The Shahid group, which owns Store 99, the retail chain, plans to expand the number of its outlets to around 100, a six-fold increase, within three years.
Store 99, which sells apparels, accessories, cutlery and other items for Rs 99 or below in its 14 stores in North India, is buying merchandise from firms that went into liquidation in the US and Europe to keep prices low, said Shiraz M Javed, a director of the group. The Shahid group has interests in real estate, exports, and manufacturing in North India and in the US.
Javed did not name the companies the group bought the merchandise from, citing non-disclosure agreements. “Our retail business is doing well during the downturn. Our stores cater to the mass market. We would like to open at least 30 stores by the year-end and 100 stores in the next two-three years,” he added.
The chain directly imports products from factories abroad and here to keep prices in check. As for the expansion, it is tapping promoter equity, apart from private equity and venture capital, to fund it. And might sell a stake in the company next year, said Javed.
The group had sold its Sabka Bazaar and Home Store retail chains to the Mumbai-based Wadhawan group in 2007 for around Rs 100 crore. "Those were low-margin and low-volume businesses and we could not compete with upcoming chains in those categories,” Javed said.
Analysts say chains which sell sub-Rs 99 products are yet to pick up in the country. "These stores have low margins and depend on high turnover. Long-term sustainability of these formats looks difficult, as the initial novelty wears off, and then the advent of hypermarkets, which sell imported products,” said Purnendu Kumar of Technopak Advisors, a business consultancy.
