Hype over for hypermarkets?

In February 2004, RPG Retail was launching its second hypermarket – Giant and had plans to open 20 more Giant hypermarkets by the end of 2006 at a total investment of Rs 10 crore for every store. Since then, things have not gone quite to plan. Giant, now renamed Spencer’s, has opened barely six stores in all in the three years since.

Back in 2004, it was widely expected that the hypermarket would emerge as the dominant model in the fledgling retail space, virtually snuffing out competition from neighbourhood grocery stores. The motto was quite simply: Think Big.

Yet today, what is growing, and rapidly, are the smaller retail formats - convenience stores, food and grocery and discount stores. In a period of just under a year, Subhiksha, with its 1200 sq. ft. discounting format has become the largest domestic retail chain, on the verge of become the first 1000 store chain.

More interesting, the biggest entrants in the space are all thinking small - whether it’s Reliance Fresh, now close to 300 stores, Aditya Birla Retail’s More and ITC’s Choupal Fresh. The Bharti Wal-Mart joint venture will also look at opening smaller stores in tandem with their larger hypermarket and cash and carry operations.

Even Pantaloon Retail is joining the bandwagon. Less than a month ago, India’s biggest retailer announced that it was setting up a chain called KB’s Fairprice Value, a neighbourhood convenience store that reach 1200 stores in another year. Hypercity CEO Andrew Levermore has picked up the same cues: last week he announced that they were setting up a neighbourhood convenience called Expresscity, each no larger than 4000 sq ft and driven largely by food and grocery and will grow to 250 stores in five years.

August 18, 2007
Source: Economic Times

The Choupal Saagar is rural hypermarket and is situated around 6-10 kms from small towns. This concept might not be doing record-breakingly well, but the stores are in handsome operating profits.

But the same concept hasn't caught on in Urban India. The concept of going to a hpermarket situated a little outside the city is still far away and too much of a gamble to take for big retailers. The One-Stop-Shop hasn't materialized yet. The only store that is currently in running is the Metro Cash and Carry concept, as in bangalore. The minimum amount of purchase here is Rs.1000/-. But this store plays the role of a wholesaler more than a retailer.