‘Operating 90% stores despite supply side, labour challenges’

Private equity firm Samara Capital and US-based e-commerce giant Amazon.com-owned More Retail Ltd is operating almost 90% of its stores despite supply disruptions and labour unavailability, a senior executive at the firm told Mint.

More Retail operates around 645 stores across India. Samara Capital and Amazon had bought the retail chain from Aditya Birla Group in 2018.

"We are operating 90% of our stores in addition to 20 distribution centres that we have. The 10% stores that we are not able to operate are those that are either inside certain malls or those where local authorities have asked us not to operate," said Mohit Kampani, deputy managing director and chief executive officer (CEO) of Hyper Markets at More Retail.

More Retail's operational stores are currently selling only essential products such as groceries.

"While we are seeing strong support from the central and state governments, there are some implementation issues at district level by the local authorities, which have caused some issues," Kampani added.

The 21-day nationwide lockdown to contain the spread of the deadly coronavirus (covid-19) has impacted the movement of goods and services. Lack of manpower has become a major operational hurdle for retailers as suppliers are unable to deliver goods to these store operators.

"70% of our top suppliers are not able to operate their distribution centres at normal output. In some cases, we are trying to resolve issues by sending trucks from our end to pick up goods," said Kampani, adding that, "We are working with two-thirds of what we would normally carry as inventory."

The mass migration of labour to villages as a fallout of the lockdown has also disrupted the supply chains leading to additional problems for retailers.

"Labour, right now, is one of the biggest challenges. Labour is scared because of the various actions that have been taken by the local authorities in different parts of the country. There is a need to give them confidence for them to come back," said Kampani.

The labour issue is also affecting suppliers and their factories.

"Within the company, while we have around 13,000 permanent employees, currently because of the challenges around logistics, we have around 9,000-9,500 employees at work," said Kampani.

The retailer recently hired former Colgate-Palmolive India chairman Vinod Nambiar as its managing director to beef up its management strength amid the testing times.

Prior to joining More Retail, Nambiar held leadership positions at Hindustan Unilever Ltd (HUL) and Colgate-Palmolive. In his previous stints, he worked across geographies in India, Romania, Italy, Greater China and the broader Asia-Pacific region.

"We believe that Vinod brings a unique combination of inspiring leadership and first principles-based problem solving approach with passionate customer obsession. His strategic clarity coupled with a strong execution bias will drive exceptional results in the years to come," said Sumeet Narang, founder and managing director of Samara Capital.

He added that the retail industry has shown a high degree of nimbleness to adapt to the difficult operating environment.