Supermarket chains go on expansion spree

New Delhi: More Retail is scouting for space in several cities as it aims to open 300 supermarkets and hypermarkets over the next three years, while Reliance Retail is looking for hundreds of properties for its Reliance Smart Point supermarket format, multiple real estate agents said.

Riding on a sharp recovery from pandemic-led blows, supermarket chains are aggressively looking to expand nationwide in the coming years, according to retail real estate companies.

The big box retailers are betting on India’s long-term potential for organised food and grocery business, an estimated market of more than $500 billion.

While India is the world’s third largest food and grocery market, the sector is dominated by mom-and-pop stores which number around 12 million. So, there is great room for modern retailers to grow in that space.

An India Ratings & Research report from the Fitch Group said food and grocery retailers saw “meaningful recoveries” in October and November from the impact earlier in the year, with many breaking even. According to it, most retailers had over 90% of their stores operational heading into the quarter, compared with 70% at the start of the September quarter.

“More is aggressively looking for 300 properties all over the country,” said the head of a prominent real estate consultancy. “It is an open mandate for various real estate firms.”

More Retail chief executive Mohit Kampani did not respond to calls and text messages. Reliance Retail did not respond to an email seeking comment till press time Thursday.

The store expansions will add heft to the companies’ omni-channel strategies, as they plan to use their outlets either as last-mile delivery points or to act as feeders to kiranas.

“Every supermarket operator is expanding, including Reliance, More, DMart…,” said Shubranshu Pani, managing director of retail services at consultancy firm JLL.

Pani said cash flow is currently tight for most of the other retailers including in fashion and lifestyle, as they are still reeling from the shocks of the pandemic.

“Sales are happening for fashion retailers since August and they had a good Diwali, but they are still not out of the woods,” he said.

Meanwhile, DMart is looking for properties in Delhi NCR, said real estate consultants.

“Delhi is underserved for DMart. That is why they are looking at several locations,” said Shriram PM Monga, principal consultant at F&B and retail real estate advisory SRED.

A WhatsApp message to Neville Noronha, managing director at Avenue Supermarts that operates DMart, did not elicit any response till press time Thursday.

In 2018, More Retail was acquired by Samara Capital through Witzig Advisory Services from the Aditya Birla Group for about Rs 4,200 crore. Subsequently Amazon acquired a 49% stake in Witzig Advisory with 17% stake purchased through Class A shares which have voting rights and the rest 32% through Class B shares which have no voting rights. The deal was structured this way to make it compliant with the foreign direct investment rules in ecommerce whereby More can remain a seller on Amazon India’s marketplace.

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