Date:04/12/2008 URL: http://www.thehindu.com/2008/12/04/stories/2008120453260300.htm

Tamil Nadu - Chennai

Retail players putting off expansion plans

Special Correspondent

“They anticipate a further fall in property prices”

— Photo: Bijoy Ghosh

REALTY-RETAIL LINK: R. Subramanian, chairman and managing director, Subhiksha Trading Services (left), addressing a conference in Chennai on Tuesday. B.S. Nagesh, managing director, Shopper’s Stop, and Pradipta K. Mohapatra, immediate past chairman, CII-Southern Region, are in the picture.

CHENNAI: Most of the retail players in India have put off their expansion plans, expecting a further fall in property prices, R. Subramanian, managing director, Subhiksha Trading Services, said here on Tuesday.

Talking to reporters, he said there was a 25 per cent fall in property cost. Retailers were expecting it to dip by another 30-40 per cent by January. The retailers were confident that the prices would fall, but were not aware of the quantum. That was why they had put off finalising many deals.

“In India, stock markets get corrected first, and it takes around six months for real estate to follow suit. The indices have fallen, and the effects of August-September have not been felt in the real estate sector. India has the largest number of retail stores, and the fall in property rates will do a lot for this sector. The retail sector should take advantage of low property cost and low labour cost,” he said.

Addressing members of Confederation of Indian Industry (CII) at a conference on ‘Retailing for India,’ its past chairman Pradipta K. Mohapatra said neighbourhood stores would continue to exist alongside ‘super kiranas,’ supermarkets, hypermarkets and malls, provided the retailers kept innovating and used modern technology. India was yet to catch up with the West in the use of supply chain management, and in the share of organised retailing, he said. Now the retail sector earned Rs.700 per square foot, against the projected norm of Rs.1,200.

Releasing the CII-PricewaterhouseCoopers retail report on ‘Benefits of modern trade to transitional economies,’ N.V. Sivakumar, executive director and leader, PwC Retail and Consumer Practice, said: “The growth of organised retail will lead to creation of local distribution channels in India, which will improve the availability of quality products. It will also lead to more employment.”

Manikam Ramaswami, chairman, Tamil Nadu State council, CII, said that to address the manpower shortage, the industry should find trained manpower and pay more to retain them. Steps should be taken to ensure supply of trained manpower. Besides the industry should increase its IT adoption and supply chain management to manage cost and earn minimum profits in the face of a stiff competition.