Bets on private label category that brings higher margin than food to turn profitable on a net level by next year
Spencer's Retail is set to launch its private label brand in apparel, 2BMe, in order to improve margins and turn profitable on a net level while it prepares to get listed, DNA Money has learnt.
In modern retail, apparel brings in the highest margins and the brand, which is to be launched tomorrow, would help Spencer's report post-tax profits by next year.
The listing of Spencer's would follow a restructuring of CESC under which the retail business is housed.
"Moving forward, we are taking a fresh approach to our apparel business by launching a new control brand that will evolve all aspects of the category – in-trend design, merchandise, pricing, marketing and in-store presentation – to ultimately create a 100% end-to-end brand environment that will increase customer loyalty and differentiate Spencer's from our competition," an internal presentation on the 2BMe brand launch said.
"Spencer's will now focus on apparel as well apart from food. The brand would be announced on Tuesday by Shashwat. We will expand the brand, but sensibly. Apparel contributes much higher margin than food. That should add margins and we are optimistic of its performance as we go forward," said Sanjiv Goenka, chairman RP-Sanjiv Goenka group.
This follows a complete overhaul of the management of Spencer's being overseen by Sanjiv Goenka's son Shashwat.
"More and more senior-level people are joining Spencer's. There's a change in the way we recruited; we are now going for the best (people in the industry) and we are demanding very high performance from them. We have now much more youthful way of management. Vipin Bhandari (formerly Hypercity CEO) and Rahul Nayak, director - operations at Star Bazaar have joined us," Goenka told DNA Money.
Others who have joined Spencer's are vice president - marketing Nitu Jaiswal, who was earlier head of marketing at Walmart India and Sandeep Gautam, executive director – HR, from Bharti Walmart, Spencer's officials said.
"There has been a lot of changes in strategy as well as cost-cutting affected, all of which has resulted in topline and bottomline improvements. We are getting set for company-level profit at the net level," Goenka said.
These steps have helped Spencer's post six months of consistent positive Ebitda with revenue per square foot touching Rs 1,741, which Goenka claimed is way higher than the industry best.
Spencer's is now preparing for offering its shares to public.
"Spencer's is ripe for listing," he said.
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