Small is beautiful for Mark Ashman, chief executive officer of Hypercity. The large format hypermarket arm of retailer Shoppers Stop Ltd (SSL) has decided to scale down three of its big outlets by about 50 per cent, to a manageable 50,000 sq ft, in order to achieve an early break-even.

Ashman, had earlier said that Hypercity would turn profitable by FY15. The focus now has shifted to getting the right product mix. Ashman is also betting big on the company’s private labels in both apparel and consumer goods division.

Hypercity, which was launched by SSL as a large format store, is also looking at launching stores with retail space of around 28,000 sq ft.

“The idea is not to just open stores randomly, but to get the size right. Developers are not happy to give retailers space for hypermarkets. The downsizing is a win-win situation for us as well as mall owners, as they can rent out the remaining space to other retail chains. It will also help attract more footfalls,” Ashman said.

At present, there are 12 Hypercity outlets. The company has already signed deals with developers to open another seven outlets this fiscal. Of these, four will be smaller formats with an area of 50,000 sq ft. However, Ashman said the company would continue to open stores in the locations it is already present in, instead of going to new cities.

“Retailers have to be more cautious going ahead. The last quarter saw sluggish sales due to different economic factors. Another problem is that they have not gone beyond the top 40 cities thus letting go of the opportunity to capitalise on 80 per cent of the population. For companies such as Hypercity, it is all the more difficult as food is a high-cost and low margin business,” said Harminder Sahni of management consulting firm Wazir Advisors.

Kirti Shah of research firm BDO Advisory said that downsizing would help Hypercity cut down on manpower cost and minimise operational costs.

Hypercity’s overall sales this quarter went up by 15 per cent to Rs 204 crore. Same-store-sales grew by 7 per cent and contributed 40 per cent to consolidated revenues of Shoppers Stop. The major growth driver for Hypercity was its private labels, which grew by 22 per cent.

The company, which has 10 different private label brands in the apparel and food segment, plans to enter the fast moving consumer goods (FMCG) segment with 15-20 new brands by the end of this year.

“We need to drive the volumes in our private labels. We are also focusing on smaller packs as people tend to buy small or economy packs during difficult times,” Ashman said.

The hypermarket retailer is also planning to increase the share of high margin apparel products in its stores from 9 per cent to 15 per cent this year.

Priyanka.pani@thehindu.co.in

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