Inflation blues bites into retailers plans

MUMBAI: A dip in consumer spending and the possibility of real estate prices softening have halted the expansion plans of India���s modern retailers. Says Future group CEO Kishore Biyani: ���Demand for some categories have declined, which may be attributed to inflation. Some small retailers are also postponing their expansion plans.��� According to industry experts, small retailers are the worse hit by the inflation.

Some retailers also say they expect real estate prices to fall further. In anticipation, many retailers have chosen not to invest in property right now. Even those who only a month back had announced their expansion plans are now keeping a low profile. And recruitment has taken a back seat as well.

Realty consultants, who had predicted the property prices to stabilise, claim that more retailers are now approaching them for better deals. Says Jones Lang Lasalle Meghraj chairman and country head Anuj Puri: ���Prices have been too high for some time now. If this continues it may not be possible for many retailers to buy or rent out certain properties. Some retailers have been negotiating really hard for acquiring property at the lowest possible price, and prices may come down in the near future.���

Vishal Retail chairman and MD RC Agrawal says: ���Yes, the growth now looks quite slow and we are considering whether we should go ahead with our expansion plans as aggressively as before. Though our year-on-year profits are quite impressive, but I must say there has been quite a decline in margins in some segments.���

Adds Spinach CEO Pushpamitra Das: ���Supply is a problem. We are now bargaining harder with suppliers to make up for the slip in margins.���