Indian conglomerate Aditya Birla Group plans to trim its store network in a bid to cut losses and accelerate productivity.

Nearly 40 stores will be closed, affecting about 150 staff.

Its retail venture Aditya Birla Retail has already axed more than 12 and is continuously identifying unprofitable stores for closure.

Aditya Birla Retail operates supermarkets named ‘More’ and hypermarkets branded as ‘More Megastore’. With a total network of about 500 stores, Aditya Birla Retail follows Future Group and Reliance Retail in the country’s supermarket chain rankings.

Incurred losses of Rs 423 crore have been posted by the retailer in the year to March 2011.

The continuous network shrinking will affect outlets in metros where competition is stiffer and rentals are higher.

“We are closing the nonprofitable stores – 40 to 50 – because huge funds are required to run these stores. Besides, the rents in Mumbai are high. We will now focus on large stores, but continue to run supermarkets in the south and markets which are doing well, such as Punjab, Haryana, Uttar Pradesh and Kolkata,” said CEO Pranab Barua.

The network cull will see the elimination of some corporate positions along with store staff. 

“This is all a part of the process. Change in people need not lead to a change in strategy,” Barua said.

Aditya Birla Retail also cuts more than 100 stores during the administration of former CEO Thomas Varghese due to economic uncertainty and consumer slowdown.

Retail analysts pointed rapid geographic footprint expansion, carrying too much merchandise and frequent management changes as the factors which added to the complexities of the business.

“A few years ago, most of the retailers ended up opening stores in similar catchments, thus competing with each other. So the sales weren’t viable to offset the rentals,” said Harminder Sahni, MD of retail consultancy firm Wazir Advisors.

GB