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Retailers Eye Comeback As Realty, Interest Rates Go DownBy akansha, Section Noida Real Estate Property  Retailers who are engaged in a consolidation drive in the wake of the ongoing downturn are hoping to stage a comeback in the next six months following the dip in real estate prices and interest rates. "As we have already seen the property prices falling by 20-25 per cent, input cost and operative cost by 10-15 per cent, we hope to achieve a stable growth in another six months or so," said Kumar Rajagopalan, CEO, Retail Association of India. What's still worrying is that the consumer price index has not fallen the way Inflation based on wholesale price index has plunged. "If realty prices fall further and demand picks up, the retail sector will also rev up. The Prime Minister and finance ministry officials are already talking about the revival of the economy in six months," said a top industry player. According to Kishore Biyani, CEO, Future Group, "Of course, the slowdown effect has forced the company to downsize its expansion to 2.5 million sq ft, which would require an investment of Rs 700-800 crore. We are also exploring various options to unlock the potential in each of our business ventures." The Future Group, which has 12 million sq ft retail space across 70 cities and towns in the country, had targeted an expansion of over 4 million sq ft, but it has downsized it to 2.5 million sq ft. The RPG-owned Spencers has already seen restructuring. Reliance Retail added around 2 million sq ft last year as against Future's 5 million sq ft. Source: The Indian Express Retailers eye comeback as realty, interest rates go down Click On "Full Story" For More...
Said Rajiv Aggarwal, CEO and director, The MobileStore Ltd, "Last financial year, we planned to put 1,400 stores and we fulfilled our target till March end. Keeping the recessionary trend in mind we aim at only 500 stores this year. Nevertheless, it is a good time for consolidation.
The industry is suffering from the first pangs of slow growth and the favourable new Government policies will help in creating and sustaining the demand." Rajagopalan said, "Last year, we projected 35 per cent growth, but unfortunately we missed the target due to the slowdown in October. However, we understand that some companies have cut down their expansion plans, and on the whole growth is at a slow pace." Experts in the retail sector feel that it is time to exercise caution against unbridled expansion. "Focusing on an optimisation-driven strategy is the best option as there has not been much progress on growth as well as the relaxation of policy on foreign direct investment in the sector," said an industry player. According to industry estimates, the overall size of the retail sector in India is expected to touch $427 billion by 2010 and $637 billion by 2015 with the organised segment expected to account for 22 per cent by 2010, up from the present 4 per cent. The earnings before interest, taxes, depreciation and amortization (EBITDA) of the top 10 Indian retailers shows a decline of 201 basis points between 2003 and 2008. "The EBITDA study clearly shows that optimisation could be the best mantra to tide over the economic slowdown," said an analyst at a Mumbai-based brokerage firm.
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