RPG Enterprises-owned Spencer’s Retail is planning to spend about Rs 1,500 crores to open up to 2,000 stores nationwide in the next two years, angling for a piece of the country’s booming modern retailing market.
The company plans to fund the expansion through a mix of RPG’s internal accruals, debt and an initial public offering of Spencer’s Retail “at some point” in the next two years, said Sanjiv Goenka, RPG’s vice chairman.
This is Spencer’s biggest expansion plans since the Kolkata-based RPG went solo in 2005 after a soured relationship with Hong Kong’s Dairy Farm International Holdings Ltd. ended a retail joint venture that operated Foodworld stores.
RPG inherited 49 out of the 94 joint-venture stores at the time of the split and the Indian company renamed its outlets as Spencer’s.
At present, Spencer’s operates 100 hypermarkets, supermarkets and convenience stores in 25 cities, covering half-a-million square feet of shopping space.
Spencer’s officials say they will increase the space ten-fold to five million square feet in the next two years. Store formats will be “defined by the kind of properties available,” Goenka said.
Spencer’s Retail is among the hordes of local and foreign companies currently investing hundreds of millions of dollars as modern retail rapidly gains ground in the country.
Gurgaon-based retail consultancy, Technopak Advisors, expects foreign and local companies to spend $25 billion on retail initiatives in India in the next four years.
Leading the pack is India’s largest textiles to petroleum conglomerate, Reliance Industries Ltd which last year rolled out its ambitious $5 billion plan to open thousands of modern retail stores in coming years.
An alliance of the world biggest retailer, Wal-Mart Stores Inc., and ndia’s largest private mobile phone operator, Bharti Enterprises, said it plans to invest several billion dollars in opening stores in India.
Meanwhile, RPG’s erstwhile partner Dairy Farm and its Indian affiliates plan to invest upto $55 million in the next three years to open 350 stores in different cities.
Modern retailing is just 3% of India’s $300 billion annual retail market compared to 20% in China and 85% in the US. Technopak estimates organized retail’s share in India will touch 16% in the next four years.