Future Group has converted 14 of its loss-making neighbourhood supermarket stores ó KBís Fair Price ó in Mumbai into high-end supermarkets calling them KBís Conveniently Yours (KBCY). These are stores located in areas where rentals are higher by at least 50% to 70% compared to those in the distant suburbs. The merchandise at these outlets is priced accordingly so that the company earns better margins.
Of the 35 stores in the city, 21 remain in the KBFP format. Five loss-making stores have been shut down in the last six months of which one is in the newer format and four were KBFPs (If the losses cross 0.5% of the sales, they are shut down). Most of these outlets were located in the distant suburbs of Mumbai.
The KBFP stores are targeted at the middle class and stock discounted groceries, home care and personal care products. The average revenue per sq. ft. at KBFP is around Rs 800 per sq. ft. to around Rs 1,200 per sq. ft. depending on the store size. With the new format ó Conveniently Yours óFuture Group hopes to attract more affluent shoppers and therefore the outlets are all air-conditioned. Moreover, the merchandise too caters to the moneyed segment of society and includes dairy products, poultry and chocolate. While the size of the smaller stores ranges between 400-1,400 sq. ft., the newer stores are spread across 700 sq. ft. to 1,400 sq. ft.
K Radhakrishnan, who was earlier head of Reliance Fresh and KBís Fair Price, points out that high rentals remain a problem for supermarkets. ďThe revenue per sq ft for a Reliance Fresh may vary from Rs 2,000 to Rs 2,200 while for others with slightly low-end products will range between Rs1,000 to Rs 1,200 per sq. ft. Retailers have struggled with the supermarket format for many years now,Ē Radhakrishnan said. Rent issues apart, the main challenge in India for the modern supermarket chains are from Kirana stores, who are very efficient in managing costs and delivery.
Currently, supermarket chains such as Nilgiris, Big Apple, KBFP and KBís Conveniently Yours are part of Kishore Biyaniís listed company Future Consumer Enterprise Ltd.
Future Consumer Enterprise reported a wider net loss even as consolidated revenue rose 257% year-on-year to Rs 347.57 crore for quarter ended September 30. Consolidated net loss more than doubled to Rs 17.83 crore in the September quarter compared with Rs 8.11 crore in the year-ago period.
Future Group has not yet decided to phase-out the entire KBís Fair Price format but may consider it in the future once the catchment area where KBFP is located improves and gets developed. KBís Conveniently Yours was introduced in Mumbai in 2015 and the company is in process of upgrading most of the existing stores to this model.