|  Subhiksha, the Chennai based, no frills, discount retail chain, which recently hit the 500-stores mark, has catapulted itself into one of the country's largest supermarket chains, with over one million sq. ft. of retail space, spread across five states of the country, reports Indian Retail Forum.
' We will complete our 600-store target (by March 2007), and we will shortly activate Phase 2 of our expansion plans foraying into 5 more states including Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal. We hope to hit the 1000-store mark during 2007,' says R Subramanian the promoter and MD of Subhiksha.
"Our goal of becoming India 's favorite neighborhood store is now well on its way. We want to be able to provide customers from all segments of society, in all parts of the country, with a viable smart shopping option," added Subramanian.
Unlike Big Bazaar, its discount, food and grocery, retail counterparts, Subhiksha believes in setting up non-air conditioned small neighbourhood stores within the community. Each store measures around 2,000 sq. ft. in retail space. It competes not only with big store chains on regular discounts, but also with the traditional mom and pop provision and general merchandise stores because of its proximity to its customers.
Subhiksha operates in four sectors; fruits and vegetables, pharmaceuticals, FMCG and telecom. There are loyalty discounts and regular discounts of 10% on medicines and 8 to 10% on FMCCG products. It also makes the Every Day Low Price (EDLP) offer to its customers, which is sustained through discounts obtained by the chain from direct supply arrangements with manufacturers, along with bulk purchase and cash transactions.
While the discount model of Subhiksha is based on world famous Wal-Mart strategy, the carpet bombing model is based on the 'Starbucks' strategy, in which the coffee retail chain opens a cluster of stores in close proximity to each other, in a geographical area which has high population density with purchasing potential. This enables the chain to cannibilise sales within its own network rather than allowing them to go to other individual stores or retail chains.
The power house of Reliance seems to have followed a similar strategy so far, by opening a Cluster of 'Fresh' stores in Hyderabad and Jaipur.
The company started doing business in 1997 in Thiruvanmiyur, Chennai. Presently, It had annual revenue of Rs. 3,34 crores ( about US$ 78 million). It hopes to more than double its turnover (between Rs 750-800 crore) during the current year with plans to double it further in the next fiscal (2007-08), as well.
It has invested about Rs. 300 crore on its first phase of expansion. Total outlay for the targeted 1,000 stores will be around Rs. 500 crore. ICICI Venture Capital holds 24% of the equity in the company. In the next phase, the company plans to open1200 stores by March 2008. It plans to bring out an IPO by the year end to finance its expansion.
The speed at which it is expanding can be gauged from the fact that Subhiksha plans to open 90 stores in Kolkata alone in the next 4 months. It will have more stores than post offices there. |
