Spencer’s must sort out real estate, manpower & perception problems
But while Spencer’s differs in its approach to ensuring customer retention, they face significant challenges that can stymie their ambitious growth plans. Real estate is high on the list. Laments Samar, “In an sec area like Jor Bagh in New Delhi for instance, the real estate price (for a selected location) is Rs.500 per sq. ft. while my limit is Rs.55 per sq. ft.
There’s no way I can make money this way.” The only choice could be to select a location that’s priced lower, which would mean compromising on the approachability factor. As a percentage of revenues, real estate price is only about 2% in international scenario and 8-10% in India (at times it even goes upto 25%). The other critical point is quality manpower, where the company goes to great lengths to ensure it employs people with the right attitude and gives them multi-functional training. With the kind of audience they cater to, Spencer’s challenge for quality real estate and manpower becomes even more daunting, since both are critical aspects of the shopping experience.
And there is some problem with the feedback on their stores too, as Susil Dungarwal, retail & realty analyst, ficci, states, “Spencer’s merchandise mix, price, quality & service is not better than other retailers.” Surely, that perception has to be changed if they have to make their ambitious plans a reality.
But while Spencer’s differs in its approach to ensuring customer retention, they face significant challenges that can stymie their ambitious growth plans. Real estate is high on the list. Laments Samar, “In an sec area like Jor Bagh in New Delhi for instance, the real estate price (for a selected location) is Rs.500 per sq. ft. while my limit is Rs.55 per sq. ft.
There’s no way I can make money this way.” The only choice could be to select a location that’s priced lower, which would mean compromising on the approachability factor. As a percentage of revenues, real estate price is only about 2% in international scenario and 8-10% in India (at times it even goes upto 25%). The other critical point is quality manpower, where the company goes to great lengths to ensure it employs people with the right attitude and gives them multi-functional training. With the kind of audience they cater to, Spencer’s challenge for quality real estate and manpower becomes even more daunting, since both are critical aspects of the shopping experience.
And there is some problem with the feedback on their stores too, as Susil Dungarwal, retail & realty analyst, ficci, states, “Spencer’s merchandise mix, price, quality & service is not better than other retailers.” Surely, that perception has to be changed if they have to make their ambitious plans a reality.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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