New Delhi: Top 10 food retailers, including Reliance Fresh, Aditya Birla Retail, WalMart India and Bharti Retail, have registered accumulated losses of over Rs 13,000 crore in the last fiscal, ratings agency Crisil said.
“Accumulated losses of food retailers are estimated to have crossed Rs 13,000 crore in the last fiscal, an analysis by CRISIL Ratings of top 10 food retailers that are in gestation phase showed,” a Crisil statement said.
The companies analysed by Crisil are Max Hypermarket, Hypercity Retail, Aditya Birla Retail, Metro Cash and Carry India, Trent Hypermarket, Reliance Fresh, Heritage Fresh, Spencer’s Retail, Bharti Retail and WalMart India.
Commenting on the findings, Crisil Ratings president Ramraj Pai said, “These losses reflect the challenges in the food and grocery retailing vertical. Compared with other formats, food retailing is a very local business where optimal supply chains are critical to lower costs.”
“The business also has the lowest gross margins in retailing, which leads to longer gestation periods. Players, therefore, need a lot of time and investment to perfect the model and positioning and to scale up to achieve critical mass,” he added. Crisil said retailers are re-working on their operating model to cut down on losses.
“Retailers are now moving away from large-scale expansions. Exits from unprofitable categories, rightsizing of stores, closure of unviable and non-performing stores, focused and calibrated expansion and a renewed focus on private labels are some of the initiatives which the analysed retailers are undertaking to achieve faster break-even,” Crisil Ratings director Anuj Sethi said.
