by Vijaylakshmi
A dozen top-listed retailers and quick-service restaurant (QSR) chains saw the slowest pace of store expansions in at least five years at 9 percent, reflecting tapering demand for discretionary and lifestyle products last fiscal. As of March 31, these companies, including Reliance Retail, Aditya Birla Fashion & Retail, DMart, Tata’s Trent, Titan Co and Starbucks together had 33,219 stores, data sourced from their latest investor presentations showed. In FY23, the number was 30,551 and had climbed 18 percent from a year ago.These companies added 2,700 stores – on average about 7 a day – to their network during the last fiscal year, but that’s nearly half compared to 13 doors each day in FY23. “The material part, not specific to just this quarter, was the demand side of the business coming down. You saw rationalisation of the network so that it reduces fixed costs of less profitable stores or unprofitable stores,” Ashish Dikshit, MD of Aditya Birla Fashion & Retail, told investors.
Retail sales growth rate fell year-on-year every month in the previous fiscal, reflecting weak consumer sentiment across segments such as apparel, footwear and quick service restaurants (QSR). The previous fiscal’s comparatively slower 4-7 percent growth rate sustained this year as well, with April seeing a 4 percent rise, the Retailers Association of India (RAI) said after a survey of top 100 retailers.
Most retailers have also shuttered a lot of unviable stores, a trend expected to continue as companies seek to boost profitability.
“We are not being very aggressive, but we are being very mindful and analytical on our approach in terms of trying to open up the stores which can retain and sustain the ROE that we expect and the ROCE that we expect. So, a lot of that work is happening, being selective in our approach, because the market is getting a little bit corrupted in terms of people, our competitors are trying to give a little more higher rentals and give more favorable terms to the consumers,” Lalit Agarwal, chairman of hypermarket chain V-Mart, told analysts.
Easing of the pandemic was marked by booming sales across athleisure wear, apparel and lifestyle products, due to pent-up demand with consumers upgrading their wardrobes after offices reopened and higher frequency of eating out and socialising. This led to retailers accelerating store launches, with many opening larger stores in marquee properties to cash in the surging demand led by revenge shopping.
“We are guiding 700 restaurants by FY27. We continue to stay put on that. We have always believed and we will always continue to behave that we have to responsibly grow. If in a particular year, we see that maybe moderation on growth rates is required, we will look at those. We don’t want a cowboy approach to growth. Responsible, disciplined growth is what we believe in, and we will continue to do that,” said Rajeev Varman, CEO at Restaurants Brands Asia.
