Star Bazaar pats itself on slowdown strategy

RAGHAVENDRA KAMATH Mumbai, 26 January

tar Bazaar, the chain run by Tata-owned Trent Hypermarket, says it used the economic slowdown to book properties when prices were down, allowing it now to open more stores. Rentals of retail properties were 30-35 per cent lower than their peak during the economic slowdown of 2008-09, as retailers shut stores and scaled back their expansion due to lower footfalls. Starting the first store in Ahmedabad in 2004, Trent Hypermarket runs 10 Star Bazaar stores and plans to double the The company booked properties during the economic slowdown when rentals were 30-35 per count by the end of 2011. Hy- cent lower than the peak period. It also did not open any stores during this period permarkets are larger versions of supermarkets, mostly stock- tive officer of Trent Hyper- expected a break-even for Star stores. Aditya Birla, which Bazaar at the company level af- opened its first megastore in ing food and grocery, apparel market. Trent Hypermarket did a ter it attained a critical mass of 2009, in Aurangabad, today runs and general merchandise, nine hypermarkets. It wants to turnover of `289.7 crore in 2009- 25 stores. among other products. The late hypermarket en- open seven-eight new stores We have a good property 10, with a net loss of `29.1 crore. team. Our team quickly went Last year, on the sidelines of trants such as Reliance Retail every year. Reliance Retail, and seized the opportunities Trent's annual general meeting, and Aditya Birla Retail came which opened first hypermarduring the slowdown,'' said chief financial offficer P much later but have opened a ket in 2007 in Ahmedabad, toJamshed Daboo, chief execu- Venkatesalu said the company similar number, or more, of day operates 18, under the Re-

liance Mart label. In 2008, Noel Tata, the then managing director of Trent, the parent of Trent Hypermarkets, said the company planned to invest `2,000 crore to set up 50 hypermarkets in five years. The same year, Trent entered into an exclusive franchise agreement with UK's retail giant, Tesco, to access the latter's expertise in supply chain,. marketing, stock management and retail information, among others. Our essential game plan is to be the best hypermarket chain, not the largest. All our efforts are to simplify operations and make it foolproof to improve profitability,'' Daboo said at the Retail Leadership Summit organised by Retailers Association of India last week in Mumbai. Star Bazaar stores are about 70,000 sq ft each. Other retailers such as Hypercity are also planning to open stores in that range to optimise space utilisation. Retail consultant Devangshu Dutta, who works with many national and international

retailers, does not think Star Bazaar's slower pace of growth is an issue. Every business has its own logic and plans. As long as you achieve their targets, they are a success. You can pump a lot of money and stores can bleed for 25 years. In the last five years, many retailers lost money and have to scale back,'' Dutta says. An executive from Trent said the company's conservative strategy paid off, as it remained profitable during the slowdown and did not close a single store. Others -- Reliance Retail, Aditya Birla, Spencer's, etc closed over 300 stores, mostly supermarkets, to stem losses during the slowdown. We were fortunate in the first cycle and have learnt our lessons. We have calibrated our growth,' Daboo said at the summit. Apart from introducing a live kitchen in its stores, the chain has introduced Tesco's store brands in personal care, health and beauty and food in its stores. Star Bazaar will launch more products of Tesco, Daboo said.