Spencer’s Retail is all set to enter the value retail format with the launch of a hypermarket chain Spencer’s Value Market, a move that will help it expand its retail footprint in India’s smaller cities. Shashwat Goenka, Sector Head, Retail and FMCG, RP-Sanjiv Goenka Group pointed to the emergence of a new consumer class in smaller cities that want to enjoy modern trade shopping experiences, while also seeking value. The chain will focus on discounts on a variety of assortments.
“What's changed over the last four to five years, and more so with a pandemic, is this whole class of value-conscious consumers that have really come up. As we look to go beyond the 35 cities, we have to adopt a model which will cater to this value-conscious consumer," Goenka said during a virtual roundtable.
To be sure, Spencer’s Retail, part of RP-Sanjiv Goenka Group, operates two retail formats—namely its flagship Spencer’s brand and Natures Basket. In FY22, the company reported a turnover of ?2,376 crore. Spencer's, its flagship food and general merchandise format, operates 152 stores across 11 Indian cities. Natures Basket, the more premium retail chain, has over 36 stores pan India.
The shift to the value segment comes as the company plans to expand its presence beyond the 35 cities it is currently present in. The value format stores will sell fast moving consumer products, fruits & vegetables, food items, personal care items, general household needs and apparels.
Entry into the value segment will allow the retailer to capture a larger chunk of the organized retail market that is still sub-10% of the overall retail market in India. “We believe that this is going to be a very profitable and high growth segment for us," Goenka said.
For starters, the company has converted five of its existing Spencer’s stores into the value format in Karimnagar, Warangal, Kurnool, Guntur, Bhimavaram and Vijayanagaram. "Value-conscious consumers in these cities are very predominant. In totality, we will be converting 10 of our existing stores to value formats," he said.
Goenka said in the next fiscal, half of the company’s new stores under the Spencer’s brand will be under the value format. The company will open 14-18 stores under Spencer’s banner, including both the regular as well as the value format, next fiscal.
"Assuming that things go well over time, I think the overall pie for Spencer's will increase. If you were to look at the split, I would see a 50:50 split between Spencer's and the Spencer's value format," he added.