Hypercity Retail, which began operations in 2006, expects to break even by financial year 2012-13.
The retailer is looking to resize its stores to reduce operational costs and increase the share of private labels for higher margins. Like-to-like growth has been 22 per cent in the last fiscal. Some stores are profitable but the business is yet to turn cash-positive. The company is the only loss-making venture of the K Raheja-operated Shoppers Stop. Hypercity has done away with the one lakh sq. ft. format to bring down the cost of operation and has opted for stores of 70,000 to 75,000 sq. ft. or 50,000 to 55,000 sq. ft. depending on the location. The company intends to expand its current presence of nine hypermarkets to 35, in the next three to four years. The hypermarket also plans to increase share of private labels from 22 per cent to 30 per cent for better margins. In the apparel segment, which forms 7 to 10 per cent of total sales, the share of private labels in men’s wear and women’s ethnic is around 90 per cent while that in kids’ it will be increased to 70 per cent.
Arvind Singhal, chairman, Technopak Advisors says most hypermarkets in the West break even within 3-5 years of operations. They have good resources and a different retail format. In India, where modern retail is just about finding its foothold, 4-7 years is the ideal time to turn profitable in this format. In that respect, Hypercity is on track. Hypercity provides an international shopping experience, where customers can shop in comfort in a large, modern and exciting environment. It offers a wide and contemporary range of innovative products, sourced from both local and international markets. The product range covers food, homeware, home entertainment, hi-tech, appliances, furniture, sports, toys and fashion.