- Meenakshi Kumar |
In a move to restructure its strategy for Megamart retail chain, Arvind has shut around 30 loss making outlets in October-December. In another few years, it will shut 50 loss making outlets.
Arvind has about 95 company stores which are operational. The company has created a new value department chain called Unlimited which has been done after converting large Megamart stores that were struggling to shed its discount format image and sell premium brands without discounts. Already 25 Megamart outlets have been rebranded as Unlimited and there are plans to have 125 stores in the new format in the next five years. The Unlimited stores will sell premium brands like Arrow and US Polo even though the focus will be more on mass-priced franchise brands such as Geoffrey Beene and Cherokee. The company will focus on women and kids too.
The last three years the company has been trying to maximise the Megamart chain in order to improve its profitability and as a result, the store count has come down from 216 in FY12 to 140 in FY15. Even the profits have been down in the quarter ending December. It came down 5.5 per cent from a year ago and this was due to closure of stores. Arvind’s consolidated revenues stood at Rs 2, 157 crores.
In 2013, Megamart decided to change its business model by dropping the discount tag. The lull in the business was noticed by the Bangalore -based company during 2013-14 FY and hence the decision to restructure the business model. Megamart is part of Arvind’s entry-price strategy. In addition to selling third-party brands, it sells its own such as Newport and Excalibur exclusively.