The Sheen Rubs Off

Pantaloon Retail India (PRIL) is planning to go slow on the expansion of its Furniture Bazaar. There are close to 100 Furniture Bazaar outlets, which sources say will be recast to ‘shop-in-shop' format. That means, the small Furniture Bazaar outlets will now be inside the bigger Big Bazaar outlets. "A number of Furniture Bazaar outlets will be shut down this year or reformatted to be part of the Big Bazaar format," says a source in PRIL. Kishore Biyani himself had said that one reason why the company could manage the slowdown was because it reduced the inventory in the furniture format. Last year, when the recession hit the residential property market, the home furniture format was the first to be hit.

Even Shopper's Stop, which invested heavily in the furniture format, wants to take it slow with its brand, Home Stop. "Furniture is a difficult business to be in," says Govind Shirkhande, CEO of Shopper's Stop. "We have three stores. Taking it into a larger stand-alone store will completely depend on how the business picks up going forward."

Analysts say that the furniture format , which began as a high-margin business, is turning out to be a low volume business. "Two years ago, this format gave 80 per cent margins to retailers. But issues with logistics, the recession and competition from smaller vendors have made it difficult for retailers to compete," says Ajay D. Souza, head of Crisil Research. He says everyone was now moving to the furniture accessories business rather than stocking up on the real thing.

(This story was published in Businessworld Issue Dated 26-10-2009)

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