Retail shopping clicks in Tier II towns

The common perception is that big departmental stores more easily gel with urban landscape than with smaller towns with rural flavour.

But the experience of a major retail chain, which has a pan-India presence with about a million sq.ft in retail shopping space, seems to show that people living in smaller towns in States such as Tamil Nadu are no less savvy in shopping in big format stores compared with their counterparts in big urban centres. The Spencer's Retail chain has found that growth comes not only from metros and big towns, but also from smaller towns justifying its faith that in the retail business MNCs, big corporates and the kirana stores or ‘ Namma Annachi stores' could all co-exist!

According to Mr Jagannathan, General Manager, Spencer's Retail Ltd, Chennai, the company in the last one decade had developed about 30 hyper stores and 180-200 smaller stores. After stabilising its operations, it is now focussed on expanding the bigger format stores in 12-14 clusters in the country, with the South being a focus area for business development.

He said though Spencer's has been present in Tamil Nadu for nearly a decade, its activity was focussed highly on Chennai. It has around 60-65 stores in Tamil Nadu with bigger stores only in Tiruchi and in Coimbatore, where a new big store was opened on March 24.

The rest of the stores, known as ‘daily format stores' are 2500 sq-3000 sq.ft in size. The hyper format stores are in 35,000-50000 sq.ft in area but in Tier II towns, these hyper stores could be 15,000-20,000 sq.ft in size.

Expanding presence

He said Spencer's has now expanded its presence to 12-14 towns in Tamil Nadu reaching out to Salem, Erode, Tirunelveli, Tuticorin, Nagercoil, Madurai, Thanjavur, Kumbakonam, Pudukottai, apart from Tiruchi and Coimbatore.

He said Spencer's Retail was ‘doing extremely well' in the southern districts. The idea was to scale up to a shopping area of 40,000-50,000 sq ft. in each town with either single location stores or smaller stores in multiple locations.

By market standards, the business growth in the secondary towns was very high and in some of them, Spencer's was the only major brand.

Mr Jagannathan said after weathering recession and consolidating its operations, Spencer's Retail was on an expansion mode and is on a ‘property hunt' to expand in places such as Salem and Madurai. The goal was to add close of 1 lakh sq.ft in retail space in the next 18 months in Tamil Nadu.

Better value proposition

Mr Jagannathan said with aspiration levels growing even in smaller towns, the idea of modern stores has clicked even in these towns where people see the value of such stores over typical grocery stores as the former provided them with the ‘touch and feel' experience with a wider range of products on display. He felt that the neighbourhood stores, large format retail stores and the FDI-funded retail stores, if allowed, could co-exist. He did not expect any negative impact from any MNC entry into retail space and felt that the market would only expand by their entry and benefit from the growth in modern stores format.

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