Running a large retail chain is no easy feat. It comes with its own set of challenges.
In the past decade, several once-prominent brands either exited the market, closed stores or scaled down operations due to various challenges.
This report examines major brands that closed in the past decade, why they failed, and how businesses can avoid similar closures in some cases.
7 Major Retail Brands That Faced Store Closures in India
1. Spencer’s Retail
Spencer’s Retail, a prominent name in the Indian retail sector, faced a challenging period in recent years.
The company, which operated 158 stores across 35 cities, shut down 49 underperforming outlets to streamline its business operations.
Stores in high-loss regions, particularly in Delhi-NCR, Telangana, and Andhra Pradesh, were deemed unviable, while Spencer’s chose to concentrate on regions where it was performing better.
Anuj Singh, Spencer’s MD, told Indiaretailing, that the store closures were part of a strategic shift to focus on more profitable markets and reduce losses.
2. Future Retail
Future Retail used to be one of the major chains in the retail industry with over 1,500 stores across the country.
Future Retail started facing debt issues in 2012, particularly as the company struggled to service loans. It had significant borrowings, with exposure to lenders reaching around ₹11,970 crore.
The company’s aggressive overexpansion further worsened the situation, as it opened hundreds of stores under various brands like Big Bazaar, FBB, and Easyday.
This rapid expansion stretched its resources and led to operational inefficiencies, making it difficult to manage the growing network of stores.
Apart from these, the company took a heavy blow due to the emergence of eCommerce, legal battles with Amazon, etc.
3. Café Coffee Day
Café Coffee Day, which once had a dominating presence in India with over 1,700 outlets, is one of the most well-known examples of retail collapse.
Saddled with over ₹7,000 crore in debt in 2019, the company struggled to sustain operations and was forced to close several outlets after facing severe financial difficulties.
To manage its mounting debts and streamline costs, CCD closed 73% of its outlets, leaving it with just around 450 operational stores by 2023. This downsizing was part of its restructuring strategy.
The closures were also influenced by intense competition from emerging coffee chains, the rapid growth of e-commerce food delivery, and shifting consumer preferences toward at-home coffee experiences
4. Benetton
Benetton, a prominent name in the fashion industry, has operated over 700+ stores across the country.
However, Benetton faced mounting pressure due to changes in the retail space, including intense competition from local and international brands (Zara, H&M), and a shift in consumer behavior toward online shopping.
In response to these challenges, Benetton started closing stores to cut costs and streamline operations. By 2017, Benetton had already closed over 110+ stores across India.
Benetton’s product offerings became outdated, and the brand failed to innovate with current trends in fashion. Also, Benetton’s premium pricing made it difficult to appeal to middle-income consumers in India.
5. Splash
Splash, the fast-fashion brand from Dubai-based Landmark Group, once operated 18 standalone stores across India in addition to shop-in-shop setups within Lifestyle stores.
However, due to various challenges, all 18 standalone Splash stores were closed as the brand exited the Indian market.
The primary reasons for this closure were its inability to compete with more affordable fast-fashion brands and its slightly premium pricing, which didn’t align well with the preferences of price-sensitive Indian shoppers.
Landmark Group chose to focus on its more successful brands, such as Max and EasyBuy, which cater to a broader audience with budget-friendly offerings.
Zudio is one of the brands that disrupted the fast fashion market by understanding it correctly. Read Zudio’s success story to understand how they did it in one of the competitive spaces.
6. GAP
GAP is one of the premium clothing brands that struggled with a mismatch between its pricing and the local consumer’s expectations, as it was positioned as a premium brand but faced stiff competition from more affordable international and local fast-fashion brands like Zara and H&M.
Given the underwhelming performance, they’ve decided to close many Gap stores in the country and eventually, exited the Indian market shortly after.
However, in 2022, Gap announced its re-entry into India through a long-term franchise agreement with Reliance Retail. The re-entry strategy includes opening freestanding stores and expanding through Reliance’s digital platforms, such as Ajio.
Gap’s first standalone store under this partnership opened in Mumbai in February 2023, with plans to launch 50 additional stores across India by the end of 2024.
7. Subhiksha
Subhiksha, once a leading retail chain in India, faced significant financial difficulties that ultimately led to its closure.
Founded in 1997, Subhiksha initially grew rapidly, expanding its reach with a variety of discount stores offering groceries, electronics, and mobile phones. At its peak, Subhiksha had over 1,600 stores across India.
The company’s downfall was driven by multiple factors. One of the key issues was poor financial management, including the inability to service its debts. Subhiksha had significant liabilities, and by 2008, the company was unable to manage its cash flow properly, which led to widespread defaults on payments.
By 2009, Subhiksha had to shut down stores and entered into insolvency proceedings, marking the end of its once-promising retail journey.
Key Learnings from These Brands to Avoid Store Closures
Massive shut shops and store closures highlight the importance of evaluating several factors that decide a store’s location before planning an expansion strategy.
With location data, retailers can optimize their expansion strategy by making data-backed decisions that reduce the risk of store closures and give a greater growth potential.
Below are key factors AI can help assess when selecting the perfect location for a retail business:
- Customer Demographics: Understand your target audience’s age, income, and spending patterns to ensure the store meets their needs.
- Customer Density: Evaluate how concentrated your potential customers are in the area to assess the market potential.
- Foot Traffic: High-traffic areas can increase visibility and sales, making foot traffic analysis essential.
- Competing and Complementary Brands: Analyze nearby businesses to identify challenges, synergies, and their potential market share.
- Revenue Prediction: Leverage predictive analytics to forecast profitability for the location.
Using location intelligence platforms like GeoIQ can provide these insights and more to help businesses avoid costly missteps and build a solid foundation for growth.
By making informed decisions in location selection, better finances, etc., retail businesses can increase their chances of long-term success and avoid unnecessary store closures.
