As the store rents have dropped as much as 35% in last one year, retailers across the verticals have decided again to expand. But I hope this time they are doing their complete homework before reaching to any conclusion. Otherwise it won’t take much time for things to change. And we have already seen effects of such unplanned expansion earlier with closures in Ahmadabad and many other parts of country. I agree that rentals form a substantial part of a stores expense sheet but it’s not the only part. Apart from rentals there are many other expenses which a store needs to meet effectively like human cost, inventory cost, infrastructure cost, maintenance cost, electricity, etc. And at the end purpose of opening a new store is not just meeting expense but is to earn profits.
Here is expansion plan of some of the retailers:
|
RETAIL EXPANSION: WHAT’S IN STORE |
||
|
Retailer |
No. of |
Timeframe |
|
Subhiksha |
600 |
12 |
|
Spencer’s |
100 |
6 |
|
Koutons |
50 |
2 |
|
Big Bazaar |
40 |
8 |
SOURCE: http://www.rediff.com
- 
Rajeev Damani 
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November 15th, 2008 at 2:19 am
600 from subhiksha really seems just on paper….. they arent able to fulfill the demands of the customer at their existing stores let alone expand… for the last 3 months, subhiksha don have any stock at all(basic)… HUL has stopped its supply partially… as per the inside sources from the co…. the promoters lookin for an equity sale or a complete sell off….
November 15th, 2008 at 4:35 pm
hi pat,
you are right. even i hope that they don’t go with this plan. they are actually missing liquidity. otherwise it gonna be a big mistake for them. it can be strategy to have better prices for the stake they want to sell off