'Best time to contemplate opening new retail outlets' – Experts

30 Mar '09

2 min read

The Indian clothing retail sector was flying high in the air, with every retailer worth his salt, announcing grandiose plans on store expansions. But the unveiling of the economic crisis, has brought these plans to a screeching halt and are now re-visiting their expansion plans.

Each and every retailer is contemplating strategies to lure the Indian consumer who has dug his/her hands deep in to their pockets. From amongst the main strategies adopted by the retailers is luring the elusive customers by offering hefty discounts.

But is the consumer biting the bait is the million dollar question?.

Many other apparel retailers are either shutting down stores, which they term as unproductive and are not able to re-negotiate rentals or are outright downsizing staff. These stores were opened when real estate rentals were at their peak and accounted for 30-40 percent of expenses.

The only retailer who claims to not having been affected is the person who initiated the retail revolution in India. According to sources, Kishore Biyani in foresight had already started tightening belts and started cost cutting exercises way back in the first few months of 2008.

Reliance Retail, which has nearly 900 outlets across many formats and is the second largest retailer by floor space after the Futures Group has winded up a few stores. It has also reduced the store size of its hypermarkets by half.

But at the same time industry experts aver that this is the right time to contemplate opening new store since rentals have nose dived to new lows and which can be further negotiated and once the recessionary trends get over, it would mean higher operating margin for these outlets.

Fibre2fashion News Desk - India

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