Govt efforts may boost consumption 2016 onwards: V-Mart

It has been almost constant and flat on the growth path but we have been able to get some kind of growth on same store number which is lower than our last year same store sales growth. So consumption is there people have lot of aspiration to consume more and more but as of now they don’t have extra money in their pocket by any other activity supported by the government or by the nature.

Therefore, lot of things are awaited and it’s a temporary phenomena where things should get up and go up and running. So I see lot of things happening in the year to come.

Q: There are talks of sluggishness in the rural economy and you are predominantly in tier II, tier III cities and towns where a lot of demand could also be coming in from the peripheries of these stance particularly from the rural area. How are you reading this situation on the ground and digital retailers are becoming a threat to the modern retailers or the offline retailers? Are you feeling the heat in the tier II, tier III towns from the digital side?

A: You are correct. The rural consumers do not have extra money in the pocket. We are seeing sluggish economy there, people are reporting that and we are also feeling that because the MSP prices, the yield has not gone up and so the rural customer doesn’t have that extra money.

I will try to explain you about the consumption behaviour, so there are two kinds of consumption behaviour – (1) need based consumption, which is widely seen in our kind of areas where we operate in district level towns, where we have urban, semi urban and the rural customers and (2) status based consumption, which derives from the festivity or occasions or marriage.

So these status based consumptions only get effected with that extra money whether they have in their pocket or not. However, need based consumption is always there; where two pair of clothes a year for any consumer who lives on this earth is necessary in a year and that consumption cannot die down but where status is concerned, where the consumer want to showoff to the society – that part gets tapered off but otherwise we are not seeing a slowdown but we are not seeing the growth which we anticipated immediately.

However, to answer your second question about online space; I think the consumers that we are talking of at the district level, the urban customers or semi urban or the rural customers, these customers are relatively not technology friendly, they are not very much prone to buying online or even accessing online space or they don’t carry smart phones, don’t have internet bandwidth.

Therefore, I feel there is low penetration in those areas compared to the number of people who live there and we do not see those happening in our kind of segment because we deal in affordable fashion.

This affordable fashion is primarily non-branded category; these apparels are more of touch and feel effect where customers want to try before they buy. So I do not see lot of impact happening there due to online players.

Q: You did say that same store sales growth is looking sluggish; it fell to about 7 percent in nine months of FY15. How much lower do you think it could go and FY16 what is the expectation?

A: Last quarter would be similar to what has gone in the past nine months therefore, as of now, since start of April we are seeing better consumption happening and better sales being reported at the store level.

I have a very bullish approach on year 2016 because lot of initiatives taken up by the Modi government would get rolled up and people would see employment, people will see more money in their pocket and Make in India concept or even changes in the mining policies or power sector will bring in lot of work force on the job and that will rotate our economy in the smaller town. So we have a bullish approach in the years to come.