The scheme — Get your old clothes. Get up to Rs 250 discount — offered for the first time by Pantaloons in select stores in Mumbai and some parts of Maharashtra shows how desperately Indian retailers are trying to attract footfalls. The scheme comes at a time when customers are deferring purchases, companies are laying off workers, cutting salaries and halting production to combat a slowdown.
Faced with dwindling demand, retailers are coming up with innovative marketing schemes, relooking at store models, raising sales target for employees, shutting down unviable stores and seeking lengthier credit lines from suppliers.
“Most retailers have frozen expansion plans and are having a relook at their investments to beat the slowdown,” said Pinakiranjan Mishra, partner (retail and consumer practices), Ernst & Young, an accounting and consulting firm. “In the current situation, retailers may not add employees as fast as they did in the past,’’ he added.
Focus on viable stores
Spencer’s, a part of the RPG Group, is focusing on opening bigger stores to notch up larger volumes. The retailer is now planning to open 50 hypermarkets this financial year rather than 35 stores planned earlier, after cutting down the number of new stores by half to 100.
“We are restructuring our retail model after looking at the revenue from different models. Due to economies of scale, hypermarkets have done better than small stores. They also brings in more footfalls leading to higher sales,” said Samar Shekhawat, vice-president (marketing), Spencer’s.
Spencer’s has also shifted over 50 of its stores in West Bengal, Kerala and Karnataka to other locations to cut down on high rentals and gain footfalls.
Retailers such as Videocon and Subhiksha are deferring their new ventures. Subhiksha has delayed the launch of its consumer durables stores.
Kishore Biyani’s Future group has also closed and relocated a few stores and offices, where rentals have gone up rapidly in the last couple of years. For example, the group has closed down five stores of lingerie brand Etam in malls. Delhi-based Vishal Retail is also relocating some loss-making hypermarkets to better locations.
Boosting staff efficiency
Retailers are turning their attention on employee productivity to boost sales. Delhi-based apparel retailer Koutons Retail has increased the performance target for its employees to deliver more. “We have motivated our employees to give that extra 25 per cent in the quality and quantity of work they do,” said D P S Kohli, chairman of Koutons Retail India.
Vishal Retail is planning to start a performance-based remuneration process in its back-end operations, whereby employees will get higher perks based on performance.
“Though we can’t do much about labour cost at front-end operations, we are considering performance-based remuneration at the back-end. We are encouraging people to work harder so that they bring more efficiency to the system,” said Ambeek Khemka of Vishal Retail.
Better credit lines
Though traditionally retailers get 19-21 credit days from suppliers, most of the national retailers are now seeking longer credit days of 30-45. Khemka said Vishal Retail is negotiating with vendors for credit of more than 75 days as against the normal practice of a month.
“We have asked vendors to increase our credit period as footfalls are decreasing and sales are not coming by,’’ said Ambeek Khemka.
