Tirupur-based Crystal Clothing Company is placing big bets on franchising, planning to increase its number of outlets from 15 to 5,000 through this model in the next 8-10 years.
After joining the convoy of the country’s leading textile brands venturing into modern retail with their own exclusive brand outlets (EBOs) five years back, Crystal Clothing Company, one of the finest yarn-to-apparel manufacturers, is on the move to paint a larger picture in the retail segment. It is now in the league to launch its highest network of exclusive stores, mainly in the lingerie retail space after the brand ‘Jockey’. The brand is deeply convinced that franchising is one of the fastest ways to expand its retail footprint across the country. Hence, with a view to cater to the need of metros and small town consumers pan-India, the brand has introduced two formats of stores – big and small – to cover Tier 2 and 3 metros along with smaller towns. It is presently operating through 15 stores based in southern and western region, of which five stores are run by franchisees while the rest are company-owned.
The Journey
The family-run company was established in 1971 by K Venkatapathy and is currently managed by V Shriprakash and V Vijaysekar, sons of the founder. Five years back the company ventured into exclusive retail space with the launch of its first own outlet at Tirupur and consequently it opened stores in Coimbatore, Madurai and Chennai. For the first three years the company was limited to the southern states with almost no distribution channel in place. It would directly supply to the dealers compared to other domestic and multinational brands that had good distribution channels. Ultimately this caused the company to significantly lag behind in creating a presence across India.
“Earlier the distribution channel network was not strong. We were supplying directly to dealers. Despite being an old player in the market we could not get through the market like Jockey and other multinational brands,” says M Rajendra, Director-Marketing, Crystal Clothing Company Ltd. After successfully running its own franchisee stores and earning good business for the first three years, the company mustered enough confidence to pitch for the franchising model, especially after Rajendra came on board two years back. It realised that there was a major shift in the retail industry from small mom-n-pop stores to modern trade to franchising.
Product Range
The visibility of Crystal Clothing is now very high in the market due to its super-premium quality of products. It is among India’s few vertically integrated companies focused on yarn processing to final cut-and-sew operations. It is also the largest manufacturer of clothing for infants and children as well as adult knitwear of export quality apart from producing innerwear for women and T-shirts, shorts, sportswear, loungewear and thermal wear for men. These categories are launched under the brand names FMO, Date, One Risque and Kiddos.
The ratio of men and women undergarments in its total innerwear range is 90:10. The kids’ wear range constitutes 30% of its total product portfolio. Further, the brand is planning to increase its share of women’s lingerie, expand men’s formal and casual wear and venture into women outerwear space in an effort to make its retail outlets ‘one-stop’ destination for family shopping. The company’s manufacturing and warehousing is centralised in Tirupur. Keeping in mind the purchasing capacity of small town consumers, it has also launched products in the low to medium price range. The high price range products are to be placed in big format stores while the low to medium price range products would be sold across small format stores in small towns.
Franchisee Retail
While captivating franchisees by offering profit-sharing model along with maintaining good relationships, the company offers to support them in every aspect – right from searching for the right property to opening the outlet. “We will extend our experience and skills to our franchisees in every possible way, including creating the right store ambience, staff training, billing, and software implementation so that there is a high comfort level. We will also take care of promotion and branding through various media outlets. It’s a five years’ agreement with franchisees but we are keener on lifetime partnerships,” Rajendra says.
As a long-term measure, the brand is looking for franchisee entrepreneurs with professional knowledge who can unconditionally accept its strategies, believe in its layout and interior and run the store with due hygiene care and quality of staff. “The person should have the passion to run our franchisee. He or she should have financial capabilities, professional qualities and business acumen. A background in this line of products is not so important. In Bengaluru many IT professionals are coming ahead to enter into a franchise relationship with us,” Rajendra informs.
In its search of promising franchisee partners, the company is assuring break-even in 12 months for both store formats. For the northeast region it will have a master stocking strategy so as to share the stocking space for supply to distributors in the hilly region. Spread across 1,000-1,200 sq. feet, the big format stores will largely be concentrated around high streets and modern retail destinations in metros and Tier 2 towns. Similarly, the small format stores of around 300-400 sq. feet will be placed across high street locations, modern retail and popular shopping destinations in Tier 3 to 5 towns.
Future Plans
The company has opted for the franchisee route as a tool for future expansion and brand exposure. It is aiming to launch around 5,000 EBOs across the country through the FOCO and FOFO models in the next 8-10 years. By March 2018 it will launch around 50 outlets and every year it will launch around 400-500 stores. In every major metro to Tier 2 cities there will be at least three FOCO outlets in line with its strategy. Soon, three outlets are set to be launched in Pune.
In spite of more focus on FOCO outlets initially, an increasing number of FOFO outlets will be the preference in order avail of investments by franchisees. Also, franchising will be the vital source for creating mass brand awareness through modern retail across all towns along with trade and digital promotions. “We don’t want to limit ourselves to only the southern states. Our aim is to reach all the other regions as well. Since we already have 550 distributors, we will encourage them to start with at least one outlet of Crystal Clothing Company Ltd.,” Rajendra reveals. The optimism lies in the fact that the branded undergarment market is spiralling upward.
As for the e-commerce space, it has recently partnered with Flipkart, Myntra and Amazon along with selling through its own portal. Though online contribution is presently miniscule, the company is ambitiously targeting to get at least 30% of its sales from digital space by offering customers the complete omnichannel experience through an integration of its online and offline platforms. Going forward, the company is also planning to supply to Canteen Stores Department (CSD) and Central Police Canteen (CPC).
Growth Projection
So far, the company has been growing at an annual rate of 30%. With its ongoing retail expansion, it is projecting to grow by 50% year-on-year (YOY). The company wants its EBOs to contribute equally to its distribution network, which offers 100% YOY growth.
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