The Retail Rebound

AS THE MARKETS REDISCOVER RETAIL, RADHAKISHAN DAMANI AND KISHORE BIYANI REAP THE BENEFITS

- Samar Srivastava

After a sustained lull, the retail sector has finally rediscovered a spring in its step. Investors are, once again, showing faith in what was considered a sunrise sector in the early 2000s, but had failed to sustain momentum. This time, having learnt from its past mistakes, the industry is perceived to be on a much firmer footing. And in for the longer haul.

What’s driving the gains? First, consolidation: Rivals (Future Group and Bharti Retail) have merged or been bought out (Nilgiris by Future Group). Some like the RP-Sanjiv Goenka Group’s Spencer’s and the Aditya Birla Group’s More have scaled back expansion plans and shut down stores.

Second, per store profitability is now the name of the game. Scale at the cost of profitability is no longer an option. Retailers will now tell you that there is enough space for everyone and the first to expand is not necessarily the winner.

And lastly, retailers have gotten better at the science of retailing. Distribution centres and enterprise resource planning systems are de rigueur. As a result, their operations are far more efficient, leading to better bottomlines.

A significant trigger for the recent upswing in retail can be attributed to the March 2017 listing of Avenue Supermarts which operates the DMart brand of stores. Its efficient operations coupled with a low free float have given the Radhakishan Damani-owned retail operation a stratospheric valuation of ₹69,000 crore as of mid-October.