Future Retail targets 4,000 small stores in 3-5 years
MUMBAI: The retail arm of Kishore Biyani led Future Group will set up 4,000 “neighbourhood” small stores in the next 3-5 years as part of its continued focus on small stores for growth.
In a presentation on earnings for the quarter ended March 2017, the company said it will see “robust supply chain infrastructure and deployments across the network” for its neighbourhood stores formats that include EasyDay (acquired from Bharti Retail) in the north and Heritage Fresh in the south.
The firm will ramp up the number of neighbourhood stores from 538 as of March 2017 to 1,000 by September 2018, and to 4,000 in the next 3-5 years.
The company said in its presentation that there was a ‘compelling proposition” for neighbourhood stores as people prefer travelling less and shopping in their area even as consumption and “aspirations” rise among Indians with higher incomes.
A major feature will be a membership program where 1,500 households per store in a single neighbourhood will be eligible to become “members” or frequent shoppers. These members will be eligible for 10% discounts and “many services”, the company said, adding it has 1.3 lakh members in its existing network of neighbourhood stores.
“It is a very good strategy to expand aggressively in the convenience store format”, Abhijit Kundu, vice-president of Research at Antique Stock Broking said. “Future Retail has been focusing on increasing its throughput in their hypermarket format, trying to get higher revenue from existing stores, but they are not very aggressive in here,” he said. Future Retail’s hypermarket formats include Big Bazaar. Stock market rallies are usually followed by a jump in real estate prices as investors book profits on stocks and sink their money in property. Thanks to expectations from a new real estate regulator and an overall upswing in the mood of the economy people are beginning to sniff the air for real estate deals once again.
But real estate remains a really bad investment at current prices although this doesn’t mean you shouldn’t buy your dream home (as long as you will live in it).
Real estate is a clunky asset. Selecting, inspecting, bargaining, filling in paperwork, checking the authenticity of the deal, registering the property -- these are just some of the many steps in a real estate transaction. Prices vary (the neighbour got a better deal). And there’s the gap and the pain between deciding to sell and selling -- a down market can last for years. It is also a chunky asset—you can’t sell just the kitchen if you want a fraction of the money you invested.
The black money component is another put off, unless you are buying directly from a builder. Then, that comes with its own problems of delay, misinformation and, in some cases, outright cheating. Despite the noise around the real estate regulator, it will still take years for this industry to build a better track record. The Rear Estate Regulation Act or RERA is far from being of any real use on the ground. The states are simply not ready with their regulators, websites or processes.
So, what’s a good real estate strategy? At current levels of prices and yields, it makes far more sense to rent than to buy.
In Delhi, in an urban mass affluent locality such as Mayur Vihar a three-bedroom, hall, kitchen (bhk) apartment costs anything between ₹1-3 crore according to property listing sites . Let’s take the cost as ₹2 crore.