Mohit Kampani recently took over as the chief executive of Spencer's Retail, promoted by RP-Sanjiv Goenka Group. The retailer is looking at a break even this year. In an interaction with Raghavendra Kamath, Kampani discusses the company's strategy and plans. Edited excerpts:
Recently Spencer’s closed down nine stores in Pune, one of the most lucrative markets for retailers. What is the reason?
Yes, we have closed nine Daily Stores. We exited Pune for purely financial reasons. This year, we have stated intent of break even. We are adding one third or 33% more space this year and none of that in Pune. Though we had nine stores in Pune, none of them were making profits. That is why we decided to close them down.
What are your expansion plans for this year?
We are planning to open 14 hypermarkets this year which will be 3,00,000 sq ft of new trading area. This is busy year for us. We have 107 small stores and they will continue in geographies where we have scale. We have closed small stores in Tamil Nadu for non performance.
The group’s chairman said that Spencer’s will break even by December 2013. Are you on track?
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Yes, we are on track.
Why do you think Spencer’s took so many years to break even?
Once, we needed to figure out the right business model. We figured that out in the year before last. Once we found what works and what does not, we started aligning or configuring our business around that. In hypermarkets, we are expanding only in a few geographies—East, North and South.
What is the progress on IPO plans and plans to bring strategic investor?
Though I can not comment on that, we are on track on what we have said.
What are the changes you are making in terms of store lay outs, merchandise mix and sizes in newer stores?
Our previous hypermarkets were 23,000 sq ft. The newer stores are 29,000 sq ft. They are 30% bigger as we want to give more space to non-food such as apparel, general merchandise and so on.
You were planning to open 1,56,000 sq ft space by March 2013. What is the progess on that.?
Yes, by March-April, we will open that much. As we speak, we are doing fixtures for five of our stores which are coming up at Dhanbad, two in Kolkata, and Chennai among others.
At a time when not many are expanding, what is giving you the confidence to open stores?
We are expanding because our hypermarket is a profitable model and we need scale. Out of 25 stores, 23 are profitable. Today properties are available, we have resources for expansion and we have a successful model to scale it up.
What is the kind of same store sales growth you are seeing in the business?
Same store sales growth is at 15%.