They have been into business since long but their expedition with franchising has just begun. Was it a quick decision or they realised the worth of franchise concept of late. TFW got in touch with some of the best performing youngest franchisors to know h
According to a study conducted by Industrial body, India's retail market is expected to touch a whopping Rs 47 trillion (US$ 782.23 billion) by 201617, expanding at a compounded annual growth rate (CAGR) of 15 per cent. India's retail sector is growing remarkably and a proven concept of franchising model is just like icing on the cake as it allows brands to double their store count and assures sustainability in business.
Franchising is being idolized as the blessing in disguise for many retailers as well, which were traditionally not into franchising. Some of the finest examples are brands that lately pushed expansion through replicable biz model consists of brands such as Bata India, Reliance Footprint, Reliance Digital, Global Desi by And Designs, Lacoste India, Lenskart.com, Fab Furnish, Being Human, People by Aditya Birla Group, Diva'ni, a venture of YRF-Yash Raj Films and KBSH- KBSH Private Limited, Tara Jewellers, Wills Lifestyle, Swiss Military and Germany's Hafele that caters to kitchen fittings have lately started their brand's franchise operations. The most popular and flourishing sectors that top the chart in retail sector are apparel, fashion accessories covering eyewear, jewellery, home furnishing and specialty retail. All credit goes to the favorable factors such as organised retail formats, development of commercial real estate space in tier II and III cities, growing middle class income, consumers' altering consumption patterns, access of foreign brands and emergence of online shopping portals across various biz segments is expected to contribute to the intensification of retail industry.
Minting cash by selling stylish garb
In the apparel industry, Being Human Clothing started off as an idea to help the twin cause of healthcare and education supported by Being Human, The Salman Khan Foundation. After launching the brand in Europe and Middle East, the brand started its India operations last year. Currently, 26 per cent of its Exclusive Brand Outlets (EBOs) are being successfully operated by franchisees, who are like-minded people from a strong retail background. As per Manish Mandhana, MD, Mandhana Industries Ltd: “Owing to the importance of franchising in growing the business across length and breadth of the country, Being Human Clothing has witnessed success in adopting the model. Moreover, franchise model can give a business a deep network within non-metro cities, which are among the most promising markets.” Besides other metro cities, Being Human aims to reach across the deepest pockets of India. The brand is planning to grow its reach to 50 EBOs and 175 SIS across India by March 2015.
PEOPLE, is another youth brand, which has over 85 stores across 40 cities. Talking about the experience they had with franchise route, Abhay Bahungune, Brand Head, PEOPLE, says: “For us, franchising is not just an operational exercise but a strategic business pillar. We aim to open 700+ stores across identified geographies in the next three to five years. Such rapid and complex growth definitely requires local expertise to be successful. This expertise can be brought in by franchisees. We are looking at franchisees as our local partners, who would help us build the brand in local markets and communities and be our partners in growth.” The brand is expanding with a cluster based approach where they select a particular geography and saturate it before moving on to other geographies. Moving ahead, PEOPLE hopes to double its stores and cross the mark of 150 stores in this FY (2014-15).
DIVA'NI is a cinema-inspired brand by Yash Raj Films (YRF) and Karol Bagh Saree House (KBSH) Private Limited. With its brand value, Diva'ni intends to boost the prospects of a favourable and profitable business venture. On sharing her experience, Sanya Dhir, Brand-Director, Diva'ni, says: “The brand has strategised to work on 'franchise owned-franchise operated' model, in which the brand gives the freedom to partners to be their own boss. These exclusive stores showcase the essence of the brand on behalf of Diva'ni.” The brand is looking at cities of Punjab to begin with, and then trickling down to Kolkata and Hyderabad soon.
Latin Quarters (LQ) is one more fashion brand that caters to women's western wear. Saurabh Jhingan, COO and Co-Founder, Latin Quarters, says: “Earlier our brand did not have any franchise store. But, now we are open to the option of opening franchise outlets. The only business strategy the franchisee to have is the same passion and zeal for women wear fashion that LQ has.” On their plans ahead, the company wants to take LQ in tier II and III cities. By this year end, the brand is coming up with five to six exclusive stores and is also looking to increase number of shop-in-shop formats.
Besides that, Lacoste India is a strategic alliance between Lacoste and Sports and Leisure Apparel Limited (SLA). SLA has the exclusive rights to manufacture Lacoste branded garments in India and distribute Lacoste branded garments in India, Maldives, Nepal and Sri Lanka. On enlightening about the journey through franchise way, Rajesh Jain, MD and CEO, Lacoste India, says: “Lacoste has adopted franchise model recently in India where we are looking for partnerships and alliances to leverage the brand policy and at the same time build the brand in terms of revenue generation and presence. Franchise model here gives us a platform wherein we are able to tap and reach the required customer base. Not only are we now approachable via franchisees, but are capable now to project the brand image from a mere Polo Centric brand to a complete lifestyle brand offering much more than just apparels.”From 23 Point of Sale (POS) in 2009, Lacoste is today present across 44 POS in India covering 15 cities and one POS in Maldives. The brand believes in concept of selective distribution rather than mass distribution therefore, Lacoste India would be restricting itself to open 9-10 stores this fiscal year in India. While, as confirmed by Vineet Haralalka - Retail Operations, ITC Ltd, “We are looking forward to expand through franchise route especially in tier II cities. The reasons include to scale up the business fast, to get the local knowledge from the partner on local trends and consumption patterns. We are looking at adding about 10- 15 franchisee-operated stores every year over and above company-operated stores.”
Fusion of online + brick-&-mortar concept
Retail is not just restricted to brick and mortar stores only. Now, with just one click, you are able to buy your favorite brand's products and accessories without any hassles. Crisil Research predicts; the online retail business in India is expected to grow at a whopping 5055 per cent annually to become Rs 50,000 crore (US$ 8.32 billion) business in the next three years. The online retail market is dominated majorly by snapdeal.com and flipkart.com. Brands like Lenskart.com, Fabfurnish.com, firstcry.com have lately got into offline mode and initialised their franchise operations. Serving the varied eyewear needs of people pan India, Lenskart.com has extended its operations to the offline space with the click and mortar model by opening physical franchise stores. The franchise outlets are an extension of the brand. The click and mortar model of transaction goes beyond traditional retail as it reinforces the trust factor with the physical feel of products along with the convenience of access to a larger inventory online. Peyush Bansal, CEO and Founder, Lenskart.com, updates: “We would like to target metros, tier I and selective tier II markets, where we are able to give the Lenskart experience for our customers. We assess each of the potential cities based on the business requirements.”
In the home décor segment, Fabfurnish.com is another online brand that launched its offline stores. Talking about the experience they had while setting up physical stores, Vikram Chopra, MD & Co-founder of FabFurnish.com, says: “As a brand, we want to provide a holistic experience to our consumers, and offline stores help us do that by giving customers a chance to experience the products before they buy. Thus, stores also help us build trust and credibility. Creating physical stores was a part of our brand strategy from the start. Hence, our first store was up and running within six months of launching our online business.” He also adds: “Winning the catchment area around our store location and also building tremendous brand equity, both are very important for us. Hence, we work very closely with our partners to ensure they win the market.”
Hafele India is another brand that provides the latest home improvement trends and solutions to its customers across the globe. Häfele India Pvt. Ltd, MD, Jurgen Wolf, adds: “We got into franchise partnerships five years back as we were not getting an exclusive brand space among crowded dealer outlets. We have now 56 studios and have ambitious expansion plans with our franchise model for the future.” This year, Hafele intends to open at least 10 more regular format outlets. Since a chunk of its business is generated from the kitchen products' verticals, the focus is on opening smaller Kitchen studios. Over the next 3-4 years, the brand aspires to open 200 such outlets in focused markets across India.
Jewellery: bejeweled for profits
Tara Jewels Ltd entered the jewellery retail space in India in 2010 under the brand name Tara Jewellers. Enlightening about their foray into franchising, Vikram Raizada, Executive Director, CEO (Retail), Tara Jewels Ltd, says: “We have just started our franchising process and is currently speaking to a number of prospective franchisees. In the long run, we intend to have an equal number of company-owned and franchise-owned stores. We are looking at a plug and play model whereby the franchise stores will be integrated in the Tara management system rather than being looked at separately. Both will have a clear role to play and we aim to have a symbiotic relationship between the two.” Presently, all of brand's stores are company-owned and managed stores. During this year, Tara Jewellers is targeting to open approximately 5 to 10 new franchise stores around states where they are largely in.
Strategies for effective expansion
During business expansion, every business entity across diverse segments of retail industry endeavours to capture the customer's pulse by knocking doors of new territories. For more footfalls, brands undertake various strategies for a successful brand distribution via various retail formats or doing extensive market research for uncharted locations to understand the viability and brand stability. “In terms of business strategy, we do catchment area analysis, store feasibility study, zone wise mapping and competitor analysis,” informs Manish Mandhana. On explaining further, Rajesh Jain, says: “We do not believe in expanding ourselves exponentially. We target cities where we forecast a potential and wish to ensure our visibility. With adherence to this business strategy, we give an equal opportunity to our franchise partners to evaluate a relevant location for their profit maximization and also, seek their consent before making an alternate presence in the same city.” Whereas, the strength of Fab Furnish lies in its online presence as it helps the brand to generate tremendous footfalls on its offline properties.
So, all those franchisees that are geared up to get into retail biz must evaluate what business model, retail distribution format and return-on-investment (RoI) analysis is suitable for a successful expansion into markets that they wish to target in future.