Advisory Jun, 08 2015

Why opt for MBOs over EBOs in Kids Retail

Kids retail sector has matured in the recent times. In the last five years, many domestic retail brands witnessed losses. But even then, a few international brands & other established domestic brands in kid’s retail have been marching ahead. Let’s loo

By Yamini S Verma, TFW Bureau
Sr. Sub-editor
Why opt for MBOs over EBOs in Kids Retail

With the cut-throat competition in almost every field, kids retail brands are also on their toes to uplift and maintain their value proposition as per the customers’ experience and convenience. Retailers catering to kids merchandising need to adapt innovative formats to meet the preferences of one and all. In the recent times, the Indian kids' wear retail industry has witnessed mammoth growth with many indigenous and foreign players entering the organised platform. Unlike, any other retail segment, the kids’ retail has grown on to become one of the major retail markets in India.

Market at a glance

According to retail consultancy firm Technopak Advisors, driven by huge demand from brand conscious children, the Indian kids wear retail market was expected to touch Rs 58000 crore by 2014. While the ASSOCHAM study estimates the Indian kids-wear market to reach Rs 80,000 crore by 2015. The kids fashion has infiltrated into tier-II and III cities like Dehradun, Chandigarh, Pune, Nashik, Indore, Varanasi and so on, the report adds. This report finds growing of kids wear at the rate of 17 per cent, making it one of the most attractive categories. The report is based on children in the age group of three to 13 years. The study reasons increased media exposure, double-income parents and peer pressure for children becoming more fashion and brand conscious.

Preferred route for success

Multi Brand Outlets (MBOs) are the preferred format for retailers in kids’ category, reason being, the variety of brands and freedom to decide. Whereas with the Exclusive Brand Outlets (EBOs) format, retailers have no freedom to operate the business as per their strategies and plans. They have to abide by the guidelines of the vendor. 

Sharing his view, Supam Maheshwari, CEO and Founder, FirstCry.com says: “Considering the dearth of Exclusive Brand Outlets in the baby sector in India, the opportunity in Multi- Brand store looks promising. Parents are looking for more and more choices when shopping for their kids as they wouldn’t want to compromise on quality. Other than this, maximum variety that gives value for money is more desirable for parents. In such a scenario, Multi- Brand Outlets are more suitable.” FirstCry.com works on an omni channel presence model and has more than 100 franchise stores across India. The brand has built itself to be ‘the ultimate destination’ for parents looking to buy products for their kids. It plans to cross the count of 400 stores in India by 2017 and make shopping for kids an easy experience across all tiers.

Green Gold Animation Pvt. Ltd, which has all the products and merchandise of Chhota Bheem also finds EBOs as the basic challenge in the kids retail segment. Sudeesh Varma, Head- Marketing and Operations, says: “EBOs are more challenging to operate than MBOs, the reason being- one has the options to choose and buy from in the multi-brand store. Whereas EBOs are more brands driven and the products displayed in the store may also not hit customers’ tastes if the brand is not doing well.”

Varma is also of the opinion that the kids’ retail sector has huge growth in the Indian market. He adds:”As of now, the kids’ retail sector was flocked up by unorganised players but with the foray of organised players, growing economy and the increasing disposable income, the focused demands of the buyers are duly met on time and as per their preferences.” Green Gold Animation Pvt. Ltd offers a range of kids' products including comics, DVDs, apparels, gifts, home decor items, puzzles and stationeries. The stores have a special range of Chhota Bheem, Mighty Raju, Krishna Balram, Luv Kush and Chor Police merchandise which are very famous among the kids. The brand is gearing up to pick up speed in 2015 and is also tapping investors via the franchise route.

                    MBO’s

           EBO’s

•  MBOs are preferred in the kids’ retail sector as the retailers get freedom to take decision about the ambience and visual display of their outlets.

•  In EBOs, retailers have no freedom to run their unit as they will have to put up with the vendor’s guidelines such as fixed set of promotions for a year.

•  In case of kidswear, customers can pick from a variety of apparels and brands.

•  In case of kidswear, EBOs are more products driven than brands.

•  Multi brand formats with greater volumes of shoppers’ essential also allow the customers to compare and decide amongst the offerings that are showcased in the store.

•  EBOs seek skilled manpower as they are the representatives of the brand.

•  But, providing multiple choices, MBOs might confuse the shopper. In fact the retailer would also not be able to recommend any brand to its customer.

•  In terms of benefits from the vendors, EBO retailers get territory protection as no other EBO of same brand will be opened pened in the same vicinity.

•  MBO retailers also get fewer benefits from the vendors. MBOs have to face fierce competition if another multi brand outlet is opened in the same vicinity.

Related: Turn towards turn key businesses

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