Spencers Retail Ltd has unveiled a new format of mid-sized stores catering to a growing class of consumers hunting for hard bargains.
The company is launching Spencer’s Value Market, which promises 6 per cent minimum discount on all days, aiming at the tier-3 and 4 cities. Going forward, at least half of all stores Spencers will launch is going to be in this category.
The management of Spencers Retail, a RPSG Group company, believes that the new stores would become EBIDTA positive in 12-18 months and drive profitability, aided by higher footfalls and lower cost of operations.
Announcing the formal launch of the new retail format, Shashwat Goenka, retail and FMCG of the RPSG Group, argued that the venture reflected the emerging consumer trend which is playing out in the post-pandemic India, which he described as one of the most competitive grocery markets in the world.
“There are three broad classes of consumers — the extremely premium or the gourmet segment, the aspirational segment and the very value conscious segment. Natures Basket fits the premium and gourmet model, we have Spencers for the aspirational segment. The third segment which we were not playing, the extremely value conscious segment, that’s the segment that we now want to target as well,” Goenka said.
The stores will be smaller in size and manned by fewer people on the shop floor compared to Spencers. They will come up outside bigger cities to take advantage of sourcing and distribution.
Initially, the company will convert six of the existing Spencer’s stores in Andhra Pradesh to Spencer’s ValueMarket. There will be about 10 such stores by the end of this fiscal, Goenka said.
The company has 152 Spencer’s and 35 Nature’s Baskets— which the Goenkas bought from Godrej before the pandemic — across 36 cities in India. Going forward, there will be as many new stores under the Value Market brand as under Spencer’s.
“We are planning to open 14-18 new stores, half of which will be under Value Market, in 2023-24,” Goenka said, adding the numbers do not include new Nature’s Basket stores. The new format, he hoped, will lead Spencers Retail to the path of sustained profitability.