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Organised retailers expanding businesses to cash in on boom

Big Bazaar is planning to position the store as a value retailer after hiving it off as an independent company within the group, reports Sanjeev Sinha.
Hindustan Times | By Sanjeev Sinha, New Delhi
UPDATED ON APR 17, 2008 11:23 PM IST

Buoyed by the ongoing retail boom and the growth prospects, the organised retailers of the country, from Reliance Retail to Pantaloon Retail and Shoppers’ Stop to Vishal — are on a major expansion spree.

This is likely to increase the organised retail space from 66 million sq ft in 2007 to more than 316 million sq ft by the end of 2011.

Reliance Retail alone plans to increase the number of its Reliance Fresh outlets from the present 520 to 5,000 by 2011, and Reliance Mart from 4 to 200. The company plans 300 outlets of Reliance Jewel, 75 outlets of Reliance Trends, 125 stores of Reliance Footprint and 300 outlets of Reliance Wellness by 2011 (5, 4, 4 and 30 respectively at present) In all, the company plans to up its retail presence from 3.75 million sq ft to about 100 million sq ft by 2011, sources said.

Vishal Retail plans to invest up to Rs 3,000 cr over the next three years. At present it has 106 stores with floor area of 2.2 million sq ft in 69 cities. It is eying 10 million sq ft by March, 2011. “Most of our expansion will take place in tier-II and tier-III cities, and be funded through debt and equity in a 2:1 ratio,” said Ram Chandra Agarwal, CMD, Vishal Retail.

Similarly Bharti Retail, which has a joint venture with Wal-Mart for cash and carry operations and a franchisee agreement for front-end retail, aims to spend up to $2.5 bn (Rs 10,000 cr) by 2015 for opening multiple format stores over 10 million sq ft.

The Future Group, which began the retail revolution with its Big Bazaar chain, is not to be left behind either. Big Bazaar contributes 64 per cent of the group’s total turnover of Rs 7,000 cr. It is planning to position the store as a value retailer after hiving it off as an independent company within the group. The group is also planning to increase the number of its Home Town stores this year from 5 to 10 with an investment of Rs 120 cr, while the number of Central malls will be increased from 6 at present to 30 by 2011.

“The new Central malls will initially come up in Mumbai, Bangalore, Vizag, Coimbatore and Ahmedabad, and then in other parts of the country,” said Rajesh Seth, V-P marketing, Central & Brand Factory. The group’s flagship company Pantaloon Retail is expected to have more than 27 million sq ft of retail space by 2011 (7 million sq ft at present).

Piramyd is expected to occupy close to 2 million sq ft by the end of 2011, which will be more than 4 million sq ft in the case of Subhiksha and 5.1 mn sq ft in the case of Shoppers’ Stop, according to an Edelweiss research report.

The report says retail is poised to grow at 42 per cent annually from 2007 to 2011.

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