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Q. How has the ongoing global financial crisis affected India’s retail industry and your company in particular? What measures have been adopted by your company to cope up with the current economic slowdown?

A.The global financial crisis has resulted in slow customer sentiments, wherein people have started concentrating on their savings, leading to low walk-ins for the retailers. The current cash-flow management in the company is tedious and rigid. In addition, there are unsold inventories as we were unable to revise production figures owing to the sudden slowdown. On the retail front, many retail spaces (especially organised malls) that were booked and planned for, got delayed or cancelled resulting in further piling up of inventories. The company has adopted a conservative growth plan for the next year and a half and is concentrating on rationalising and optimising resources like manufacturing facilities etc. We are also weeding out the non-performing stores and the stores which have longer gestation periods, in order to breakeven or become profitable.
 
Q. In light of the current financial crisis, do you foresee changes taking place in the growth strategies of Indian retailers with emphasis on cost cutting as well as business & financial re-structuring?

A.Yes, we foresee all players becoming more realistic and conservative on the back of the ongoing financial crisis.

 
Q.What are your views on the competitive scenario in the Indian retail industry given the entry of many big as well as small players in the last 2-3 years? How is this going to affect your business and what strategies have been adopted by your company to face competition effectively?

A.Since the last three years, we have started penetrating into Tier 2, 3 & 4 cities, thus having a march ahead over other players. Our formats too are medium which facilitate quicker turn around. The entry of many players earlier made retail space an endangered commodity, pushing prices sky-high, rendering the business unviable in the process. The current situation will result in businesses becoming much more realistic, thereby allowing better prospects and viability.
 
Q. In the current scenario, cost cutting is on the priority list of almost all retailers. According to you, which are the areas where and how a retailer can cut cost?

A. A retailer can cut costs mainly on three areas, manpower, electricity consumption & rental corrections. One must also try and buy as close to the period of sales in order to have a better idea of the market mood.
 
Q. Many companies are putting their expansion plans on hold or rethinking about their expansion plans due to liquidity pressures, what is your opinion regarding this?

A.According to me, this is the best time to expand as everybody is quite on the back foot on this front. At this juncture I see an opportunity with respect to expansion.

 
Q. Franchise model is increasingly becoming popular in Indian scenario, what are the advantages in this business model in the current business scenario. What do you think that this model would add value to the organisation’s branding?

A.We are a firm believer in the franchise model of business. All our 300+ stores are franchised. I feel that franchising allows the marketer and retailer to concentrate on their respective competencies. It also lessens the burden of working capital requirements. However one has to balance and have strong procedures to avoid dilutions in delivering between franchises.
 
Q. What are the challenges that your company is facing while targeting/penetrating the market as well as selecting franchise partner. What role does Spykar play in this model?

A. Our company is not facing any challenge in this area.
 
Q. Do you see any tie-ups with real estate developers in terms of profit sharing? Could you shed some light on how the profit sharing tie-ups work in the Indian retail sector?

A. All our current deals are on a revenue sharing basis and not profit sharing basis. At present we are operating between 12%- 15% of sales.
 
Q. How important is inventory management in your business cycle? What kind of inventory management methods have been adopted by your company?

A. Spykar being a fashion brand, inventory management is extremely crucial to our business cycle. All our inventory management methods have been developed in-house.
 
Q. Is consolidation an option for Indian retailers to face the challenge put forth by the ongoing economic downturn?

A. In the current economic slowdown consolidation could have been an option for retailers. However we are yet to explore it.
 
Q. What is your opinion on further opening up the sector for foreign players? Do you foresee that the Government would consider in this current situation?

A. Yes, we would want foreign players to operate within this sector in our country. Keeping in mind the current scenario, the government would hopefully consider it.
 
Q. What are likely to be the prominent growth drivers of India’s retail industry in the next 2- 3 years in terms of products and markets?
A. The growth drivers will remain the same just as they were until a year back, such as domestic demand, huge population, expanding middleclass and the size of the upper segment.