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May, 01 2019

OF POTS, PANS & PROFITS

Kitchenware retailing calls for unique and affordable serveware, barware, cookware, bakeware, dinnerware and kitchen tools, designed to reflect customers’ personalities and lifestyles.

In 2015, when Arpan Gupta, fran­chise owner of a reputed cookware brand, opened his outlet in Benga­luru, the average ticket price was Rs 1,000. While earlier most of the customers were ‘regulars’ who did not experiment with new brands or products, a lot has changed in the last four years. The routine stocks are replaced by fancy and light items as per the demands of the new-age customers, and the revenues have consistently grown by 30% annually.

Today, the average billing at the store is Rs 1,500-2,500 and about 15-20 customers visit the store on any given day. On occasions like Diwali and other festivals, per day sales cross over Rs 1 lakh. Gupta adds that Tier II cities and non-metros are the hubs for such investments as consumers have far lesser store options.

STEADY GROWTH

According to Neha Gandhi, Director, Stovekraft, the idea that anybody can cook has become so phenomenal that the demand for kitchen appliances is steadily growing. “The lines are blurring with age as anybody who cooks needs cookware appliances and that’s not necessarily just the women. It could be an 18-year-old boy in the hostel wanting to make noodles or a newly-wed couple looking to set up their small kitchen; the demand is diverse for kitchenware,” she says.

THE BUSINESS MODEL

To start an exclusive kitchen appliance outlet, the investment required is around Rs 30-35 lakhs in a metro city. As part of the investment for a store measuring 400-1,000 sq. feet, the brand will provide stocks worth Rs 15-19 lakhs. Other costs will include Rs 10 lakhs on lighting and interiors, Rs 1.5 lakhs franchise fee and Rs 50,000 refundable deposit. Brands will also provide a start-up kit worth Rs 43,500 that includes software licenses and other approvals to run the outlet. The return on investment is between 25-35% and the franchisee can break-even in a year.

Commenting on how the demand for cookware appliances from organised retail is consistently growing year-on-year, K G George, Senior Vice President (Retail), TTK Prestige, says, “Consumption of kitchenware is very high and it’s a fast-moving consumer durable. With high disposable income, double income households, and people looking for convenience in their kitchen, the organised retail market is set to explode.” Prestige, which has presence in over 300 towns through 540 stores, is now looking at rapid expansion of its network. It plans to open 100 stores in the next 12 months. Also, for the first time, TTK Prestige is planning to open a mix of franchised and company-owned stores.

FRANCHISING FOR BETTER RETURNS

Further, Gandhi says that the franchising model is the best business model to open a cookware appliance store as both the brand and the franchisee can leverage each other’s forte. “The brand will have easy access to new markets, while the franchisee can benefit from brand value and a financial model that gives him or her high returns,” she says.

WAY FORWARD

Amid several fears over whether e-commerce will take over the offline market, Gandhi assures that a retail convergence is the way forward. “Many times, customers walk into our stores looking for a product they would have chosen online based on the features, reviews and ratings. On some occasions, aged home-makers walk into the store, like a particular product and call their kids to check the online price of the same product. Hence, the two channels will meet to give a better customer experience in the future,” she says.

And Gandhi confidently concludes that no matter how preferences change with time, the desire for touch-and-feel experience before buying, especially cookware appliances which are used on a daily basis will not fade away anytime soon. “More brands will be focused on experiential stores in the future where customers can actually cook at a retail outlet before buying a product. The future of cookware appliances stores does not lie in the online marketplace, but stores that sell experiences first,” she says.

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