Our margins have not been much impacted by crisis – MD, 'The Loot'

02 Jun '09

3 min read

When the whole world is feeling the heat of recession along with the textile and garment sector, can the retail industry, particularly the apparel sector which is also facing a storm with dipping sales, be left behind and it has taken a worst hit at a place which hurts the most; profit margins.

To get answers to these and more queries, Fibre2fashion spoke to Mr Jay Gupta, Managing Director of 'The Loot'. The Loot currently operates more than 75 outlets across 40 cities and is the leading multi-branded discount chain, which offers more than 100 national and international reputed brands.

We began by asking Mr Gupta the reason behind the shrinking profit margins in the retail sector, to which he said, “Though the retail industry is facing a slowdown, I believe that the retailers catering to basic necessities will not be really affected. India is a huge market and there is more than enough scope and potential for the value segment. India is also a very price sensitive market and hence this sector will boom”.

“I don't think value retailing will get hurt by this global meltdown but this segment will leverage on the scenario and should cash on the opportunities available. Though marginal impact can be temporarily felt but India being a huge market and a growing economy this phase will pass”, he added by saying.

Next we asked him to reveal the actual hit in margins the industry has taken, to which he replied by saying, “Big retailers particularly who had signed properties at peak rentals must be facing 5-10% margin erosion, but, value retailers like 'The Loot' which is a year round discount store and is recession friendly has not been impacted much on the margins front”.

Continuing further, we asked him to let us know the steps taken by him to retain those margins, to which he explained by saying, “By re-negotiating rentals and reducing our fixed costs and at the same time the situation has turned in our favour and the real estate bust has been the most favorable to our business”.

He added, “Lower property prices and lower attrition rate in jobs have also helped reduce our cost of setting up of new stores and since our stores are doing reasonably well and due to which our expansion target plan is on track, so, I don't see any major constraint for expansion”.

To conclude the interview, we asked his opinion about as to when the situation would stabilize and trade returns to normal, to which he replied by saying, “I think it will take one year or so for things to be completely stabilized and get on an upswing and the recent development of a stable government at the Centre may shrink this gestation period further”.

Fibre2fashion News Desk - India

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