Dabur India Ltd., which sells the popular Dabur Amla hair oil and Dabur Chyawanprash, plans to open 1,000 retail outlets in the next 10 years to cash in on a growing demand for specialty stores and organized retail.
The stores will sell products ranging from personal care to pharmacy and general merchandize and stock both Dabur and rival brands, said a company spokesperson.
The firm will invest Rs140 crore to open 120 stores by 2010, all of which will be operated and owned by franchisees. The typical store size will range from 1,500 sq ft to 6,000 sq ft. The retail foray will be led by its wholly owned subsidiary, H&B Stores Ltd.
“Retail is the next big focus area for Dabur India,” said the company’s chairman V.C. Burman in a statement. Dabur has roped in three senior professionals from AS Watson Hong Kong and London to formulate the retail strategy, according to officials. H&B Stores plans to set up 350 retail stores across India in five years .
The company aims to break even in the next four years and is targeting revenues of Rs1,700 crore by 2012.
According to consulting firm AT Kearney, pharmacy and personal care retailing, worth Rs25,000 crore, is one of the rapidly growing retail segments in India.
“Fundamentally, it is a lucrative format since this type of chain operates with a 30% gross margins vis-à-vis 20% in a supermarket format,” said Hemant Kalbag, principal, consumer industries & retail practice, AT Kearney Ltd. “Dabur may have a first-mover advantage because organized retail in this segment is nascent. However, the main challenge Dabur could face is how will they reconcile its own brands with those of other FMCG companies.” Traditionally, FMCG firms and retailers have had a lovehate relationship with consumer product-makers. While the former want better shelf space for their products, retailers want lower purchase prices. “Dabur, which is one of the leading personal health care companies would have to convince other consumer product companies that shelf space will be equitably distributed to all,” said Kalbag.
Rasul Bailay contributed to this story.