A taller Piramyd in the offing

RETAIL: Piramyd rejigs strategy, plans expansion of space, and in-house brands.

In an effort to catch up with retail giants Pantaloon Retail, Shoppers' Stop, and Trent, Piramyd Retail has modified its growth plans.

"We have had this reputation of being weak in execution. We were one of the first among organised retailers but lost our focus along the way," admits Nandan Piramal, executive vice chairman, Piramyd Retail.

The company recast its management structure in April, clearly separating its business units into two "" Lifestyle, under the brand Megastore, and Food Home and Personal Care, under the title of Trumart, with separate business heads.

"Our aggressive growth plans for the next three years demanded clarity of operations," says Piramal.

The Piramal Group-promoted retail venture ended the year 2005-06 with more than a three times jump in its retail space, from 1,50,000 sq ft to 4,80,000 sq ft. In contrast, Shoppers' Stop and Pantaloon Retail occupy 1 million sq ft and 3.5 million sq ft respectively.

Piramyd Retail hopes to step up to 9,00,000 sq ft. by the end of the year. This growth will hinge on the execution of the 2006-07 growth plans being presented to the board later this week. The plan includes four new Megastores and 35 news Trumarts.

"We plan to add 35 Trumart stores every year, and have signed on a land bank for at least 13-14 Megastores over the next three years," says Piramal.

While Piramyd is taking its Megastores to the northern and eastern regions (two will open in Calcutta in 18-24 months), Piramal believes that to achieve economies of scale for the Trumart business, they will need to saturate the Western region first.

The company is also changing its store-in-a-mall strategy for its 13-odd Trumarts and positioning them as neighbourhood marts.

"We have taken a strategic decision to position our Trumart stores as stand-alone neighbourhood convenience stores. They will be the organised version of kirana shops," says Piramal.

Megastores, on the other hand, will shift from a combination of stand-alone and mall-based stores to primarily mall-based stores.

Piramal also reveals that the first Trumart "Daily" store is scheduled to open in Pune by August. Trumart Daily has a smaller, convenience store format, averaging 1,500 sq ft versus Trumart's supermarket format covering on average 5,000-10,000 sq ft.

"Trumart daily will have minor differences like smaller pack sizes and a stock of mainly fast moving goods," clarifies Piramal.

With companies like Pantaloon Retail creating differentiation through specialised formats and clearly defined target audiences, and Trent creating it through its private labels that cover 60 per cent of its merchandise, Piramyd Retail's big focus this year is also on creating its own differentiation.

It hopes to increase the contribution of higher-margin private label business from 8 per cent of total sales to 20 per cent. In fact, the company's first in-house shoe brand was launched this month. A tie-up with sister company Morarjee Textiles for production outsourcing is also on the cards.

Amid all the optimism however, Piramal reveals the last quarter has not been profitable. The company closed the year with a loss of Rs 10.3 crore.

The company's share price has also been on a downward trend, touching a low of Rs 99 on Wednesday, against a price of Rs 215 at the start of the financial year.

"Retail is about either specialisation or scale. Our profitability will come from our expansion," asserts Piramal.