fresh equity infusion.
Jubilant Retail claims to be the second largest value-for-money hypermarket chain in Bangalore. The group also takes on lease the entire mall to provide family entertainment options and ensure a tenant mix and activities that encourage consumers to visit the malls. The integrated strategy also helps the firm to ensure lower lease rental costs for its hypermarts and gives it greater control over the success of the malls. The retailer also claims to have a strategy of 'farm to fork' to source produce from farmers at a lower price which enables it to offer affordable pricing.
“The promoters have so far invested Rs 400 crore in the business with around Rs 225 crore as equity. Going forward we aim to fund our expansion with a 1:1 debt to equity ratio,” said Malpani. The Total hypermarkets carry an assortment of 95-100 lines of products, spread across fast moving consumer goods, groceries, and fruit and vegetables.
Malpani says the stores have been seeing same-store sales growth of 60 per cent. Same-store sales growth is a key metric in the retail industry, as it shows by how much sales at existing stores have been growing. Growing same-store sales leads to improved gains and lower dependence on opening new stores to boost sales and profits.
The Bhartias are also present in the retail business via BSE-listed Jubilant Foodworks, which is the master franchisee in India for Dominos Pizza and Dunkin Donuts.
A recent study by The Boston Consulting Group (BCG) puts the size of India’s organised retail industry at $28 billion or 6-7 per cent of the total retail market. By 2020 the global consultancy estimates the organised retail industry to grow almost 9 times to $260 billion. “If historical constraints that held back the sector persist, organised retail would reach a size of $170 billion by 2020,” said BCG.