Facing slowing growth and high operational costs, India’s largest retail chain, the Future group, has consolidated its back-office operations, rightsizing some stores and could potentially walk away from properties that are now turned unviable, say company officials.
“Our back-end operations have been converged to cater to multiple formats as a part of our cost cutting and efficiency enhancing exercise. Earlier there used to be separate teams for different formats catering individually only to that format, but now the teams have been merged over last year. Presently, the teams cater to multiple formats across the group,” said Rajan Malhotra, CEO of Big Bazaar, the group’s flagship retail operations.
The group is also looking at right sizing and closing the worst-performing Big Bazaar stores, said another company official who didn’t want to be identified.
“We are looking at the bottom few Big Bazaars of which some would be right sized (reduction is store size) and some unviable stores may be shuttered. The options are being evaluated,” he said. However, he said that shutting stores will be the last option.
Previously, by end-June, the company had planned to increase Big Bazaar stores from 104 to about 140. It will now target about 130, said Malhotra.
He said the company is re-considering all agreements signed earlier and might even cancel any that have fallen behind schedule. In many cases he said that the promoters themselves have scrapped the plans and some properties have been delayed inordinately.
“Most of the agreements are signed given a time-frame of 18 months to three years and if the agreements are not as per they have been signed, definitely we will re-consider and may cancel the property,” he said, adding that the company is trying to keep its expansion plans on track though some projects are getting delayed by builders hit by a paucity of funds.
The group, however, will also focus on rolling out Big Bazaar Express stores – which are smaller and largely stock a narrower range of merchandise than the larger Big Bazaar stores – that are easier to launch in smaller towns that have smaller markets as well as in places where real estate prices are high, Malhotra said.