17/05/05 Supermarket boom sparks off flourish in storage biz (Noemie Bisserbe)

The modernisation of the Indian retail sector expected to expand the growth rates of large-format stores has also spurred an increased demand for materials handling and storage equipment such as trolleys, pallets or supermarket utilities.

According to the latest report by Euromonitor International, Indian supermarkets, departmental stores and hypermarts are predicted to expand at growth rates of around 24% to 49% per year during 2003-2008 - and there's no better witness to this than the flourishing retail storage industry itself.

“Retail storage industry's growth rate is directly proportional to the growth rate of the retail industry, which is growing annually by 15 to 20%,” said Mayank Agarwal, marketing manager of Mekins Group, a Hyderabad-based manufacturer of retail storage items.

“We estimate the total size of the retail storage industry in India to be approximately Rs 100 crore. (But) the industry is not organised due to many local manufacturers with basic fabricating machines,” he maintained.

Mekins, which started operation in 1978 with the manufacture of agriculture and irrigation sector goods, later diversified into materials handling and retail storage items to grab export opportunity. According to Agarwal, the company has now bagged orders from retail majors such as Pantaloons, Biz Bazaar, Food Bazaar, Central, Foodworld, Giant and Metro.

“Presently our export turnover is much higher than the Indian, but we expect our sales in India to rise considerably,” Agarwal said. Mekins, currently worth Rs 70 crore, expects to achieve a Rs 100-crore turnover from its materials handling segment by 2007-2008.

However, foreign trade is not looking up for all Indian retail suppliers. The indigenous segment still has strides to take before it can win the confidence of many prestigious chains. “Big chains still prefer to work with architects and the foreign players usually go for global suppliers like Legett & Platt, Alu or Bender Brothers,” said Monica Shirke, director of First Rain Exhibits, a Mumbai-based company that focusses on meeting the growing needs of exhibit and retail design sector.

Nevertheless, the suppliers are still optimistic. Niloy Debnath, First Rain Exhibits' managing director, bets on not less than a 30% to 40% growth for the company within the next few years.

“Were foreign direct investment to enter India's retail sector, we could have more chances to collaborate with international designers,” he reasoned, adding that roles of companies like First Rain Exhibits in India would stay largely untouched as foreign retailers would have to adapt their retail design to the market here.