Megamart to revise its expansion plans

Bangalore: Expansion plans for Arvind Brands-owned Megamart may get scaled down in the next two to three years.

The discount store chain, which had drawn up plans to have 30 large stores by 2010, may revise the plan to open only 20-22 stores in the next three years.

“In the first quarter this year, there will be no large format store except for the spillover from this year,” according to Mr J. Suresh, CEO (Brands and Retail), Arvind Ltd.

The company had planned three to four outlet centres every year, but has decided to keep the number to the two that were already planned for the year (one each in Faridabad and Bangalore), said Mr K.E. Venkatachalapathy, Chief Operating Officer, Megamart.

Last year, Arvind Brands had announced its intention to pump in around Rs 400 crore into the retail venture, out of which the company has already invested about Rs 250 crore.

The plan was to bring in this investment in about four years, but this may get extended to five years, according to Mr Venkatachalapathy.

Citing delayed project completion by real estate players as a reason for their growth plans slowing down, Mr Suresh, however, expects no problem or any kind of adverse impact till March. “Post-March, we have to be watchful. One is not able to clearly predict what is going to happen.” Expansion plans of small format stores would, however, remain intact with the discount retail chain announcing plans to open 25 small-format Megamart stores in the first quarter next year (average size of 2,500-5,000 sq ft). Currently, there are 125 small format stores.

Mr Venkatachalapathy said that the company has become choosy about identifying property for its expansion.

Although rentals are fairly attractive now (real estate rentals have dropped from 10 per cent in some places to even 70 per cent in others), they are still not viable, said Mr Suresh.