The Hindu : Business : Pantaloon Food Bazaar's ambitious plans

Online edition of India's National Newspaper
Thursday, Jun 10, 2004

Business

Business

Pantaloon Food Bazaar's ambitious plans

By Ramnath Subbu

MUMBAI, JUNE 9. Pantaloon Retail, the Rs. 650 crore retail chain, has chalked out ambitious plans for its two-year-old, Rs. 100 crore retail foods venture, Food Bazaar. While there are at present 14 Food Bazaars across India, the plan is to have another 18 by December 2005. Pantaloon's investment in Food Bazaar to date has been in the region of Rs. 15 crores and by December 2005, it will touch Rs. 50 crores.

Pantloon Retail has five divisions — Pantaloon Family stores, Food Bazaar, Gold Bazaar, Central Malls and Big Bazaar. The food business achieved cash break-even in the first year and has turned profitable from its second year of operations.

"Most chains have been in the business for five and even ten years and have been unable to turn profitable. The foods retail business was thought to be a `long-haul' business but we have managed to challenge that," Ambrish Chheda, chief, business development, Pantaloon Retail, told The Hindu.

Food Bazaar's overall retail space will increase from 1.15 lakh sq. ft. to about five lakh sq. ft. by December 2005. Commensurate with the increase in space, the company is looking at increasing its turnover from Rs. 100 crores to Rs. 500 crores by June 2006.

"Except in the south, other retail chains have not succeeded in the other parts of the country. The main reason is that players blindly copied western concepts of smaller stores of 2,000-2,500 sq. ft. We Indianised the concept and went in for much larger places. We have a pan-India presence with 14 stores with the latest at Bangalore. We are currently working on a 25,000 sq. foot store in Goregaon, Mumbai," said Mr. Chheda.

The `Food Bazaar On-Call' service, currently being test marketed, will take the company's strategy to a higher level. It is a toll-free, 24-hour phone service. If the order is placed before 4 in the evening, the delivery is made in six hours. If later than 4, then delivery is the next day. For the `Food Bazaar On Call' service, the company has a separate distribution warehouse. The company is now test marketing the concept in New Mumbai at various locations — Vashi, Sanpada, Koparkhairane, Turbhe and Juinagar. "The next city will be Gurgaon in July and thereafter, we will take the idea nation-wide by December 2004," said Mr. Chheda.

Food Bazaar has a two-fold strategy to grow topline by five times over the next two years. While the first is through physical, geographical, space expansion, the second, equally important, is an extensive private label programme. At present, Food Bazaar has seven private label product lines and aims to extend this to 30 under five umbrella brands by September involving a capital investment of Rs. 5 crores. "We will use our stores as `brand factories' to nurture our own brands and develop umbrella branding. Our branded products are priced 15-30 per cent lower than existing brands and that is why the `value for money' we offer is far greater. In the south, we have been able to penetrate the SEC A, B and C category of consumers and that is why our margins are more than twice as high as other FMCG companies."

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