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Jan, 04 2012

WRAP N ROLL IN PROFITS

Going by industry experts, the size of the corporate gift industry is about Rs 6,000 crore, which is not even 20 per cent of its potential. Sensing a plethora of lucrative business prospects, franchisors are keeping no stones unturned to cash in on the ‘r

GIVE someone a gift and you may get something more in 'return'! Looking for a profit pie in gift business? Want to see how this 'return' gift brings a sea change to your cash registers and balance-sheet? If yes then corporate gifting is your pathway to rake in some assured moolah and success!

Though a western concept, corporate gifting has been creating waves in India in the recent times. And going by the staggering number of multinational companies (MNCs), corporate gifting has inadvertently become the most sought-after tool for brand building as well as strengthening consumer ties.

With corporate gifting curve heading towards the North, franchisors feel this segment has a plethora of potential for entrepreneurs as well as franchisees to invest and churn out profits. Experts feel this segment, which has remained unorganised, has a huge potential for franchisees offering comparatively low-levels of entry cost and investment while competition here remains almost non-existent.

As per franchise data, investment in the corporate gifting segment ranges from as low as Rs 6 lakh and can go up to a whopping Rs 50 lakh, depending on the location and size of the store. And franchisees of this segment can expect the break-even in just four to six months! Talking about the soaring profit margins for franchisees, Anil Kumar Gupta, Managing Director, Sparket Marketing Pvt Ltd, says: “The gross profit ranges between 15 and 40 per cent, depending upon the product, customisation, quantity and competition. And all our branches are averaging profit margin of 25 per cent and above.” Prominent names like Presto Wonders, Sparket, Red Moments Inc. and Crystal Mirage are swearing by the profit spells that this segment has been offering. Besides, names like Cookie Man, Monginis etc have made headway in this segment by launching new products and stirring up experimentation to penetrate further.

Multiplying moolah!

This segment, although considered niche, has been termed as potentially profitable by industry experts. As per industry experts, the size of the corporate gift industry is about Rs 6,000 crore, which is not even 20 per cent of its potential.

Corporate gifting also seems to have acquired a new dimension in the recent times with business services brands planting organised steps in the segment and reaping rich dividends. Speaking on this segment as a profit grosser for both the franchisor as well as franchisee, Anurag Poddar, Director, Presto Wonders, affirms: “Corporate gifting is a bonus business for Presto. And what Presto does is totally different from others. It has brought personalisation in the corporate gifting segment. This is because we feel that personalisation is a big value addition here.”

Nevertheless, this segment continues to remain niche as well as unorganised and herein comes the feasibility quotient of the franchise format. Thankfully, with the influx of branded names through franchising, corporate gifting is slowly but steadily throwing its portals open for several others to follow the suit. Confirms Pattabhi Rama Rao, President, Australian Foods India Pvt Ltd, (Cookie Man): “The franchise model works well here in this segment, essentially because it gives the brand an opportunity to reach out to potential customers through the database of both the franchisor as well as the franchisee.” While Virendra Ghole, General Manager - Marketing & e-commerce, Monginis Foods Pvt. Ltd, asserts: “At Monginis, we route all the orders received from the corporates through our franchisees. This is how we keep them motivated.”

While corporate gifting is making its presence felt through franchising, franchisees are sometimes perplexed regarding the choice of a format for a corporate gift outlet. While a franchisee-managed outlet and office continues as the preferred point of sale, franchisors in this segment also prefer home-based franchisees. Gupta updates: “We believe in contacting buyers at their office and all our franchisees are operating from home. The advantage of a home-based franchise is that there is no need of expensive retail space, expensive furniture and fixtures, dead inventories and high running overhead costs.” Another emerging trend in this segment is the prominence of receiving orders through brand websites. Franchisors feel this is an additional boon for franchisees, as this saves them from running around corporate offices and confirming orders. For instance, both Cookie Man and Monginis receive orders on their websites. Confirms Ghole: “Online retailing is the future. Therefore, Monginis has already started e-commerce in a big way.” Similarly, Rao enlightens: “We have stores ranging from 50 sq.ft to 500 sq.ft. But we do receive a lot of orders on our website and sometimes at our stores.”

With brands counting on profits, charting out extensive expansion strategies are also on their growth radar. While Sparket is initially focusing on metros and state capitals, Presto Wonders has already made its mark across tier-II and III cities. Poddar elaborates further: “We are targeting 300 stores by 2015 end and this is not possible without the inclusion of tier-III cities in our expansion itinerary.” Divulging the expansion plans of Cookie Man, Rao informs: “Currently, we have 42 stores across 18 cities and plan to increase our presence to 100 stores by 2013.”

Biz for all seasons

With franchise brands tasting success in this segment, the question is how realistic it is for a franchisee to invest in this business given the seasonal nature of this segment? Experts, however, punch in positives. With the trend of brand building and communications going viral in the MNC culture, corporate gifting is no longer limited to the festive season. Corporates now give gifts throughout the year in relation to employee welfare schemes, for visiting delegations, etc, making it conducive for a franchisee to never run out of business and profits. Gupta explains: “We have done round-the-year business with gifting at all locations and have seen bumper business during festival seasons. Besides, gifts for employees, consumer connect promotion schemes, channel engagement, reward and recognition, relationship building activities, event giveaways, branding and merchandising are non-seasonal corporate gifts taking place all round the year.”

What's more, sharing of client database between a franchisor and a franchisee ensures optimum profit and success in securing orders. Gupta agrees: “We have over 200 corporate customers and the same is shared with our franchisees. In fact, each of our franchisees has helped us enter into new corporate relationships and various local vendors.” Similarly, Rao confirms: “Cookie Man and our franchisees have one common goal to sell a high value product as best possible, ensuring customer delight. We share databases with franchisees and in some cases even provide them assistance in closing a corporate order.”

Location benefits

Looking at the predominating presence of corporate offices in metros, wherein lies the prospect for a franchisee based in a tier-III town? Gupta says: “Our Kochi franchisee is presently covering the entire Kerala and with time can justify his case to add more cities by signing territory rights, depending on his infrastructure, capabilities and interest.” While Poddar avers: “The market of corporate gifting is essentially less in tier-III towns. On the contrary, opportunities galore here due to the growth in the number of conferences, get-togethers and they all need mementos, souvenirs' etc.” Incidentally, Presto Wonders has stores in locations like Imphal, Kharagpur and Durgapur.

Franchisees know-how

Training and support are important aspects for franchisees in any industry. But for franchisees in the corporate gifting segment, fulfilling client requirement and handling orders need extensive training and support from the franchisor.

In case of Presto, since corporate gifting comes with a touch of personalisation, so technical knowledge for work is important. Gupta states: “They need to undergo one week training at our Kolkata office and on the field to understand the business, products and various vendors. Subsequently, our team visits their location periodically and work with them on the field to ensure that they get the confidence. The back-office takes care of enquiry generation, artwork, logistics, accounts and various other activities to ensure that their operations are integrated with us. We don't earn a single penny from them till they earn and that model ensures we both remain in the same boat for lifetime.”

What's ahead?

Although in a nascent stage, the corporate gifting segment is expected to touch the pinnacle in times ahead. And going by the organised format offered by franchise brands, money and opportunity for franchisees are up for a grab!

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