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Spencers focus shifts from Supermarket to Hymermarket

June 6, 2010


Excerpts from Enterprising India an interview with Mr. Sanjiv Goenka.

His views On Spencers Retail Business

I certainly expect Spencer’s Retail to become profitable, but would not like to comment on the precise time. In the retail business, we are creating a new vertical. It is a pioneering effort and a challenge, but we do believe we are on top of that challenge. I think sanity has come back into the retail business, although I would like to have more. We have taken initiatives that are focussing on expansion of revenue per sq ft and cost control.

For instance, we are cutting down our reliance on smallerformat stores, and getting aggressive on the larger formats. The effort of managing a 5,000 sq ft. store is roughly the same as managing a 50,000 sq ft one. So if you want to save time and costs, focus on bigger stores to get larger space, larger revenues, and larger profits. Going ahead, I expect the rentals to correct.

Why Saregama has failed to take-off ?

The entire delivery mechanism of the music industry is undergoing a technological change. In addition to cassettes, CDs, and MP3, now we also have free website downloads, mobile phone downloads, etc. The industry is growing, and changing faster than you can cope with it. For example, the entire music industry two years ago was Rs10bn (US$230m-250m); in 2008, the music valued-added services for telecom operators was Rs28bn (US$550m-580m). So areas of the music business have grown, but the music industry’s share in that pie has reduced… and I think it is a challenge to increase our share in that. We plan to diversify from plain music into movies as well. Music gives us just one revenue stream, movies give seven So why should we restrict ourselves to just music?

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