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Eyewear retail is design-focused, futuristic space that puts the emphasis on customer experience and reintroduces genuine excitement into the process of eyewear shopping.
Although optical retail is largely unorganised in India with 90% market share still held by small and unorganised players, it did not take much convincing for Satish M, franchise owner of a reputed online eyewear brand that disrupted the market, to open his first optical store. Three years into the business, the franchisee is now scouting for locations in various Tier II cities across South India to open his second store. “It’s a sustainable business,” he recommends. Adding that the need for a good pair of glasses or even sunglasses never runs out, he says, “From often changing the eyewear to keep up with what is trending to gifting glasses and sometimes even vouchers, the market has vastly expanded.”
“While price points were a concern to the older generations, millennials don’t mind spending on eyewear and that too often. With big players disrupting the market, fancy frames with lenses are now available for less than Rs 2,000. Unlike the older generations, millennials don’t wear the same pair of glasses till they wear out but change every six months,” he adds. According to Satish, customer walk-ins to the stores peak during weekends and sale seasons, and a store can generate Rs 20,000-30,000 in sales every day, depending on the location. High streets where prominent footfalls are seen during weekends are the preferred locations.
BEYOND THE CITIES
While the Indian optical retail market is pegged at Rs 25,000 crore, nearly 50% of the country still does not have proper access to certified brands and often ends up paying exorbitant prices. Players like Lenskart, Specsmakers and others are eyeing this market, where the growth opportunities are high. Commenting about the demand for these stores, Pratik Shah, CEO, Specsmakers, says, “Rural and sub-rural areas have a great need for vision correction and they don’t have solutions provided at an affordable price yet. As and when the awareness about vision correction improves there will be more solution providers in the market and there will be a larger market to capture.” The company plans to raise capital to expand its network to 300 stores. By 2020 the company wants to be a 400-store company and by 2025 it wants a count of 1,000 stores. “We plan to have at least 150 stores per state and are looking at the top eight states in the country to expand,” he says.
THE BUSINESS MODEL
For those looking to invest in a popular optical retail brand, the investment would be Rs 35 lakhs, excluding rental costs. Typically, the capital investment required to start a store would include Rs 12 lakhs for interiors, furniture and fixtures. While the brand will charge Rs 2.4 lakhs as one-time franchisee fee (non-refundable), the franchisee will have to spend Rs 3 lakhs on technology, including tabs, LCD screens and any other equipment. Also, the brand will provide Rs 12 lakhs worth of stocks to the franchisee outlet, and the equipment and machine charges will be Rs 5 lakhs.
As per Lenskart franchise lead, three staff executives are required to run a store and one store manager would be appointed and trained by the brand. Accordingly, the salary of the store manager will be borne by the brand, while the franchisee will have to pay salaries to the three staff. The operational costs would include monthly rentals of the store, salary in the upper bracket of Rs 60,000 and other bills. A franchisee will need Rs 1-1.1 lakhs every month as operational costs. The brand is looking for rapid expansion in Tier II cities and franchisees can generate Rs 10-14 lakhs in revenue per month from a store in Tier II city. The franchisee gets 25% margin on overall sales. Though there are no specific requirements for investor profiles, the brand is focused on customer-friendly services and stresses that customer-obsessed partners are preferred.
THE SUCCESS MODEL
According to Amit Chaudhary, the co-founder of Lenskart, offline stores have been extremely profitable due to the unique model. Elaborating, he says, “We are available wherever our customers want us. Whether it’s online, modern shops or home visits by our optometrists, our omnichannel approach is a key aspect of our growth. A lot of thinking has gone behind keeping our stores small, lean and profitable.” Interestingly, Lenskart does not have an inventory at the store, which cuts down losses to the franchisees and the stores only aim to solve the try-before-buy concern. Confirmed orders are placed at the store through an iPad and are served from a central warehouse. To its credit, Lenksart has opened 100 stores in 100 days, and is now present in over 120 cities. While the brand sells 30,000 spectacles a day, it targets to sell 1 lakh a day in the next 10 years.
While 60% of Lenskart’s online shoppers are from metros, the rest are from Tier II and III cities, where the brand plans to set up small stores of around 200 sq. feet area. The brand is looking for aggressive expansion in Tier II and III cities and is not franchising in any metros.