Retail Sector in India was being hailed as Sunshine sector just a couple of years back – Many Indian players entered it to grab potentially huge retail Indian consumer market and grew very aggressively. But it seems that sun is not shining on them anymore – the calculations seem to have gone wrong!
Indiabulls, which is one of the most diverse groups in our country with interests in diverse fields like stock broking, retail, power, non–banking finance and real estate. The USD 3 billion group has emerged as a big player in many of the sectors it has presence in, but sadly their retail venture – Indiabulls retail – is looking down in the dumps.
Indiabulls entered the retail sector in 2007 by acquiring Piramyd Retail for Rs 208 cr from the Pyramid Group. Probably the only good thing for them was the acquisition because after that, the road has entirely been downhill.
Their initial plans of starting up around 30 hypermarkets and also expanding the 42 stores of Piramyd to more than 150 by 2008-09 were scuttled due to the economic slowdown. This led to the closure of most of their stores. Though others like Reliance and Aditya Birla Retail were able to bounce back, Indiabulls never recovered. And recently it’s been announced that their expansion plans have been currently frozen.
They failed due many reasons: –
- Being successful in many other sectors already, Indiabulls assumed that it would succeed in retail too. But in the end it became a case of keeping too much on one’s plate. They couldn’t manage to oversee the operations as well as spare capital which they had to invest in their projects in other sectors
- The economic recession destroyed their plans in terms of retrenchments, defaults to vendors and suppliers, CEO changes etc.
- The acquisition process was a waste as Piramyd was already in a financial mess and it meant problems from the start for Indiabulls
Indiabulls has tried to rebrand its stores – Megamart as Happy Store and Megastore as Store One to increase sales and footfalls. But that doesn’t seem to have worked. At present it is still running stores in Pune and Nagpur. But the future looks inevitable.
Yet Another retailer gone bust? Where do you think our retailers are going wrong in their planning?