3 Things MAX to Focus on in India

Vasanth Kumar, Executive Director at MAX – a value fashion brand promoted by Dubai-based retail and hospitality conglomerate Landmark Group – is gung-ho about tapping the eCommerce market with its Group-led online platform, landmarkshops.in, as much as he is about expanding both in Tier II cities and megacities.
Growing at more than 35 per cent, Kumar believes that the mid-market customer segment is the fastest growing segment and will continue to be for the next 10 years, mainly because it is led by organised retail. Experts believe that although the bulk of the total market is still unorganised, the mid-market segment is getting organised.
In an interaction with Retail media, Vasanth Kumar , an apparel retailing business veteran with an industry experience of over two decades (he worked for Madura Garments before joining the Landmark group in 2005), explained in detail how the Group is ready to turn the tables with their online presence, come up with Omni-channel stores and leverage the 10 million customer base by loyalty reward schemes. 

How is the Indian market different from the Global (or other Asian) markets?
One thing about the Indian market is that they are really leapfrogging today because there is so much of activity happening in the online space. The customer’s knowledge and experience is expanding with every passing day. India is becoming a melting pot for eCommerce start-ups. There is a fast developing ecosystem which is leveraging and enhancing customer’s expectation and consequently increasing consumption also. Things are becoming so convenient for them today.
So, today while we have 15 stores in the South-east regions of India, the same growth will be witnessed in places such as Mumbai and Delhi. In Delhi, where we already have 12 stores, we intend to make it 20. Once we have these networks ready and we are decently spread across every nook and corner, we will look into hyper-local and provide 100 per cent convenience to customers. Customers are not only expecting that, but are already seen warming up to it.
I am also seeing the traditional media getting transformed onto the digital media entirely. Similarly, brick-and-mortar also is getting into the online space because that is the need of the hour. They are seeing two parts of everything: a brand with an offline and online version, a magazine with an online and physical copy version, they see TV and then they see the same TV streaming online, so on and so forth. So the consumption pattern has changed big time today. The way I see it, it is a natural progression, a natural requirement, and there is nothing new or out of the world the brands today are doing.

How are you better connecting with your target audience at the moment through your stores?
We are enabling our top 30 stores with Wi-Fi, the tablets there will enable the customer to scan through the entire range available. In the value fashion segment, MAX is the only mono-brand. The advantage we have over others is that all the others are multi-brands whereas we are the only mono-brand in India. And it makes it easier for the customer to interact with us because they have to communicate with one entity – MAX, whether for a product, store or the website.

Many brands are investing in customer loyalty programs today, how are you channeling that aspect?
We have also started customer loyalty programs. One good thing for the brand MAX is that we already have a customer base of 5 million. Once we have integrated the platforms with the Landmark group, we will also be floating the customer loyalty online, which means very soon the customers can burn the points online itself. Not only that, they can know the latest trends, know the store networks, other than getting information on location of stores. The total customer base of Landmark group is 1 crore, out of which half of it is of MAX.
Now, we have these ten million customers who we can leverage. And once our online program is on for the customer to use and burn points, it will be big in the future. We are going to start leveraging that in another 10 days.

What is the brand’s product and design strategy for the Millennial and how are these different from the core offering of the brand in light of strong International competition entering the country?
Let’s address the first part of the question on the Millennial first. In the stores, let’s take the new store in DLF Mall of India for instance – we have started implementing the new retail entity of MAX, which will be more digitised. And we will also have Video Walls and LEDs wherein we will showcase various properties such as the Elite Model Look, for which we are title sponsors, among others like MAX Design Awards, Little Icon Event and MAX Fashion Icons.
All of this we will start relaying through videos at the stores now. And use that to attract customers to participate with us. All these happen in pockets across India. With the digital enabling of stores we can showcase all these events in all the stores simultaneously. We can even go for webcasts. In that sense, we have a lot of opportunities to connect more with the customer telling them what all we are doing which is of relevance to them.
Now, to the second question. We are Indian enough because of our understanding of the Indian customer. At the same time, we also have a solid International face. The Group has 300 stores across 18 countries, which means that we are able to get relevant international trends to offer to the Indian customer apart from offering the Indian ethnic wear. So, we have the advantage to play both the roles and that is working in our favour.

In terms of business, how important it is for a well-known brand like yours to create retail store experience for the customer?
Our reason for existence is store experience, without which we’ll be dead. For a hardcore brick and mortar retailer like us, the focus is always been creating a retail store experience. And we continue to reinforce that image of ours because that is our bread and butter. Our retail stores are where we keep our retail leadership and connection with the customer visible.
We complement it through our digital online and Omni-channel initiatives. The prime piece of action for us is the retail space. Because that is where we can engage with the customer, can connect with them and understand their needs in one shot. And instantly we can gratify their needs. Even in the Western markets, more than 90 per cent of the business in fashion either happens in the store or happens as a web-enabled offline sale, which means it goes back to delivering retail experience with Omni-channel initiatives.
The retail flow at physical stores is the main piece of action. Whether it is a blogger event, customer preview of the seasons’ clothing-line or other launches, our retail space is where we initiate a discussion with the customer. And that is what makes it more enriching for the customer. We give our customers enough reasons to visit our stores, but in the end, obviously, it is them who decide on the channel to engage with us.

What’s the process of franchising MAX stores and how has been the response so far?
Twenty per cent of our stores are led by franchisees. Typically, a franchisee comes in two types of categories; one is in a smaller city where they do a full franchise, even operational control and in the metros, where a franchisee would typically invest in the interiors, but we run their show. In the latter, the operations are handled by us.
The reason why it is only 20 per cent of our entire business is that the investment required for franchisee operation is fairly high; you need at least Rs3 Cr for fit-outs and interiors. And we provide Rs2 Cr of stock to them from our account; which makes it a total of Rs 5 Cr. So there is a limited opportunity to participate with the right location and right business, because for that kind of investment you need fairly high returns. And in Delhi and Mumbai the real estate is so high that this model is unworkable.
We have now launched another model called ‘easybuy’, which is a 100 per cent franchisee model only in Tier II cities. We have launched 10 stores till now in this one year old concept. This is something we would look to expand in the next 10 years through franchising.
The cost of setting up a store is anywhere between Rs 80 lakh to Rs 1 Cr. And one can easily get revenue of 20 per cent return (IRR). ‘Easybuy’ is again a mono-brand and is priced 25 per cent below retail prices of MAX. The area of the store is 5,000 sqft only.

How has been the response with Easybuy?
We have received a good response. For the next set of stores even the existing franchisees are willing to participate and we are in the process of building a supply chain for that. As we build up, we intend to open one store a fortnight and then one store a week over 4 years. Right now, we are opening a store every month.

What is the revenue targeted by the Group by 2020?
With a 20-25 per cent per annum growth, our Group, which currently stands at $1 billion, is looking to double it by 2020 and reach $2 billion.

What’s the percentage of growth recorded every year?
We are achieving a 38 per cent CAGR for the past 10 years.