Anuj Singh of Spencer’s speaks about the ongoing slowdown in the retail business, the proliferation of products for retailing and much more
New Delhi: Anuj Singh, managing director of Spencer’s Retail, is an industry veteran with almost three decades of experience having worked with Walmart, Nestle, Unilever and ITC among other companies. Singh completed almost one year in his top job at Spencer’s Retail during which he has taken some tough decisions including exiting loss-making markets for the retailer like Tamil Nadu and Kerala.
Singh talks to IndiaRetailing about the ongoing slowdown in the retail business, the proliferation of products for retailing and much more. Edited excerpts…
Retailers are saying there is a slowdown in the market. How long do you think it will persist?
Well, I think it depends on where you are, what your size is and which sectors you operate in. Rural is where people are seeing a slowdown in our business. Because we have multi-category, I don’t particularly see that it’s a secular slowdown.
So, if you look at fashion as a category, people would say there’s a slowdown. It could be a slowdown in the sense that during an anticipated festival season, the sales don’t go up but if you look at the velocity of sales which are happening during end-of-the-season sales, it’s still there. So, I think overall it is a bit unpredictable now.
If you look at staples, there is general price deflation in a few categories. But overall, the staples category is doing quite well. Processed food continues to be strong. In beauty and personal care, there is a little bit of a slowdown. So, it is not one secular trend; it varies across and calling it a slowdown in retail is a broad-brush statement.
You mainly run two formats—a hypermarket and a smaller one that competes directly with the kiranas. How are you faring in that area?
While internally we call it Spencer’s Kirana, it is not identical to a typical neighbourhood kirana, which would be anywhere between 300 sq. ft. and 1,000 sq. ft. Our kirana format is bigger than a normal kirana store but smaller than a hypermarket.
Our smallest kirana store would be about 3,000 sq. ft. and the assortment in the number of SKUs we carry is higher than that in a neighbourhood kirana, but much lower than in a hypermarket.
It is a smaller format in the context of the bigger formats we operate. We call it kirana because it is typically located in neighbourhoods as opposed to our hypermarkets, which are located in malls and high streets.
Any reason for the difference in the choice of locations for both formats?
The shopping mission for both the formats is different—that for a hypermarket is at the beginning of a month for a large, planned grocery purchase, whereas kirana shopping is typically for mid-month top-ups and conveniences.
Therefore, the locations are different and some of our assortment is different. We carry larger packs in hypermarkets but because the shopping mission of the consumer is different when visiting a kirana, we carry a lot more smaller items there.
What are the number of SKUs in the formats?
In a hypermarket, we can carry anywhere from 15,000-20,000 SKUs because it’s a B2C (business-to-consumer) format. We carry apparel which contributes to the high number of SKUs because every size, design, colour becomes a distinct SKU.
Our kirana format because where the size of about 3,000 square feet we carry anywhere from 3,500-6,000 SKUs, depending on the size.
Why did Spencer’s exit Kerala and Chennai?
We used to be a pan-India retailer some years ago. Then we exited from the West, and some areas in the north. Our presence in the South was in Telangana—mainly in Hyderabad—and coastal Andhra Pradesh, with a few stores in Kerala and Tamil Nadu.
When we did a review of the business, we felt that given our size and what we do well, we are best placed to double down in a few geographies. We identified the geographies as West Bengal, Eastern UP, which cover the cities of Banaras, and Lucknow and go up to Allahabad, Gorakhpur and NCR.
Given the concentration of the stores, we were doing well in Telangana and Coastal AP. We had about seven small stores in Chennai and 10 in Kerala. Since they were not in the geographies that were our strategic priority, and they were high loss-making stores, we decided to close them down. It was both to contain losses and strategic priorities.
So, while we exit these regions, we will be adding stores in other geographies. In Banaras, we had seven stores, and we added an eighth. In Gorakhpur, we have four we are adding one more. And we’re continuously adding in West Bengal.
Today, there is so much to offer—from established products, consumers are also even demanding D2C brands. How do you accommodate and maintain that tricky balance in your stores?
You are right, the sheer availability of offerings has gone up exponentially. Consumers want to make their decisions based on a lot of choices but retailers cannot offer an infinite aisle. You have finite space in physical stores. So, it is going to be about optimising, which is a bit of a science and a bit of an art.
It’s a science because you choose brands by looking at two things: the area you are operating and the market share of a product in a category. Let’s take a category like tea. Look at who the market leaders are in that particular region. We do that by looking at which are the big national players, which are local players. We also look at our private brand strategy… it’s a process of continuous optimization.
Will your hypermarkets become bigger to offer more products and choices to consumers?
If you’re an Ikea, probably 100,000 sq. ft. is still small for you. For a hypermarket, you can have a 50,000 sq. ft. and make it work. But the optimal size in my opinion and what we have seen is between 25,000 and 30,000 sq. ft.
