The retail sector is passing through tremendous transformation. With the onset of a globalised economy, people have become aware of the value of money and opting for low-cost formats. And with organised players basking in success, others are gladly follow
The retail sector is passing through tremendous transformation. With the onset of a globalised economy, people have become aware of the value of money and opting for low-cost formats. And with organised players basking in success, others are gladly following suit.
IN the retail sector, some franchises could cost you higher than you actually expect. Initiating a low-cost business is no big deal since retail industry is already diversified. It opens up lot of avenues for the investor to choose from. Whatever the statistics may say, entrepreneurial zeal in India has never been affected due to any of the reasons. This is the only reason why entrepreneurs are penetrating into low-investment business.
Business potential
Recognised as one of the money-spinning sectors, retail industry is the next big opportunity that assures buoyant prospects to the investors in categories such as books retail, jewellery, gifts, florists, home décor, movie rental, fashion accessories and small formats like kiosks.
Flip side
Initiating any business is easy. However, converting it into success is not a child's play. At present, India's retail sector is witnessing hordes of challenges like picking the right location, soaring real estate prices, pilferage, skilled workforce, accessibility, glitches in managing the supply chain, fluctuation in pricing, delivering good customer service and fierce competition by mom and pop stores. Pawan Gadia, Chief Executive Officer, Ferns N Petals, says, “The product is highly perishable, so to carry out operations in this business a person has to have a proper idea of the amount of flowers that needs to be procured to avoid losses.”
S.N. Mishra, Chief Operating Officer, Apeejay Oxford Bookstores Pvt. Ltd, stresses, “The biggest challenge in the franchise operation is the inventory management ordering, stock tracking and stock replenishment. Another major challenge in the book industry is to get skilled manpower in books retail, as staff product training is very important.”
Jewellery industry faces threats from the unorganised/family-owned jewellers, who intend to copy designs, slash gold prices during wedding seasons and offer customer satisfaction. According to Mathews Cherian, Vice-President, Normak Fashions (P) Ltd, manufacturers of Estelle brand of imitation and costume jewellery, “The most important challenge is not within the country. It's mainly from the Chinese and Korean imports, which are being brought into India through various unfair trade practices.” Such threats can be overcome by delivering quality products, introducing new schemes and discounts and spending on marketing to create brand awareness in consumer's mind.
Franchisability
As the retailer/franchisor may not be aware of local market conditions of a particular city/town, well-known companies are foraying into the franchise model to craft their brand's identity in the consumer's mind by associating with investor, who knows the market well. To chart rapid success in a short span of time, franchising can do wonders if somebody is passionate, willing to invest and has an entrepreneurial zeal to imitate the business guidelines. Says Mishra, “During the time of opening new franchise, we provide extensive training to their staff at our own store to give them practical experience of running a book business. We also conduct training sessions to re-emphasise company system, process and procedure. Since we are in this trade from more than 90 years, we provide lot of support in the form of merchandising, events, tie-up and different promotional activities.”
Expansion
On the basis of popularity and demand created by customers, the company progresses towards spreading its wings in the new market. In case of Ferns N Petals, the average footfall per centre varies with different locations. On widening its brand reach, Gadia informs, “As of now, we have 84 franchise outlets and by the next three financial years, the company is targeting 200 outlets across A, B and C-class cities.”
Cherian adds, “By 2012, we expect to touch the 100 Exclusive Brand Outlet (EBO) mark and expand our presence in all A and B-class cities.” Currently, Oxford Bookstore owns 16 franchise and 10 company stores. Mishra states, “For FY 20102011, we are planning to open six stores mainly in tier I cities.”
In terms of reaching to consumers, Raj Shroff, Managing Director, Diagold, enlightens, “We are targeting tier I and II cities and looking forward to open 100 stores in the next three years.” For owning a Diagold's franchise, the franchisee would require a space of 200-450 sq.ft within an investment range of Rs 6 to Rs 10 lakh, including furniture and fixtures. The preferred location for opening Diagold outlet would be high street or a good mall.
Exit option
In the floral industry, the franchisor offers full support to the franchisee and gives him the advice to sell the business further. Gadia says, “Yes, we have the option to sell the business further in case of some genuine problem, our back support team helps them to find the potential buyers. In such cases, the company verifies and need to feel satisfied that the buyers would abide by the rules and regulations laid by the brand.” In case of Oxford Bookstore, the franchisee doesn't have the option to sell their business further.
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