Essar Hypermart goes multi-brand

Essar Hypermart, an organised steel retailer, is planning to stock products of other manufacturers apart from parent Essar Steel to meet customer demand and remain competitive.

“We are in a transition phase, moving from a model which is only Essar product to multi-brand. We have not been (present) in let’s say TMT bars and pipes, so we can get it converted and made for us and sell,” the retailer’s CEO Girish Rao told dna.

Most organised retail shops such JSW Shoppe typically stock the products only made by their promoter companies.

Essar Hypermart, which has a customer base of fabricators, Tier II and III auto vendors and agriculture equipment makers, recently realised that customers had to visit other stores and traders to meet their requirements. Essar Steel, which primarily makes flat products, lacked products such as TMT bars, smaller pipes and structural products such as angles and channels in its portfolio.

The retailer has tied up with four secondary steel producers from Wardha, Raipur, Hyderabad and Uttarakhand for TMT bars, which are typically used in construction.

For other products including structural steel and pipes, the company was in talks with 2-4 secondary steel producers and hopes to close contracts soon. It may sign a contract under which it will supply HR and CR coils to get products made according to its requirements.

Essar Hypermart, which had grown at 5-6% last year with revenue of close to Rs 4,000 crore, is targeting a growth of 15% in this current fiscal.

Ramp-up in production at Essar Steel is likely to boost availability of products for the retail chain.

Going multi-brand will also help the company to improve revenues. Rao said currently the company had geographical restrictions being focused on products from single company.

“If I am able to source and sell locally by value addition then I will be able to sell more because I become more competitive in the market,” he said.

Essar Hypermart, which opened its first store in 2007 and once had close to 600 retail outlets including hypermarts and franchise stores across India, was forced to rationalise outlets, especially in the eastern region. The company has shut down around 18 stores in Eastern India and is operating one at Jameshedpur.

The firm now has 68 outlets across the country and no plans to add more at least in the current year. It also has 250 outlets under franchise model, which may increase to 300 by the next year.