V-Mart's same-store sales will grow 5-7% in this fiscal: Anand Agrawal

The slowdown in consumer demand has been felt even in the first fortnight of September, but am optimistic that things will change in the festive season, says Anand Agrawal, CFO, V-Mart. In a chat with Swati Khandelwal, Agrawal said, "The government should take steps at different levels to encourage sentiments at the ground level, which is weak due to monsoon and lack of employment opportunities for daily wage earners."

Do you see any sign of recovery and how optimistic you are that things will turn around and become better during this festive occasion?

A slight slowdown has been visible even in September while we were hoping more and are quite optimistic about the upcoming festive season. The footfalls have been low for all these many days of September. However, Durga Puja build-up has begun, and we hope that the demand will peak in the next 5-7 days, at least in the Eastern part of India, where Durga Puja is celebrated in a big way. But as of now, the conditions have remained weak, even in the first 15 days of September.

Name the pockets/clusters where you are looking to open new stores?

We are eyeing East India and are opening more stores in East and North-East India. Besides, we keep a close tab on almost every pocket where we have a presence. Secondly, under our cluster-based expansion model, we like to open more stores either in the city where we have our presence or in the neighbouring cities. We have a target of opening around 60 stores this year against 44 stores that were opened last year.

You have revised your SSSG (same-store sales growth) guidance for FY20 to 5-8%. Do you think that this target can be surpassed by the end of the year?

No, there is no such hope right now. The current market traction makes me feel that it will stay between 5-7%. In the first quarter, our SSSG stood at 5%, but it seems that it will be a hard task to maintain the same levels in the second quarter amid the ongoing environment. But we are quite optimistic and have great hopes with the third quarter because the three main festivals, Durga Puja, Diwali and Chhath fall in the same quarter. Plus, it will also be backed by the winter season that begins in the same quarter. This makes me feel that we will be able to post a full-year SSSG of 5-7%.

How much investment have you planned for this financial year?

Our total capital expenditure for this fiscal stands at Rs 100-120 crore. We have a firm belief that the ongoing slowdown is temporary and is a cycle. At such a time, we have a strategy of strengthening ourselves through expansions, which are not planned for a short period of six months or so. Our stores are opened with an average lifecycle of around 10-20 years. So we want to continue with our thought process and work to improve our capabilities and efficiency to make sure that we benefit the most whenever there is a revival in the market. Thus, we haven't put any brakes on our total investment and will continue to keep at the aforesaid levels.

What is your current private label share and the strategy to increase its penetration?

Private labels have a contribution of around 67% to our revenue at present and we want to take it up to 75% in the next year. However, we don't want to increase it more than this (75%) levels because we also want to keep and provide market-level variety to the customers in our stores. We have improved a lot on the private label not only in terms of designs, but also in terms of product quality and have also worked on sourcing capabilities in private labels. Customers have started recognising our private labels. We have also improved a lot on our instore branding and visual merchandising. Besides, we have also launched our online retail in the recent past. The platform will also be used to increase our private label strategy.

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