The LN Mittal-backed Indiabulls group has put its retail expansion plans on the backburner, focusing instead on its core business of financial services and real estate, said a top executive from the group.
Store One, the retail arm of the group which runs three stores in Pune and Nagpur, had plans to open stores in Mumbai and Delhi, among other places. Indiabulls also had plans to foray into the cash and carry (wholesale) business.
“As of now, our stores in Pune and Nagpur are doing well. But retail is a very competitive business. Hence, we are not expanding our retail stores for now,” said Gagan Banga, chief executive officer, Indiabulls Financial Services.
“For now, we are focusing on our core business,’’ he said. The $3-billion Indiabulls group has stock broking , non-banking finance, real estate, power and retail ventures. It forayed into retail in late 2007, with the the acquisition of Piramal Group’s Piramyd Retail for Rs 208 crore. Originally, it planned to set up 30 hypermarkets in the country, with an outlay of Rs 1,500 crore and expanding Pyramid’s store network from 42 stores to 150 in a year’s time. But the economic slowdown of 2008-09 impacted the cash flows of retailers adversely. This forced many, such as Indiabulls, Reliance Retail and Aditya Birla Retail, to shut losing stores and scale back expansion. Between them, Reliance Retail and Aditya Birla have shut about 125 stores in the past two years. Barring a few, Store One has closed almost all the stores it acquired from Pyramid Retail. But both Reliance Retail and Birla Retail have resumed expansion plans as economic conditions improved. While Reliance Retail plans to open 3,000 stores in the next four years, Birla Retail plans to open 10-12 hypermarkets every year.
“They (Indiabulls) were doing too many things at one point of time. Retail business is not like real estate; it requires a lot of focus in terms of operations and merchandising,’’ says a retail consultant, who did not want to be named. Indiabulls Retail made a net loss of Rs 90 crore and Rs 51 crore in 2008-09 and 2009-10, respectively. “Retail is a long gestation business and one needs to invest heavily in the first few years. They must have decided to exit the business, given their ongoing projects in real estate and power, which also require a lot of capital,’’ says Anand Raghuraman, partner and managing director, The Boston Consulting Group.
Indiabulls has tried to salvage the retail business. After it acquired Pyramid Retail, it rebranded Pyramid Megastore, the lifestyle stores, as Indiabulls Megastore and Trumart, the convenience stores, as Indiabulls Mart. Last year, the group again rebranded Indiabulls Mart as Happy Store and Megastore as Store One, saying it was a bid to garner more sales and footfalls.
Indiabulls has also renamed the name of the company as Store One Retail India Ltd from Indiabulls Retail Services Ltd bid, to align the corporate identity with the branding of the stores.
