Let winners emerge in retail sector and then invest: Jhunjhunwala

Renowned stock investor Rakesh Jhunjhunwala rarely disappoints his followers. So whenever he talks, people hold on to their pens or keyboards awaiting hints and suggestions on the best stocks to invest.

His views about retail that form about 20 per cent to 25 per cent of his portfolio too are insightful.

"There are too many me-too retailers," he says at the CII National Retail and FMCG Summit 2014 in Mumbai.

According to him, only players with a differentiated thinking will succeed. He has invested in companies such as Lupin Laboratories, Titan Industries and Aptech, among others in several sectors.

"The winner would emerge in 5 to 10 years and there will be more specialised retailers," says Jhunjhunwala as he foresees competition heating up.

"It may be better to invest when the winners emerge," he says.

According to the ace investor, inventory management is the most important part of any retailer's cost.

A better supply chain and inventory management will offer customers a better choice, he says.

On the focus of retailers, he says they would have to work on profitability and achieving it involves long courtships and gestation periods. "And all courtships don't end up in marriages," he says. 

He underscores the fact that 'no business has been successful unless they generate their own resources to grow'. Jhunjhunwala sees the race for topline growth, lack of shop-level profitability and size being the only criteria without an eye on customer experience as impediments for the sector.

He also points to the importance of Goods and Service Tax (GST) in the retail sector, which he believes will make India more tax compliant.