Subhiksha to open 100 stores in Mumbai in one month; announces 1,000 stores within one year

SubhikshaMDSubhiksha, the Chennai based, a decade old, no frills, food, grocery, pharma and telecom, discount retail chain is gearing up to open 180 neighbourhood, convenience retail stores in the eight cities of the state of Maharashtra including Pune, Nasik, Aurangabad and Nagpur, Kolhapur, Sholapurand Sangli. Of these the lion’s share will go to Mumbai, which will have 100 of the 180 stores planned. 80 of the 100 Mumbai Subhiksha stores are slated to go on strean by mid-January, 2007, reports PTI.

The rapidly-growing retail chain has already crossed the 450-store mark across five states in the country and is currently occupying retail space of more than one million square feet.

“We are targeting a 1,000-strong retail network by end-2007. We are looking at providing customers across the country with a viable smart shopping option,” R Subramaniam, Managing Director, Subhiksha Trading Services, said today. At an average cost of Rs. 50 lakhs per outlet, Subhiksha will invest Rs. 500 crores to expand its network to 1000 outlets. Subhiksha, is targetting a turnover of Rs. 3,500 crore during 2007.

“With the implementation of our expansion in Maharashtra, we will complete our 600-store target. We will shortly activate Phase II of our expansion plans by foraying into the north and east including Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal” he said. Phase II involves Rs 200-crore investment in opening 400 stores.

The rapidly expanding chain, which claims to be the biggest chain in the country, is following the carpet bombing strategy for its expansion, wherein, to create maximum impact, it simultaneously launches a cluster of stores in a given geography.

It may be recalled that only a few months back Subhiksha to finance its ambitious expansion drive had raised Rs. 300 crore. It has also recently raised Rs. 80 crore through the rights issue. Currently, ICICI venture Capital holds 24% in the equity capital of Subhiksha.

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3 responses to “Subhiksha to open 100 stores in Mumbai in one month; announces 1,000 stores within one year

  1. The action is in food retailing ! Spencers adopting cluster model while Subhiksha a carpet bombing . Wonder what are other retailers upto ?

  2. Yes! And why not? 30% of all turnover is expected to come from food and processed food products.

  3. The hottest retail news for Mumbai: Agitation against the unnecessary spends by Subhiksha.
    Subhiksha to open 100 stores in Mumbai in one month; announces 1,000 stores within one year. Which Format: I think Supermarket.
    How it will differentiate “low prices and reach”: Directly sourcing from manufacturer and will pass benefit to consumers and prices will be 8 to 10 % less compared to MRP.
    At an average cost of Rs. 50 lakhs per outlet, Subhiksha will invest Rs. 500 crores to expand its network to 1000 outlets. Subhiksha, is targetting a turnover of Rs. 3,500 crore during 2007.
    What is reliance and bharti’s plan? Help Indian Farmers I think.
    This is their short term plan I guess.
    Now what is actual ground reality for Mr. Retailer of India???? As a Consultant I throw some light.
    Customer focus became more a reality rather than an ideology. Price reductions will increase market share, but only temporarily and that subsequently market shares returns to about the same level after a price war as they were before.
    The consumers see products as much the same as each other and consequently price is of short-term effect but customer service and quality are likely to be main factors in deciding who gets the order.
    A company can outperform rivals only if it can establish a difference that it can “preserve”. Also, how it preserves the Knowledge created in the process. It must deliver greater value to customers or create comparable value at lower cost or do both.
    Market turbulence has resulted in changing the competitive nature of the industry. Dominant effects are consumer/customer related, such as changing demographics, changing socio-economics and socio-cultural influences, resulting in changing customer attitudes and expectations. The underlying motivation for changes in customer expectations is a shift in the consumer “perspective of value”, which has moved away from a combination of benefits dominated by “price” towards a range of benefits in which price, for some customer segments, has very little impact.

    The issue is now to consider how an effective response is being made to both consumer expectations related changes and market induced changes.
    Key Takeaways for Mr. Retailers:
    – Loss prevention and shrinkage management would be a critical area with the rapid growth of the retail networks.
    – Cost of financing is higher in India. Thus in business where margins are low working capital management, efficient logistics & cost management becomes ‘the key’ operational parameter.
    – In operations management by leveraging technology, retailers in India are at a nascent stage. This would be one area of opportunity for winners of the future.
    – Paucity of trained retail personnel both at the store as well as managerial level and thus knowledge retention will prove critical.
    – In India supply chain and customer relations followed by merchandising, facilities management and vendor development are areas which have significant gaps that need to be addressed.
    – Management Accounting Systems are not dynamic enough to support better decision making and efficient management of the members of the organization.

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