Retail sales growth plummets one-third in FY13
By FashionUnited
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Growth
Results of major retailers
Kishore Biyani-led Future Retail, the country's largest listed retailer, saw sales growing at 10.1 percent last financial year against 31.6 percent in FY2012, while Raheja-owned Shoppers Stop saw a growth rate of 14 percent in FY2013, compared with 28 percent in the previous year.Same-store sales growth refers to growth coming from stores which are in the business for a year or more. According to a report by the Confederation of Indian Industry and the Boston Consulting Group, “Modern retail is struggling to drive efficiencies due to nascent and largely unorganised supply chain.” Same-store sales growth of Shoppers Stop was less than three percent in the first half of FY2013 versus 13 percent in the second half, as promotions and weddings propped up retailer's growth. Retailers like Future and Tata Group-led Trent have also shut loss-making stores.
Future has shut stores of its electronic chain eZone in small towns to focus on the top six cities and closed unviable stores of its hypermarket chain, Big Bazaar in some cities.Trent has closed nearly half a dozen stores of its value fashion chain Fashion Yatra, which were not making money. While announcing its FY13 financial results, Trent said it had a total of 107 stores across different formats. By the end of 2012, it had 106 stores, meaning the net expansion was just one store.
Profitability at stake
Even profitability of retailers is under pressure. For instance, Trent has incurred losses worth Rs 37 crores and Rs 27 crores in FY12 and FY13, respectively, mainly contributed by losses at Star Bazaar, its hypermarket chain. Shoppers Stop had losses of Rs 11.3 crore in FY13 due to losses at Hypercity. In 2013-14, analysts say, growth will remain subdued.However, according to a recent survey by the Boston Consulting Group, 68 percent of respondents expect organised retail to grow 20 percent annually in five years and 90 percent of executives believe there is no change in the composition of the top three players in the segment.