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Cover Story
 

“I Foresee a lot of Action in Retail Space”
Govind Shrikhande, CEO, Shoppers Stop Ltd.
Issue Date - 18/08/2011
 
B&E: What steps have you taken to combat the flurry of shopping malls, which is affecting your business in a big way?
Govind Shrikhande (GS): Firstly, our operation are very different from the operations of a shopping mall. In fact, we are a high-end chain of large-format departmental stores where the focus is on selling the most relevant consumer products. Also, we ensure that we are present near every major shopping mall across metros. For instance, one can see us around the Select City Walk mall in South Delhi and the Raja Garden shopping area in West Delhi. Further, we are also expanding in a big way. We will be launching about 5-6 stores this year alone, and expect to reach 67 stores (from 43 stores at present) in the departmental stores format in the next three years. We are also expanding in other formats like hyper-market format. HyperCity, our hyper-market chain, currently has 10 stores across India. We plan to double this number in the next four years. Today, we are not only present in metros, but one can also see us expanding our reach across Tier 2 and Tier 3 towns (such as Vijaywada, Indore and Bhopal) in the country. We are also planning to enter Coimbatore and Ahmedabad very soon. In fact, today we are the largest retailer in India with total retail space of about 3.5 million sq. ft. in 16 cities across the country. We want to quickly take this number to 25. While in Delhi and Mumbai we plan to have 10 stores each, for Bangalore and Chennai we are targetting 5 stores each. In fact, in the next three years 75% of our store will be in the major metros across India. All in all, we are targeting an investment of Rs.4 billion in the next four years.

B&E: A committee of secretaries (CoS) has recently given final shape to the draft policy for allowing 51% FDI into the country’s multi-brand retail format.What do you think of the proposed change? What impact will it have on the Indian retail sector?
GS: I have always been of the opinion that the Government should allow FDI in retail but with certain strings attached. It would be to India’s advantage to have FDI in retail, to push exports up substantially. In fact, it will bring in a lot of economic wealth to a whole host of people involved in the manufacturing. Although a lot of discussion are going around the proposed FDI limit in multi-brand retail, the policy changes are still not clear in terms of how much investments will be allowed in back-end and how much in wholesale cash-and-carry format stores; whether there will be a minimum investment cap of $100 million or not. But anyways, it will be a big boost to Indian retail as it will definitely bring in a lot of investment. Further, I think we need to focus more on the departmental store format, as there is still not much happening in the segment. In fact, if FDI is allowed in multi-brand retail, department store format would be among the first to benefit from the decision.

B&E: Considering the low deal volumes in the sector so far this year, do you think that this proposal is likely to improve deal figures going forward?
GS: I foresee a lot of action in retail space in the near future. In fact, the sector is bound to witness some major changes soon. With policy changes, foreign players entering India will prefer to acquire established local brands, as it will give them a head-start in the country. Thus, competition is set to rise going forward.

 

          

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