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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. In India, global financial recession has most affected the retail sector in the impulse buy segment. At Khadim’s, we offer products in the domestic market in the value segment, which is basically functional plus and therefore has not been very significantly impacted by the overall decline in consumer spends.
 
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. It is very obvious that in the retarding economic scenario, businesses will adopt restructuring measures to maintain overall viability. To be specific about us, we have adopted cost control measures rather than cost cutting ones, with increased focus on value re-engineering and re-aligning HR measures to maximise output from manpower.
 
Q. In the current crisis, many big as well as small players have been shutting down their stores. What would be the strategies for the companies, according to you to sustain in this crisis situation?
A. We feel strategy is a function of the business area. Hence, most organisations will suspend/reduce initiatives involving capital expenditure and downscale operational costs.
 
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. The mainstay of our expansion plans is the franchise model, which makes expansion a less capital expenditure dependent strategy. On our own retail expansion model, we have stepped up our assessment of market feasibility before firming up opening plans.
 
Q. Does your company have any plans to expand into tier 2 & 3 cities as well as district towns or rural areas in the coming future? If so, then what kind of business opportunities do these cities/town offer to the retail sector?
A. Khadim’s expansion plans, in recent years, have been primarily focussed in tier 2 & 3 cities, in fitment with the value based footwear offered by us and in future we intend to continue consolidating our presence in this chartered path. We feel tier 2 & 3 cities/town are fast emerging as promising and vital retail markets because of population growth, income growth, infrastructure development and rise as economic hubs.
 
Q. You have also started a chain of supermarket stores in West Bengal, do you have plans to open such chain of stores in other parts of the country and if so, when are you planning to open such stores? Do you think that adding new format would have any pressure in your existing business line?
A. As of now, we have kept the expansion plans of supermarket stores on hold. (No further comment)
 
Q. How are you planning to fund your future expansions, is it through IPO or any other source of funding?
A. We are not considering IPO at the moment as the current scenario is not conducive for raising capital. We are exploring debt routes and internal accruals and other similar options leveraging on the company’s favourable debt equity ratio.
 
Q. What are the issues and challenges faced by the footwear retail segment in India?
A. Footwear is a pretty difficult business worldwide and even more so in India, with diverse cultures, tastes and styles. With the increase in global exposure for the emerging Indian middle class, footwear is transcending from being a functional accessory to a fashion accessory. Though the consumer remains price conscious, he is willing to pay extra, for comfort which is a pre-dominant requisite for purchasing footwear. This has led to a steady growth in the organised segment. Further, national footwear retailers have to cater to varying sizes and preferences within the country. In terms of colours, East & South are conservative and West & North are more flamboyant. Similarly, both men’s and women’s sizes vary across different regions. This means we have to maintain a state-of-the-art back end system to cater to the varying needs. Further, the entry of international brands, though mostly in the premium segment, is widening up the market, at the top of the pyramid and is steadily raising the quality & fashion quotient.
 
Q. How important is inventory management in your business cycle? What kind of inventory management methods have been adopted by your company?
A. Inventory management is a very crucial aspect. We have integrated an extensive ERP system in our infrastructure to maintain optimum stock holding, a very vital factor in the footwear category, where fashion trends change quickly and products become obsolete.
 
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. We feel with the consolidation and monitoring of domestic retail industry, the government will gradually feel confident
of opening up the sector to foreign players.
 
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. Income growth primarily due to the advent of dual income families, increase in spending in per capita income, emergence of tier 2 & 3 cities, infrastructure improvements, increased consumer exposure to global brands & preference for shopping in newer environments, availability of quality real estate and mall management practices, increasing youth population, combination of private and public investments and consistent liberalization of regulations will continue to propel retail growth in the next couple of years.