Mohit Kampani recently took over as the CEO 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:
Spencer’s recently closed down nine stores in Pune, one of the most lucrative markets for retailers. Why?
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 per cent space this year but 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 300,000 sq. ft of new trading area. This is a 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.
Spencer’s chairman said the company will break even by December 2013. Are you on track?
Yes, we are on track.
Why do you think Spencer’s took so many years to break even?
One, 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 the IPO plans and plans to bring in a strategic investor?
Though I cannot comment on that, we are on track on what we have said.
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What are the changes you are making in terms of store layouts, merchandise mix and size in newer stores?
Our previous hypermarkets were 23,000 sq. ft. The newer stores are 29,000 sq. ft. They are 30 per cent bigger as we want to give more space to non-food such as apparel, general merchandise and so on.
You were planning to open 156,000 sq. ft space by March 2013. What is the progress 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 gives 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 per cent.