Welspun Retail Ltd, the retail arm of the diversified Welspun Group, will concentrate on consolidation and margin expansion in FY10 and resume aggressive expansion from FY11.
The company has re-negotiated rentals with properties and is aiming for healthier margins by outsourcing products in some key categories of home segment, and also exploring evolving markets in the tier-III locations at the same time, Dipali Goenka, director, Welspun Retail Ltd, said on Tuesday.
The company that retails home, kitchen and lifestyle products has 200 Welhome stores in 120 cities. It has earmarked FY11 for heavy expansion in tier-III markets.
“We are a 3-4 year old company and the home segment is an evolving category. We are present in tier-II markets, but tier-III markets remain unexploited. We also want to have more stores in the east of India, where we have 10 stores as of now,” Goenka said.
Even as the retailer will open only about 25 stores in this financial year, it is planning to launch 70-80 stores across the country in FY11, of which 30% will come up in the rural markets.
“The real growth for the retail industry will come from the tier-II and the tier-III markets as these are evolving. Our contribution to sales from tier-II locations is 40% now. If we make inroads now, it will pay dividends in future,” Goenka said.
Home accessories is Rs 9,300 crore market, of which only 3% is organised.
Goenka said that the on-going end-of-the-season sale period and upcoming festival period up till December will bring cheer to retailers.
“The quarters ahead this year definitely look bright. Consumer demand is reviving,” Goenka said.
The company is also looking at manufacturing niche products such as bamboo and soya towels. Welspun Retail garners 25% business from institutional sales to 4- and 5-star hotels. While brand Welhome contributes 68% to revenues, another brand Spaces contributes about 7%. The company is looking at a break even at Ebitda this year. Though Welspun had earlier planned an initial public offering, it will now look only at self financing the operations, Goenka said.
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