K Raheja-promoted hypermarket chain HyperCity, though bullish on its current model of business, is focusing on expanding its private labels this year, that will help the company up sales and boost margins, a top company official has said.
The company, expecting to break-even by FY13, hopes to add more private brands to its portfolio and have at least 17-18 stores by then, mostly in the tier I and II cities such as Mumbai, Bangalore, Hyderabad and Ludhiana.
"We are focusing on adding more private brands this year. This will definitely increase sales volumes and help us attain better margins. We will have more brands in apparel and consumer goods as they always fetch good margins than the food and grocery items," HyperCity CEO Mark Ashman told PTI.
Currently, HyperCity, positioned as a premium and high-end player among all modern retailers, sells private brands such as Fresh Basket (bakery), Everyday (range of cereals and pulses), Terzo (homecare), Ebano (home essentials), Avorio (lifestyle), Maxit (sports equipment), RiverInc (apparels) and JooJoobs (infant wear).
"The plan is to focus more on apparels, especially kids wear. We hope to increase the kids wear range from present 50% to 75%," he said, adding that for the company quality is more critical than pricing.
HyperCity, a unit of BSE-listed Shoppers Stop, currently runs eight stores and will add five more in the next fiscal, Ashman said, adding the company would turn profitable by FY13 on the back of a product mix in non-food items.
For most of the retailers, food products is a wafer-thin profit margin business and the rising prices and inflation are putting more pressure on the same, forcing the retailers to shift focus towards apparel and consumer goods.
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However, Ashman, feels that the rising food prices is not going to affect the company's sales or margins in the last quarter of the current fiscal as people were buying products for quality and not price.
Food contributes 50-60% of the revenue for the company and gives a margin of 10-15% whereas non-food margins are high at 35%.
For Hypercity, the last quarter was satisfactory and they hope to maintain the topline as well as bottomline for the fiscal year ending March 31.
"The same-store sales grew 22% and we hope to maintain that," Ashman said.
On store expansion, he said it plans to open 4-5 stores (of size 60,000 sq ft-1-lakh sq ft depending on location) every year for the next 5 years.
The hypermarket chain, that operates three stores in Mumbai, plans to have at least five more outlets in the metropolis and four in Bangalore.