Renegotiating with real-estate owners for a better price in the wake of slowdown has resulted in about 20 per cent savings in the rental expenditure for Aditya Birla Retail Limited (ABRL), the retail arm of the Aditya Birla Group.
The company closed down its unprofitable retail outlets and moved to new locations to save on real-estate costs, according to its chief executive officer Thomas Varghese.
The company pegged the rental expenditure at four per cent of the projected revenues in a year for a each location. “The margins are thin in retail sector and it is unviable to pay rents in the order of 10 per cent of the revenues,” Varghese told Business Standard.
He was in the city in connection with More Megastore, a hypermarket coming up with an investment of Rs 16 crore at Saroornagar on the city outskirts.
ABRL has 530 super markets including 156 in Andhra Pradesh. It is planning to increase the number of supermarkets to 1,000 and hypermarkets to 64 in five years. These would require an investment of Rs 1,500 crore, he said.
“The More network has just turned cash positive. We want to be EBIDTA positive by 2012 and PAT positive by 2015,” he said without giving out details.
“There will be a massive discount on some items,” he said about the strategy to attract footfalls at the new More hypermarket.
