By settling on better price quotes with the real-estate owners, Aditya Birla Retail Limited (ABRL) is able to save about 20 per cent in the rental expenditure.
The company closed down its unprofitable retail outlets and moved to new locations to save on real-estate costs, according to its chief executive officer Thomas Varghese.
The company identified the rental expenditure to be four per cent of the projected revenues in a year, for each location. The company feels that as the margins are less in retail sector, paying rentals, which are almost 10 per cent of the revenue, is not a viable business move.
The company already has 530 super markets including 156 in Andhra Pradesh and now it is focusing to ramp up its number to 1000 and hypermarkets to 64 in the next five years.
ABRL’s More Megastore, a hypermarket is coming up with an investment of Rs 16 crore in Saroornagar, Andhra Pradesh.
In order to attract the footfalls, the company is having plans to give discounts on some items.