BackLarge retailers step up store expansion as 2nd wave ebbs
Retailers such as Tanishq, Shoppers Stop and Bestseller India, that sells fashion brands Vero Moda, ONLY and Jack & Jones, plan to add anywhere between 10 to 35 stores this fiscal
PremiumLarge retailers are back to opening up stores as the second wave of covid-19 infections recedes in the country, mobility improves, local markets open up and brands pick up on construction activity stalled in the June quarter.
Retailers such as Tanishq, Shoppers Stop and Bestseller India, that sells fashion brands Vero Moda, ONLY and Jack & Jones, plan to add anywhere between 10 to 35 stores this fiscal. Meanwhile, some of the smaller retailers said they will exercise caution in adding new stores as they reel under the impact of second wave of the pandemic that temporarily shut stores as well as dented discretionary demand.
“We are very confident of our expansion plans. Whatever deferment is, it's on account of the sheer physical closure and logistics. Some things which got deferred last year...will open now and the fresh ones which were supposed to open, the work has started. So, there's some deferment but not really holding back," said Ajoy Chawla, CEO, Titan Jewellery Division.
Prior to the second wave of infections, Tanishq planned to open 35 stores for the year. “Now post this wave….we will still try to push for as many as we can," said Chawla.
Meanwhile, Shoppers Stop is set to open 11 stores. It has picked up on construction of stores that were deferred last fiscal.
In the last financial year, the retailer closed three stores as part of refining and upgrading its stores.
“In terms of store openings, we opened one last year. In our plans for this year, we had 11 stores which were due to open. But most could not open because construction activity had stopped, said Venugopal Nair, managing director and CEO, at Shoppers Stop Ltd.
Most of the new stores are in malls which had slowed down on account of intermittent closures. "This year we have a plan to open all of them. We were due to open nine out of 11 by September, which unfortunately got pushed back," he said. Shoppers Stop runs over 80 department stores and 130 specialty beauty stores in the country.
Retailers were hit by a severe second wave in the June quarter that led to temporary store closures.
This has impacted business across categories such as apparel, consumer durables, grocery, and beauty retail formats.
Estimates by ratings firm Crisil suggest that the second wave of Covid-19 infections is set to pull down revenue growth of the organized apparel retail sector to 15-20% this fiscal, from its earlier expectation of 30-35%.
In a separate report released last month, retail consulting firm Anarock said that brands have stepped up on expansion in high-streets. Between April 2020 and May 2021, retail brands closed over 120 lease deals at prominent high street markets across Indian cities and towns, it said.
"The deal sizes ranged for areas as low as 400 sq. ft. and went all the way up to 35,000 sq. ft. Some Quick Service Restaurants (QSRs) within the F&B category (Starbucks, Pizza Hut, KFC, etc.), apparel brands and even large format stores like Pantaloons, Westside, Zudio, Reliance Trends and Max (typically anchor tenants in malls) are now getting more serious about their high streets presence," it said.
Rentals continue to remain in attractive for retailers, said industry experts. Within malls, brands will continue to seek a revenue share model for the next six months, they added.
Store opening will be led by large retailers such as Reliance Retail, Tata Group, Landmark etc are expected to add stores, they added.
“Any brand with 25 plus stores in India right now will sustain. Those with less than 10 stores, will struggle," Abhishek Sharma, Director, Retail at Knight Frank India said.
Bestseller opened 10 stores in the last few weeks. Another 10 are in the pipeline—this is true for stores across its brands (Vero Moda, ONLY and Jack & Jones). Last fiscal the retailer shut four stores. It has over 1,700 points of sales in India.
Retail expansion still remains the number one driver for growth and untapped markets offer a great opportunity to drive new sales, said Vineet Gautam, CEO and Country Head, Bestseller South Asia. Gautam said that while e-commerce as a business is reigning and offers certain leverage for brands as the cost of operating is low, brick and mortar stores are not less relevant.
“Expansion of both, e-commerce and physical stores are important levers in our goal of achieving sustained growth and profitability for Bestseller," Gautam said.
Meanwhile, casual wear retailer Spykar said it will wait and watch how things pan out before adding new stores.
“Some properties we already signed, and they may open. But otherwise, we are not actively sourcing new properties today. We will wait till things get better," said Sanjay Vakharia, CEO, Spykar Lifestyle. Last year the retailer shut over 30 stores; it has 230 stores in the country.
In April, premium homeware direct selling brand Tupperware added four stores in Kolkata, Chennai, Hyderabad and Thane, taking its total store count to 91 in the country. Speaking to Mint earlier, its managing director for India, Deepak Chhabra, said opening new stores had slowed down on account of covid. But it's an opportune time to go ahead with expansion "as stores rentals are 40% off right now. And the leases are for nine years so there's enough time to make money," he said.
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