Spencer's Retail Casts Net Wide To Reel In Value-conscious Consumer

Spencer’s Retail, part of the RP-Sanjiv Goenka Group, is casting its net wide with the launch of a new format targeted at ‘value-conscious’ consumers under Spencer’s Value Market brand.

The launch will be in phases and the hypermarket chain will focus on tier III and IV cities.

Shashwat Goenka, sector head-retail & FMCG of RP-Sanjiv Goenka Group, explained that the Indian grocery market caters to three broad consumer classes — premium/gourmet segment, aspirational, and value-conscious.

“Nature’s Basket fits the premium/gourmet model. We have Spencer’s for the aspirational segment. The third segment for the value-conscious is the one we are targeting. This will ensure we straddle all three consumer segments,” said Goenka.

Between January 16 and 22, the first set of Value Market stores will be launched at six locations: Karimnagar, Warangal, Kurnool, Guntur, Bhimavaram, and Vijayanagaram.

By the end of the current financial year (2022-23), there will be at least 10 Spencer’s Value Markets. For most, the existing Spencer’s stores will be converted into a Value Market.

“Over the next 12-18 months, we are expecting to get very significant earnings before interest, tax, depreciation, and amortisation from these stores as they stabilise,” said Goenka.

Spencer’s net sales in 2021-22 had stood at Rs 2,299.69 crore.

The new Value Market stores will be set up in the next financial year (2023-24). As far as store openings go, Goenka said the split will be equal between Spencer’s and Value Market.

Currently, Spencer's operates 152 stores and there are about 35 Nature’s Basket stores. The store additions next year will be 14-18, of which about 50 per cent will be Value Market.

“We are entering the new value market. We believe this is going to be very profitable and a high-growth segment for us,” said Goenka.

The Value Market stores come with the promise of a minimum 6 per cent discount on all products every day. With the right assortment and discount, the company is eyeing higher throughput from these stores.

Even as Spencer’s targets the value segment, Goenka said that there will be no compromise on either store ambience or customer service. There will be a wider play of private labels and the size smaller than an average Spencer’s hypermarket.

Typically, an average Spencer’s hypermarket store is spread over 14,000-16,000 square (sq.) feet (ft), whereas Value Market stores will be between 8,000 sq. ft and 12,000 sq. ft.

The value segment is a new play for Spencer’s which has always operated in the premium and regular segments. Goenka attributed the shift in strategy to shifting consumer trends.

“What’s changed over the past four to five years and more so with the pandemic, is that a whole class of value-conscious consumers have come up. It’s happening globally as well.”

“If you look at India, most players have taken this route. As we look to expand and go beyond 35 cities, we had to adopt a model that caters to the value-conscious consumer,” said Goenka.