Next Retail, promoted by the Videocon group, is planning to run a pilot project in the southern States to set up stores in districts. These stores will serve as hubs reaching out to towns and cities in each State. Marking an investment of Rs 100 crore towards its next level of expansion in the interiors, the Rs 1,300-crore Next Retail believes the traditional hub-and-spoke model will work for it.
K.S. Raman, Director, Next Retail, said, “We have started a pilot project, where we would be having stores in every district. These stores would measure 3,000 sq. ft and would serve as a hub, and we would cover all districts of a particular state, completing one state at a time, beginning with the three southern states.”
With a combination of company-owned and franchise stores, Next Retail says it has turned profitable and would be funding its next round of expansions through internal accruals. “We would first like to create the Next brand of stores with a solid business model, and then go to the back-end and look at the wholesale business of cash-and-carry. We still have patience to wait for an IPO (initial public offering),” said Raman.
The company says it is only after making Next a strong brand in durable retailing that the Videocon Group would look at formally entering the cash-and-carry business under the Bolld brand. It will also use to its advantage a slew of known consumer-durable brands as its forays into the cash-and-carry business. The Videocon Group already deals in brands such as Philips Electrolux, Sansui, Kenstar and Hyundai. “We would have an advantage in the cash-and-carry retail business as well, since these brands would get billed directly from their respective factories and there would be no middlemen involved,” claims Raman.
Besides, Next Retail also intends to strengthen its institutional business, which comprises nearly 6 per cent of its sales currently. The retail company has been selling money-denominated coupons to big companies, such as Hindustan Unilever Ltd, Asian Paints and Nokia, for its employees who want to buy durables from its stores.
“As we expand our network, we expect the employees to get flexibility in buying from stores across the country. We expect institutional sales to grow in sync with the 30 per cent growth in our retail business,” added Raman.
Source : The Hindu Business Line