Aditya Birla retail seems to be nearing a dead end. With arround 640 stores and losing close to Rs.30 crore a month. It might be the most difficult business for the Birla Group so far. What is interesting to note is , that there are 640 stores, and out of them 100 stores are having a sales of Rs. 5 to 6 per sq.feet. Whereas , the expenses are above Rs.200 per sq.feet. Knowing well, that any expenses including rental , if exceeds Rs.110 per sq.ft. It is a loss making proposition.
All this started with Kumar Managalam pushing for numbers in the initial days. Due to intense pressure, Sumanta Sinha did what the master expected. So the pressure filtered downwards , leading to the number game and the quality of the locations and the rentals were compromised heavily.
Now more than 100 stores need to be closed in my view, and earlier the better, or the business gets on the block. The grapevine is, that Mckinsey is doing a valuation excercise.
Adding to this mistake of chasing number game is the expat seniors who take crores of package , and learn the Indian retail business at the expense of the biggies like Reliance or Birla’s. Time will tell us, those who don’t know what is being sold and where, are teaching India how to sell ???
Hiring expats is another stupidity from the Indian retailers. Who will learn the lesson the hard way.