August 24, 2010

Varkeys Supermarket: Is end nearby?

Varkeys Bakery and Supermarket went out of stock for more than two weeks. Customers were returned saying there are some supplier issues which have been sorted out. According to media reports, Varkeys is facing liquidity crunch. Varkeys is reported to have 59 stores across Kerala in different formats generating Rs.180 crore in turnover. Varkeys is now looking for PE funds, which would be slightly difficult to come by as they have failed in an earlier attempt and there are cases of Subhiksha and Vishal Retail winding up or looking for fund infusion.

Varkeys is the pioneer in organised retail in Kerala and is known for quality of products they sell but utmost professionalism was always missing. It is widely believed that rapid expansion has brought Varkeys in to this soup. Competition also is hardening with new organised players coming every now and then which includes Margin Free, Reliance and Big Bazaar. There are also neighbourhood stores morphing in to supermarket, as they are adapting to the evolving scenario. Every one is churning good revenues, but sustainability comes with profit which is marginal in this industry. For Varkeys, competing with all of them is a challenge.

Probably it's time-up for Varkeys. They have revived few stores now but Onam season had passed by then. The need of the hour is a professional management team and consultants who can adopt global benchmarks and practices in the Kerala scenario. The brand still hold its fort on 'reputation', but 'dependability' is in question.