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Bindu D. Menon

New Delhi, Aug. 31

Retailers are optimistic that with the onset of the festival season customers would return to their discretionary spending mode. Industry analysts too observe that the second half of FY10 will revive consumption in a big way.

“All our lead indicators hint at revival in consumption and shift of consumers to modern retail in the second half of FY10. We estimate a 4.5 per cent CAGR over FY09-12 in average sales per square feet of companies,” according to a report by Centrum Research Estimates.

Most qualitative factors in the retail space reveal that a recovery in consumption space is either under way or in the offing. For instance, same-store-sale growth of two major players – Pantaloon and Shoppers Stop – show signs of revival.

“IIP numbers has also shown an improvement in consumer goods production which implies that producers have begun producing consumer goods on anticipated demand and exhausted inventories.” “Sales are picking up and festival season sales are indicating that the consumer sentiment is peaking. Certain items like laptops and home appliances took the hit during the slowdown period. We did go slow on our expansion but now it is back on track,” Mr Ajay Baijal, President and Chief Executive of Reliance Digital, said.

The Centrum report also notes that the sales growth will outpace average space growth by 9.3 per cent in FY11 as against a negative growth of 7.7 per cent in FY09.

The cost structure in organised retail is unlikely to breach peak levels of FY07-08.

“The period of shut downs is now over. We have opened five large format stores during past three months and all have reported sales to the tune of Rs 1,000 per sq ft a day, more than double the normal sales rate. So we are optimistic about revival,” Mr Sanjiv Goenka, Vice-Chairman, RPG Enterprises said.

The group which promotes the Spencer’s chain has said it is exploring the option of revenue sharing model with realty owners for its new stores.

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