Mumbai-based Wadhawan Food Retail (WFRL), which runs Spinach, Sabka Bazaar, S Mart stores and Sangam online format, plans to launch five new private labels in food and non-food categories, in the next one year, a top company official said.
With this move, the share of private labels to the total business will double. Currently, WFRL has private labels in 10 categories such as staples, spices, rice and so on and private labels constitute 10-15 per cent of the company’s business.
“Our private labels have done very well. Now we are launching labels in new categories in the coming months,” Wadhwan Food Retail Managing Director Ashok Bhasin said.
Due to higher profit margins of 25-35 per cent in private labels, retail chains such as Pantaloon, Reliance Fresh, Aditya Birla Retail, Spencer’s Retail have launched private labels in food and non-food categories. Normally, food and groceries have gross margins of 10-12 per cent.
“Value addition brings in more revenues for retailers. As you sort, grade, pack, label the products, value of those products increase,” Bhasin added.
Meanwhile, WFRL is planning to increase the number of its stores to 1,300 from the current 200 with an investment of Rs 1,500 crore. The company, which took over National Capital Region-based Sabka Bazaar last year, has increased the number of its stores by 70 from 30. It has also taken number of Bangalore-based S-Mart stores to 50 stores from 12 when it acquired the chain.
WFRL is also planning to open its first hypermarket by the end of the current financial year. The company plans to open 10 hypermarkets across the country over the next three years by investing around Rs 1,000 crore.
Bhasin said the company is evaluating all systems, processes, models and operations to cut costs and improve efficiencies to beat the ongoing slowdown in the economy. “From better range planning, new private labels, redeploying manpower, improving sourcing and supply chains, we are doing everything under our control to improve revenues and offer better value for our customers,” he said.
For instance, the company has set up collection centres near the farms to reduce touch points between farms and stores, cut spoilages and hence bag the produce within 24 to 36 hours of harvest, he said. The company has 20 distribution and collection centres to cater to all WFRL brands.
