Spencer's, smarter
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Sanjiv Goenka, Vice-Chairman, RPG group
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Complying Deal Equity Funds REPOSITIONING a brand which already enjoys a niche in customers' minds is a difficult job, and when the brand is almost 150 years old, the effort has to be Herculean. The Kolkata-based RPG Group has taken up this tough job of re-launching the Spencer's brand, known to Indians since 1863.
Equity Msn Private Wyoming After breaking ties with its joint venture partner, Dairy Farm International, in FoodWorld Supermarkets earlier this year, the Group decided to restructure its retailing business. So, all its retail activities, except the Music World stores, were brought under the Spencer's brandname.
American Equity Investment Four formats have been created under the Spencer's umbrella brand. These are Spencer's Fresh, Spencer's Daily, Spencer's Super and Spencer's Hyper.
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Equity Private Team Wyoming The Fresh stores will be the smallest with an average space of 2,000 sq. ft. Daily stores will be 4,000-7,000 sq. ft. wide. While Fresh will sell farm-fresh food such as vegetables, fruit, milk, egg and bread, Daily will sell all these as well as chilled and frozen food and bakery.
Equity Group Investment Next in line are the Spencer's Super stores with floor space of 8,000-15,000 sq. ft. These outlets will sell all Daily store items and garments. According to Sumantra Banerjee, Head of RPG Retail and Managing Director of CESC Ltd, these will be "mini-hyper stores."
Capital Development Equity At the top of the heap will be the Spencer's Hyper with more than 25,000 sq. ft. of retail space. The Hypers will be destination stores. "These will be the real hypermarkets of India, where you pay less when you purchase more. These stores will also offer music, liquor, gift articles and garments apart from fresh fruits and vegetables," Banerjee explained.
Article Between Difference The Spencer's logo has been redesigned. New colours such as orange, green, red, pink and purple have been added. According to Sanjiv Goenka, Vice-Chairman of the RPG Group, the new identity will strongly support the innovative and ambitious growth plans of the group's retailing business.
Contact Equity Private Wyoming "Earlier, Spencer's was generally bracketed for an age profile of more than 50 years. We have tried to reposition the brand for the 20-45 age group. So we have used bright but mostly Indian colours. We have also tried to give the logo a contemporary feel. At the same time we were conscious of maintaining the feeling of trust and authenticity that was attached to the Spencer's brand name," explains Goenka.
Agreement Equity Investment On the agency which redesigned the Spencer's logo, Goenka prefers not to disclose the name but only says that it is based in Mumbai. J. H. Mehta, President, Spencer's Retail, says that a lot of in-house research work had gone into the redesign.
Business Equity Funds At present, there are three Hyper stores and around 49 Daily stores. While the Hyper stores are located in Mumbai, Visakhapatnam and Hyderabad, the Daily stores are in Tamil Nadu, Karnataka, Kerala, Andhra Pradesh and Maharashtra. Within the next three months, all these stores, which are currently under different brand names, will be brought under the Spencer's brand.
Private Equity Fund Today, Spencer's total retail space is approximately 10 lakh sq. ft. It will be doubled within the next 18 months.
Investment Property Home The total cost of this expansion, according to Goenka, is Rs 200 crore and will be funded mostly through internal accruals. There will be a debt component too. In the next six months, RPG Group will be opening nine Hyper stores. Of these, seven are in Delhi and one in Aurangabad. Hyderabad will get its second Hyper store too. Another 13 Hyper stores are expected to be added by 2007.
Managed Equity Funds Both Goenka and Banerjee concede that RPG retailing would still be second in the national market to Pantaloon, which is on a real estate acquisition spree.
Capital Entrepreneurial Equity However, unlike Spencer's four formats, Pantaloon follows several. Goenka asserts that Spencer's will be a market leader in the food and music retailing sectors.
Private Equity Hedge Funds "Pantaloons' retailing activity is predominantly garments-driven but ours will be food-driven. If you visit a Big Bazar you will notice a lot of garments on the shelves. Within Pantaloons' branded outlets, they have the Food Bazar too. In our hyper stores, however, food will be generating more than 45 per cent of the total revenue. Then it will be general merchandise, FMCG and garments. We want to be the WalMart of India," asserts Banerjee.
Email Equity Private Wyoming Outlining the back-up logistics of Spencer's, he says that in a metro there will be two to three Super/Hyper stores, backed up by 10-15 Daily stores. It is the duck-and-ducklings model, he adds. This will help the company attain critical mass in that particular city and the absorption of cost becomes smoother.
Equity Loan On Investment For the procurement of fresh vegetables and fruits, the company has already reached out to the farmers and village mandis. For example, at Hoskote near Bangalore, the farmers come to one of the collection centres of Spencer's and sell their produce regularly. Buying in huge volumes also makes the price for the end consumer cheaper.
Equity Income Mutual Funds "The idea is to reduce the cost of purchase by avoiding the middlemen because the final aim is to offer a price less than the roadside grocer, explains Banerjee.
Private Equity Group Despite all these efforts, Spencer's is yet to register a profit before tax. According to Goenka, the current turnover is Rs 321 crore and it is expected to touch Rs 2,200 crore by 2007-08.
Private Investment Public He is confident of breaking even in the next financial year. The target is to make Rs 200 crore in sales every month. "Mind you, this is a conservative estimate. We are hoping to generate more revenues than that," says a sanguine Sanjiv Goenka.
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