Spencer’s consolidation drive + rightsizing stores

You are Reading this First HereSpencer’s Retail Limited, one of India’s largest foods first multi-format retailer, has been in a strategic consolidation mode for last few months.

Strategic Measures:

  • As part of its consolidation drive, Spencer`s has recently closed 150 unviable small format stores on a Pan India basis. The immediate loss in the trading area has been compensated with the opening of large format stores. It has also completely exited few markets like Ahmedabad, Nasik, Kanpur, a few cities in Kerala, Ranchi and Mangalore.
  • Spencer’s is realigning logistic strategies in an attempt to cut costs by at least 20%. Reduction in the space at distribution centres, encouraging direct supply to stores.
  • IT-enabled shelf-centric supply chain processes are being implemented so that the right product is available at the right time at the right place. The company has fully migrated to SAP IS Retail platform and all the processes are now fully streamlined.
  • Spencer’s has also achieved some success in negotiating with mall owners on renteither in the form of rent reduction or entering into a revenue sharing arrangement

Growth Plans:

  • The company plans to focus on the larger format stores in the identified growth clusters with higher market potential value and stronger brand equity for Spencer’s. These clusters are Bangalore, Hyderabad, Coastal Andhra Pradesh, Chennai, Delhi NCR, East UP, Pune, Mumbai, South Kerala, Aurangabad, Punjab and Kolkata.
  • It would also focus on high margin verticals like private label and fashion. Currently, the two verticals independently contribute about 15% to the total revenue of Spencers which is targeted to be enhanced to 30% within next couple of years.
  • New products in existing categories in the private label portfolio are currently
    being launched across food, fashion, home and entertainment.
  • New standalone pilot stores of fish and meat are being launched in the city of Kolkata
    in August-09 to cater to one stop shop need of the customers. The company plans to open a new Hyper in Bangalore and Trichi in the next 2-3 months.

Spencers has the following ti-ups for its Retail initiative – exclusive tie-up with BHPC International LLC, which owns the world-renowned apparel brand Beverly Hills Polo Club, Au Bon Pain, the Boston-based fast casual dining and bakery cafe chain.