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Retailers bet big on small towns

Organised retail, which took a beating last year, is now scaling up operations in tier-II, and -III towns. Most retailers are optimistic and expanding operations even as projects and properties in urban areas lie unused.

business Updated: Mar 23, 2010 21:07 IST
Rachit Vats

Organised retail, which took a beating last year, is now scaling up operations in tier-II, and -III towns. Most retailers are optimistic and expanding operations even as projects and properties in urban areas lie unused. Cities such as Bhopal, Aurangabad, Durgapur, Aurangabad, Dhanbad and Mysore are next on the radar.

Spencer’s Retail, Aditya Birla’s More Retail, and K Raheja Group’s Shoppers’ Stop have already chalked out plans to make forays beyond the metros. Seeing demand pick up from across the country, Shoppers’ Stop believes the strategy to up the small town focus is sustainable.

Govind Shrikhande, Customer Care Associate, President & C.E.O, Shoppers’ Stop, said, “Small towns are very much on radar as there is a lot of untapped growth in these areas. We’ll enter at least 10 new cities in 2010.”

This year, Shoppers’ Stop plans to enter cities such as Bhopal, Aurangabad, Ahmedabad, Indore, Vijaywada, Baroda, Durgapur, Aurangabad, and Mysore. The group so far has presence in cities like Jaipur, Lucknow, Pune and Amritsar with 29 stores.

Spencer’s Retail Limited, which is present in 35 cities and has a strong presence in tier II cities such as Vizag, Vijayawada, Baroda, Lucknow, Durgapur and Trivandrum is looking at a Rs 100 crore investment and planning 15 more large format stores this year with a tier-II focus. A Spencer’s spokesperson said, “Tier II cities fetch better returns since the rentals and operational expenses are lower and the business model is viable.”

Big Bazaar, which is present in over 70 cities and towns, hopes to be present in at least 100 cities and towns in the next 2-3 years.

Anshuman Magazine, CMD, South Asia, CB Richard Ellis, however said, “The optimism is too high. The tier-II, III cities have their own demographics and will take time to catch up in terms of purchasing power”.

Atul Takle, Head — Corporate Communications, Pantaloon Retail India Limited, said, “Any town with a population of more than 300,000 represents an opportunity for a format like Big Bazaar. Given this thinking, we have booked properties in many tier- II and III towns. Today towns like Jamshedpur, Ranchi, Bhubaneshwar, Mysore, Mangalore etc have some of our best selling stores.”