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RPG to open one store a day, rules out foreign retail tie-up

RPG to open one store a day, rules out foreign retail tie-up
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First Published: Thu, Jul 12 2007. 06 39 PM IST
Updated: Thu, Jul 12 2007. 06 39 PM IST
Mumbai: The RPG Group, which owns the Spencer’s brand of retail stores, will invest Rs 1,000 crore for opening nearly 365 supermarkets in the next one year.
Ruling out any tie-up with global retail chains, RPG Enterprises Chairman, Harsh Goenka said the group had the necessary wherewithal to conduct the business on its own.
“We have 200 stores presently and are expanding very fast. We will be opening from now on almost one store everyday in the next one year. Last week, we had opened 40 stores,” Goenka told PTI.
Spencer’s Retail offers a complete gamut of products and durables ranging from bread to bed.
“We see no need to bring in a strategic partner as we have the knowledge about Indian customers, a large data-base as well as the IT backbone to run the business on our own steam.”
In fact, RPG’s IT arm, Zensar, was providing the software to global retail majors including Marks & Spencer’s, Target and Dubai-based Landmark.
RPG Group is the second largest retail chain in the country despite several major industrial houses, including the Mukesh Ambani-owned Reliance, Sunil Mittal’s Bharti Group and Kumar Mangalam Birla Group, having entered the fast-growing sector recently.
Goenka also plans to tap the capital market for his retail business within the next 12 months but nothing has been firmed up so far.
RPG Group took over the century-old Spencer’s, a Chennai- based retailer in the 1990s, and has gradually been expanding its retail business pan-India under this well-known brand.
They have five types of stores -- hypermarket, supermarket, daily stores, express stores and ‘Fresh’ for fruits and vegetables.
The hypermarkets are of 40,000-50,000 sq ft in size, supermarkets 12,000-15,000 sq ft, daily stores 3,000-5,000 sq ft and express stores of 1,000 sq ft, he explained.
To woo customers, the group will emphasise the local flavour in its retail business, catering to the tastes of different regions in the country.
Aiming to further strengthen its supply-chain, Goenka said the strategy would be to procure directly from farmers non-perishable products like wheat, rice and dal, thereby eliminating a number of middlemen and benefiting both farmers and customers.
Simultaneously, the group will also procure perishable commodities from mandis which could not be centrally purchased for distribution in the entire country.
“We are also trying to create vertical specialisation for various functions like buying - our aim is to buy right, buy smart,” Goenka said.
Goenka dismissed fears that organised retail would marginalise ‘kirana’ and neigbourhood stores which accounted for over 90 per cent of retail trading in the country.
“There is space for everyone - home-grown retailers, neighbourhood shops and even foreign retail chains,” he said, adding “presently, organised retail accounts for only 1-2% and has immense potential for growth.”
He did not expect organised retail to go beyond 20% of retail trading in the country and that itself offered a huge potential for growth of retail business.
Organised retail may be preferred by the growing middle-class for its ambience and some value-added services, but for daily needs, a vast majority of the population would continue to depend on neighbourhood stores, he noted.
The one important advantage of organised retail is that it provides massive employment, particularly to that category of persons who would otherwise not get jobs elsewhere, he said.
The sector offers jobs to school and higher secondary pass-outs who may not be equipped to get white-colour jobs but at the same time were not willing to do menial jobs after having gone to school, Goenka observed.
In this connection, the RPG Group has set up five training institutes for training such people in the retail business, he said, adding presently these institutes impart training to about 1,000 people every year.
Many of these youngsters were absorbed within the group but they were free to seek jobs elsewhere with other retail chains as well, Goenka stated.
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First Published: Thu, Jul 12 2007. 06 39 PM IST
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