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Sep, 19 2013

Fashion business abuzz with profits

Are you ready to hop on the franchise bandwagon? Check out how opportunity in retail business is knocking on the doors of monetarily sound investors.

As many players are framing niche strategies for expansion, India's retail sector seems to be getting more organised. From apparels to fashion accessories and jewellery, the market is all set to bring in new brands to make it more organised and beat the unorganised section of the market. India is witnessing a sudden rise in consumption patterns owing to reasons such as rising population, more incomes, eagerness to spend on branded apparels and accessories, increased global exposure and acceptance of western customs. This is further boosting the business opportunities for franchisors and prospective franchise buyers.  Besides, mall developments in small cities and entrance of international labels are further maximising the demand for retail brands.

Apart from jewellery and multi-brand watch stores, the apparel and accessories sector is regarded as one of the most lucrative sectors to cash in on.

Replicating success

Franchising is a sure hit across all sectors of retail. Franchising is not only considered as the safest route for spreading a brand's wings but has also turned out to be a boon for prospective investors as well as franchisors. A report released by KPMG says the majority of franchise growth in the next five years will come from financial services, courier services, health and wellness and food service sub-segments. Retail, which includes apparel, jewellery and groceries, is also expected to grow significantly.”

As per KPMG India estimates, the franchising industry is expected to quadruple between 2012 and 2017. There is a scope for the franchising industry to contribute almost 4 per cent of India's GDP in 2017 (assuming 6 per cent Y-o-Y GDP growth between 2012 and 2017), growing from a current estimated contribution of 1.4 per cent of GDP.

On taking the franchise route, Ajay Nihalani, CEO, Maya Jewels, says: “Our country is much diversified and it is quite difficult to set up company owned stores in most cities; a franchisee helps in the understanding of the local market and to bridge the gap from an organised  to a local jeweller.”

Whether one is established, emerging or a new business entity, getting the right kind of people on board who share the same business thought-process can help one achieve more profits. Planet Fashion is looking at aggressive expansion in tier II and III towns, primarily in partnership with franchisees. Over the last few years, Planet Fashion has made aggressive inroads into tier II/III towns, most of which by partnering with franchisees.

Whereas Helios follows a completely different approach related to picking the franchisees. Arun Narayan, General Manager & Business Head (Helios & Licensed Brands), says: “Helios follows a management agency model where we look for franchisees with a keen interest and track record in delivering high quality retail operations and customer experience. We provide stores sufficient empowerment, training, tools and incentives to deliver to defined standards that are measured objectively using internal and external audits and metrics.”

Commenting on the support it offers to the franchisees, Anant Daga, CEO, W for Women, says: “We do a lot of handholding as far as our franchisees are concerned. It's a business of details where you need to get involved. All store layouts are developed by the brand and extensive project execution support is extended. VM guidelines, along with all customised POS material, are deployed for all the stores.  Data analytics support is extended to facilitate better buying and replenishments. We have one of the strongest recruitment, training and incentivisation programmes for the frontend sales staff. We have stringent SOPs set for the stores and follow up with robust mystery shopping exercise to ensure high standards of operations.”

Expansion ahead

Planet Fashion is currently having 170 stores across 110 cities. On the expansion front, Planet Fashion will further strengthen its presence with quality retailing, in the multi-brand segment. It will continue to expand aggressively in tier II and III towns, while at the same time tapping the latent potential that larger towns offer. Planet Fashion will double its current turnover in the next three years. Whereas, Maya Jewels, a brand of Gitanjali, is having presence in about 14 cities with about 25 stores. The company should easily be a 150+ store on a pan-India level.

On the other hand, Titan Industries is a pioneer in franchising with the opening of the first franchise store of the 'World of Titan' almost 25 years ago. Today, the Titan family includes 300+ franchisees many of whom have multiple stores across formats - World of Titan, Tanishq, Helios, Eye Plus, Fastrack and Gold Plus. Arun Narayan, General Manager & Business Head (Helios & Licensed Brands), says: “The ability to create franchise models and make them work effectively over time is a core capability that is being leveraged now to expand the Helios chain. Today, of the 48 Helios stores 23 are franchise stores.”

With 125 stores spread across 60 cities, this year W will be opening 50 stores, of which 70 per cent will be opened through the franchise route. Apart from metros, the brand is looking to expand in over 15 more cities in tier II and III towns.

Franchise facts

Brand

Investment (in Rs)

Area (in sq.ft)

Break-even

RoI

Planet Fashion

60-90 lakh

2,500-6,000

6-9 months

18-24%

Helios

Avg 30-40 lakh

750-1,200

Within a year

NA

Maya Jewels

5 crore & above 

Min 700

12-18 months

20%

W

30-50 lakh

600-1,000

Within a year

18-24%

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