New Delhi: Diversified retail player Vishal Retail on Tuesday said the group is undertaking re-negotiation of rent agreements with property owners for a 25-50% reduction in rentals and also plans to close down, relocate and resize stores to achieve economic viability.
The company’s comments came close in the wake of its announcement last week to close down two of its stores in Mumbai and Jodhpur, respectively.
“We are in the process of re-negotiating rentals with many of our property owners and are looking at achieving 25-50% reduction in rentals, in line with the downslide in realty prices.
“We are also planning to relocate stores which are economically not viable or whose rentals are more than market rates and resize others to make them more profitable,” Vishal Retail Group president Ambheek Khemka said.
He said the company is undertaking a study to look at economic viability and rental state of all its stores.
“We are identifying stores to find out where we need to resize them, close down or relocate to some other location. The process will take some time to complete,” Khemka said.
Vishal Retail’s latest stand comes a few months after the retail giant cut down its turnover target to Rs1,500 crore for the current fiscal, down from Rs1,800 initially planned.
The company, which has currently around 185 stores including hypermarkets and small-format stores across India, had clocked a turnover of just over Rs1,000 crore in 2007-08.
Asked about plans to close down any more stores, Khemka said: “Not immediately. We will first finish the viability study and then look into the matter.”
He admitted that the company’s stores, specially the ones in metros and Tier I cities, have witnessed reduction in footfalls and sales.
We are not totally immune to the slowdown. However, it is difficult to quantify the exact percentage of decline in footfalls or sales,“ Khemka said.
He added around 75% of Vishal Retail’s stores are located in Tier II and III cities. “The impact of the slowdown has been much less in such places,” Khemka said.