Mumbai: As the economic slowdown begins to bite organized retail, Mumbai-based retail food and grocery player Wadhawan Food Retail Pvt. Ltd has deferred plans to launch 10 hypermarkets in the country starting April.
The retail chain, which runs stores under branded formats of Spinach, S-Mart, Sabka Bazaar and Lifestyle, has also laid off all but three of its 35-strong team for the hypermarket project, said an employee, who has been asked to leave. The company has also retrenched at least 20 managers from its Lifestyle chain, this employee said. He requested anonymity because the company is yet to clear his dues.
Since January, Wadhawan Food Retail has also shuttered 18 of its 200 food and grocery retail outlets across 15 cities.
Trouble in store: A Sabka Bazaar outlet in New Delhi. Wadhawan Food Retail, which runs the retail chain, had plans to set up 10 hypermarts. Hindustan Times
The group runs retail chains Spinach in Maharashtra, Sabka Bazaar in Delhi and Uttar Pradesh, and S-Mart in Bangalore, and had planned to set up its first hypermarket by April this year.
“There were around 35 employees recruited for the hypermarket team, but now only three have been adjusted in the Spinach team, the rest all have been retrenched,” the employee said. Spinach is the company’s grocery retail chain.
A member of the Lifestyle team confirmed, on condition of anonymity, that management personnel from the division have been asked to go and the company has also postponed opening of lifestyle stores under the Ed Hardy brand name.
“Presently, we have three Lifestyle stores operational and had planned to add two more this year. However, we will wait and watch the market condition before deciding on opening up of the two stores in Chandigarh and Bangalore,” the official said.
Wadhawan Food Retail did not respond to email queries from Mint.
The company was scheduled to launch its first hypermarket in Bhandup, a Mumbai suburb, in April. The hypermarket was to be spread over 150,000 sq. ft and would have come up at a cost of Rs100 crore. The company had planned to open nine more hypermarkets of at least 100,000 sq. ft each over the next three years.
“At least the company is paying two months’ salary before laying off, that is the only good thing. However, the company should have recruited people after they were sure of their projects,” said the employee, who has been laid off. “The scenario is really bad, as almost all retailers have frozen recruitment and suddenly there are so many job losses.”
Another senior official said the company had floated a national team about eight months ago, but now people from that team are also likely to be laid off. “There is a lot of manpower on the regional level for separate S-Mart, Sabka Bazaar and Spinach,” the official said, on condition of anonymity. “Around eight months back, the company had planned that the national team will look after the entire operations across formats.”
The group had also identified properties in Bangalore and Pune for the hypermarket project, but did not finalize the deal, the same person said, adding that the group is also considering closing its distribution centre in Pune and will move those operations to its Mumbai distribution centre.
Arvind Singhal, chairman of fashion, FMCG (fast-moving consumer goods) and retail management consultancy Technopak Advisors Pvt. Ltd, said many new entrants in the retail sector are finding the business complicated. Some of the retailers are not performing up to the mark and are giving second thoughts to fresh investment.
He said serious players such as Pantaloon Retail (India) Ltd, Reliance Retail Ltd and Aditya Birla Retail Ltd are in the pro cess of improving their business by reworking and closing unviable stores. They will continue to grow, whereas the small players may quit.
On retrenchment, Singhal said that since the sector is new, sometimes the employees do not perform up to the expectations.