Mumbai: Foodland Fresh, a chain of retail outlets, promoted by Raju Shete, a pioneer of organized private retail in the country, will close 39 of its 42 stores across Mumbai and its suburbs, said a person affiliated with the chain without wanting to be named.
Instead, it will now concentrate on its core business in segments such as wholesale trading, distribution and logistics. The closures stemmed largely from high rentals as well as the increasing competition from other organized retail stores coming up in the same areas, this person said.
The move to close such a large number of stores is expected to affect about 1200 employees in the front and back-end operations. Around 10% of the staff has been shifted to other businesses of the company while the rest has been retrenched, the person said.
Popular store: The Juhu outlet of Foodland Fresh. Abhijit Bhatlekar / Mint
Ivan Rodrigues, vice president, marketing and formats, and official spokesperson Radha Krishna Foodland Pvt Ltd, which owns and operates Foodland Fresh, admitted to a ‘refocusing of its core business strategy’ in an email.
Raju Shete could not be reached for comment.
Rodrigues, however, contested the number of stores being closed. “The numbers mentioned are a matter of speculation. However, we have shut down un-profitable stores and will continue to do so going forward,” he said.
The company will now concentrate on wholesale trading, distribution and logistics, he said.
The group started its first retail outlet in 1988 in the tony Juhu suburb. This is the only outlet that the company owned itself while the rest were run by franchises. Following its expansion in 2005, the chain had at one point the the largest number of food and grocery outlets in the city.
The Juhu outlet, however, continues to be patronized by the celebrities who live in the neighborhood. On a recent visit to the store, this reporter ran into Hindi film actor Karisma Kapoor, who said she comes there because it ”has almost everything except for one or two items like slim cheese and others..and nobody troubles me here and I have my own privacy.”
Rodrigues said the company will continue to support ’Foodland Fresh’ franchisees across niche geographies in Mumbai, as well as niche retail formats focused on value-added fresh and gourmet offerings. “Support to formats focused on ’healthy eating’ will also be another thrust area,” he added.
The company with its fleet of 140 temperature-controlled vehicles will continue to expand its network to serve clients, including QSR (Quick Service Restaurant) chains, retail chains, and food manufacturers, among others.
The organized retail sector in India has been hit hard over the past year. Recently another Chennai-based national food and grocery retail chain, Subhiksha Trading Services Ltd admitted to a ‘sudden collapse’ in a media note sent by R. Subramanian, the chain’s founder and managing director. The admission came after months of denying allegations of the company not paying its vendors and the staff, and shuttering several stores.
Other retailers in different product categories have also taken to relocating or shutting down stores and to renegotiating rentals that were signed at the height of the real estate boom.
In his email, Rodrigues said realistic benchmarks when it comes to sales estimates, operational excellence, capacity utilization, break even and return on investment have not been defined, solely because there is no historical data in India for such a business.