Future Group plans to revamp and grow its Nilgiris supermarket banner. The group currently operates 170 Nilgiris supermarkets,concentrated in the southern states of Karnataka, Tamil Nadu, Andhra Pradesh, Telangana and Kerala. Future Group plans to have380 stores under this banner by the end of 2018. Its revenue target will be INR40bn (USD600mn) by 2021, up from INR7.8bn(USD121mn) currently, with INR28bn (USD440mn) from private labels. In order to achieve its expansion goals, Future Retail plans tomake the format that it acquired in 2014 available to franchisees. Existing stores will also be revamped as part of an ongoinginvestment, with new categories set to be introduced, including bakery departments.2016In November, Future Retail announced a deal to consolidate the retail and allied businesses of Heritage Foods through an equitytransaction. The Heritage store chain consists of 124 stores in Hyderabad, Bengaluru and Chennai, which will complement FutureRetail's existing network of 379 small format EasyDay stores. Heritage Foods will spin off its retail, bakery, agri-sourcing andveterinary care business into a fully owned subsidiary. All these businesses, except veterinary care, will be merged with Future Retail.India Food & Drink Report | Q3 2018bmiresearch.com55
At the same time, leading UK wholesaler Booker announced plans to launch a joint venture partnership with Future Retail, which willsee the two businesses target the opening of 60-70 cash & carry depots over the next three years in India.India Food & Drink Report | Q3 2018bmiresearch.com56
RPG RetailSWOT AnalysisStrengths•A diverse multi-format retail offering allows the company to cater to a wide range of Indian consumers andshopping occasions.•Local market knowledge gives it an advantage over international retailers arriving in India.•RPG has not accrued great debts to finance its growth, and this strong financial capacity will leave it poisedfor future expansionary investments in the country.Weaknesses•With such a diverse range of business interests, there are fears that the RPG conglomerate could lose focuson its retail division, should the division start to underperform.•RPG will have to invest heavily in infrastructure and not just new store openings if it is to almost quadruple itsIndian city presence at the rate it is targeting.•Existing low incomes in India mean that there is only a limited appetite for RPG's modern retail stores.Opportunities•A commitment to private labelling is likely to broaden RPG's appeal among price-sensitive, though modern-retail-susceptible consumers.•Expansion into the underdeveloped online groceries market will present substantial growth opportunitiesover the long term.•Added-value products and home-delivery services will improve loyalty among India's growing aspirationalmiddle classes.
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- Summer '18
- Sagar Arora
- ........., Alcoholic beverage, Food processing