Spencer’s must sort out real estate, manpower & perception problems
Most upcoming organised retail chains tend to hype on their
price competitiveness. So is it the sole differentiator that works? At least Spencer’s Retail, which recently announced a capex of Rs.25 billion by 2010 to set up a series of multi-format retail outlets in India, doesn’t seem to think so, as they cater to what they call the ‘business class’ of Indian customers.
“It’s quality, range & assortment that attracts a customer to the retail store. Then there is convenience in terms of location,” argues Samar Singh, Vice President, Spencer’s Retail. Price, according to him, comes after these factors. For assortment, Spencer’s normally keeps three types of merchandise: national, regional & imported goods, and their products, according to Samar, come at prices that are “not unreasonable”, indicating how they focus more on the shopping experience per se. They follow this approach to merchandise in all their verticals. Spencer’s defines its target audience as ‘female, sec a category, in the age group of 25-34, married and with children (she could be at home or working).’ The formats it currently owns are daily (218), express (154), hypermarts (15) & supermarkets (13).
Strangely, Spencer’s is not so worried about the issue with farmers, a thorn in the flesh of some major organised retailers today. Samar points put proudly how they have not faced any problem on this front. They don’t source directly from farmers, neither do they undercut them; two prime factors, according to Samar, that minimise the possibility of conflict.
But while Spencer’s differs in its approach to ensuring customer retention, they face significant challenges that can stymie their ambitious growth plans. Real estate is high on the list. Laments Samar, “In an sec area like Jor Bagh in New Delhi for instance, the real estate price (for a selected location) is Rs.500 per sq. ft. while my limit is Rs.55 per sq. ft.
Most upcoming organised retail chains tend to hype on their
price competitiveness. So is it the sole differentiator that works? At least Spencer’s Retail, which recently announced a capex of Rs.25 billion by 2010 to set up a series of multi-format retail outlets in India, doesn’t seem to think so, as they cater to what they call the ‘business class’ of Indian customers.“It’s quality, range & assortment that attracts a customer to the retail store. Then there is convenience in terms of location,” argues Samar Singh, Vice President, Spencer’s Retail. Price, according to him, comes after these factors. For assortment, Spencer’s normally keeps three types of merchandise: national, regional & imported goods, and their products, according to Samar, come at prices that are “not unreasonable”, indicating how they focus more on the shopping experience per se. They follow this approach to merchandise in all their verticals. Spencer’s defines its target audience as ‘female, sec a category, in the age group of 25-34, married and with children (she could be at home or working).’ The formats it currently owns are daily (218), express (154), hypermarts (15) & supermarkets (13).
Strangely, Spencer’s is not so worried about the issue with farmers, a thorn in the flesh of some major organised retailers today. Samar points put proudly how they have not faced any problem on this front. They don’t source directly from farmers, neither do they undercut them; two prime factors, according to Samar, that minimise the possibility of conflict.
But while Spencer’s differs in its approach to ensuring customer retention, they face significant challenges that can stymie their ambitious growth plans. Real estate is high on the list. Laments Samar, “In an sec area like Jor Bagh in New Delhi for instance, the real estate price (for a selected location) is Rs.500 per sq. ft. while my limit is Rs.55 per sq. ft.
There’s no way I can make money this way.” The only choice could be to select a location that’s priced lower, which would mean compromising on the approachability factor. As a percentage of revenues, real estate price is only about 2% in international scenario and 8-10% in India (at times it even goes upto 25%). The other critical point is quality manpower, where the company goes to great lengths to ensure it employs people with the right attitude and gives them multi-functional training. With the kind of audience they cater to, Spencer’s challenge for quality real estate and manpower becomes even more daunting, since both are critical aspects of the shopping experience.
And there is some problem with the feedback on their stores too, as Susil Dungarwal, retail & realty analyst, ficci, states, “Spencer’s merchandise mix, price, quality & service is not better than other retailers.” Surely, that perception has to be changed if they have to make their ambitious plans a reality.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
And there is some problem with the feedback on their stores too, as Susil Dungarwal, retail & realty analyst, ficci, states, “Spencer’s merchandise mix, price, quality & service is not better than other retailers.” Surely, that perception has to be changed if they have to make their ambitious plans a reality.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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