Megamart drops discount tag

Megamart, the Rs 540 crores retail chain, part of the textile and apparel major

Arvind is planning to change its business model by dropping the discount tag. The chain is now also on an expansion spree with 10 new stores coming up in the next three-four months.

The Bangalore-headquartered retail chain witnessed a lull in its business in the current financial year, impacting margins and growth plans, which led them to restructure their business model. Megamart was paying excise duty on MRPs while consumers were paying much less under the discount model. This was not working out for the firm, especially in the past one year.

The retail chain, which posted a CAGR of 26 percent over the past three years, expects to continue with its current growth rate in the next few years. It is now aiming for topline of Rs 700 crores in FY14 and Rs 950 crores for FY15. Megamart, has 200 stores across India, of which 80 percent are in the four south Indian states and about 17 percent are in Maharashtra. It plans to open larger store formats. Currently the average store size is about 3,000-4,000 square foot while the new format will be in the range of 10,000-15,000 square foot.

Megamart began factory outlets 15 years ago selling brands such as Arrow, Flying Machine, Newport, Excalibur, which were either owned by Arvind or for which it had India rights. It developed into a 225-store discount chain with over seven lakh square foot retail space and added exclusive rights for international labels, including Cherokee and Jeffry Bean.