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KB's Fair Price expansion back in fashion

Friday, 6 December 2013 - 9:21am IST Updated: Friday, 6 December 2013 - 8:58pm IST | Place: Mumbai | Agency: DNA
Group repositions itself in price format, gives a facelift to grocery chain

The expansion leitmotif is back in fashion at Kishore Biyani-led Future Group, which runs the neighbourhood grocery chain, KB's Fair Price. After a drop in momentum in the past one year, and even the closure of some of the unprofitable stores, the company has once again started adding new ones. Currently, it has 176 stores.

K Radhakrishnan, CEO, KB's FairPrice, said: “The company has started the expansion process since August and already added 10-15 stores. But in the last six months, we have also closed down 30-35 unprofitable stores. These were mainly the stores that were acquired from Big Apple.” Last year, Future group acquired Big Apple, the neighbourhood convenience store in the National Capital Region, for Rs 62 crore.

Talking about the strike rate, Radhakrishnan added that the company wants to add 100 stores every year for the next five years. “The expansion had stopped as we were waiting to see whether we were sure of the model. But now that we have a model, we have started expanding,” he added.

He did not elaborate on the quantum of money set aside for this purpose, but put a ballpark figure of Rs 12-17 lakh for an opening of a store.

The company has also given a facelift to the grocery chain that it believes will help push up footfalls. “We have a new design now, new look and feel. The layout, colour, lighting, floor the shelf arrangement is entirely different,” stressed Radhakrishnan.

In the meantime, the company has also taken care to reposition itself. Radhakrishnan said the retailer was digressing from the fair price format earlier, but now it has decided to stay put. “We want to go a step lower, in terms of reach. The idea is to go to the lower-lower middle class as we do not want to move away from provisional stores concept. We want to go to areas where fair price stores will work,” explained Radhakrishnan.

He also added that KB's Fairprice, which basically consists of self-help stores, is keen to be a step ahead of kiranas. In this format, the company is not eyeing the customer who is shopping at Reliance Fresh or others, rather it is for the segment below which does not shop in modern retail. In order to serve them better, the Future Group is choosing the locations to the minutest detail. Instead of looking at an upmarket location, the company is considering faraway suburbs like Mumbra and Mira Road in Mumbai.

 

To ensure profitability, the company is serious about cutting down on its store sizes. Rather than the current 800-900 square feet of store size, the retail chain has in mind something like 500-600 square feet.

Radhakrishnan said that to ensure better margins, the company has bolstered its supply chain model and improved inventory churnout. The focus is going to be on its private labels that currently contribute 35-40% of KB's FairPrice turnover.


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