LABEL Issue V
SPENCER’S: REVIVING THE RETAIL
STRATEGY
outlets spread between 3,000 sq. ft. and
15,000 sq. ft. were named ‘Spencer’s Daily’
which were in the convenience store
formats while those outlets
with area
greater than 25,000 sq. ft. were named as
The Kolkata-based RP-Sanjiv
Goenka
Spencer’s Hyper.
group owned Spencer’s Retail Ltd has
In the past, the small grocery stores or the
been a pioneer in the field of organized
convenience stores named Spencer’s Daily
retail. RPG group was the first player in
were opened
India to venture into organized retail in
scale. However, problems with the cost
the mid-90s. The company
founded in
structure resulted in huge losses from
1863 by two Britons John William Spencer
these convenience stores which primarily
and Charles Durant with its first store in
sell
Chennai, came under Indian ownership
FMCG) which in turn forced the retailer
about 100 years later and became a part of
to shut down over 64 such stores in the
the Goenka
group in 1989.The retailer
last three years. Spencer's Retail reported
now runs around 135 odd stores across
a net loss of Rs. 209 crore mainly from the
India which include 31 hypermarkets with
convenience stores
an average size of about 35,000 sq. ft. and
March 2013. The losses are due to the
generates revenue of Rs.1,350 per sq. ft. a
various factors such as hefty expenses on
month. In the next four years, Spencer's
rent, staff, energy and other overheads like
plans to add 80 new stores .
security guards, bar codes, ACs and bright
In the beginning Spencer’s was operating
in
five
different
retail
formats
viz.
Spencer’s Hyper(30,000-75,000 sq. ft.),
Spencer’s
Super(8,000-15,000 sq. ft.),
Spencer’s
Daily(4,000-7,000
sq.
ft.),
Spencer’s Express(1,000-1,500 sq. ft.) and
Spencer’s Fresh(1,200-2,000 sq. ft.). But
gradually the various retail formats were
consolidated into two categories .The
groceries
to achieve economies of
(fruits,
vegetables
and
in the year ended
lights and, tough competition from lowcost
kiranawalas,
high
dump
rates
(wastages in the supply-chain), lower
revenue and unviable operational costs in
the low-margin food and grocery business.
These costs are negligible for small
retailers, most of whom bought the shops
at cheap rates and have family members
helping out. As a result, they are better off
than the large retailers.
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