To expand its retail footprint in India’s smaller cities, Spencer’s Retail is set to enter the value retail format with the launch of a hypermarket chain, Spencer’s Value Market.
According to Shashwat Goenka, sector head for retail and FMCG at the RP-Sanjiv Goenka Group, 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.
Goenka added, “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 that will cater to this value-conscious consumer.
For starters, the company has converted five of its existing Spencer’s stores into the value format: Karimnagar, Warangal, Kurnool, Guntur, Bhimavaram, and Vijayanagaram. Spencer will convert ten of its existing stores to value formats in total.
Goenka said in the next fiscal year, half of the company’s new stores under the Spencer’s brand will be in 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.
Spencer’s Retail, part of the RP-Sanjiv Goenka Group, operates two retail formats: its flagship Spencer’s brand and Nature’s 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 across 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 and vegetables, food items, personal care items, general household needs, and apparel.
Entry into the value segment will allow the retailer to capture a larger chunk of the organized retail market, which still accounts for less than 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.
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.