India’s largest linen fabric maker, Aditya Birla Group has launched its 144th Linen Club store recently at Linking Road, Bandra in Mumbai. While the brand is on a massive retail expansion across the country, it is planning to grow the number of EBOs to around 300 in south, west and northern part of the country with investing the corpus of around Rs 80-100 cr. The company is also eyeing to tap Middle-East market with opening more stores there. Thus, revealing the retail expansion strategies of the company, Thomas Varghese, Business Head, Textiles, Acrylic Fibre & Overseas Spinning, Aditya Birla Group spoke to Indianretailer.com on inaugurating the store.
What made you launch a linen club store here at Link Road and what is unique with it?
I think we have found a mid point in Mumbai. After the sea link the much better places in Bandra to locate a store is linking road. This store is going to be the wonderful beginning of the journey of our dream of creating the largest retail store chain in the world.
With this store we have come up with whole new retail identity as we wanted to recreate the structure of the way the customer shop and experience the store, and product etc. Consumer must get great shopping experience with feel and touch of the product. He/she should be able to sample as many products as they want. In addition to this, we wanted to ensure that linen products stand out as unique and differentiated. This one is the 1370 sqft store.
What is your current retail presence of EBOs and what are the expansion plans?
This is our 144th store in the country, 35th in Maharashtra and 41st in the western India and in total we have got 80 stores in South India. In times to come we will be geographically spread across the country. Our dream is to grow about 300 stores by 2020.
Our plan is to open at least 40 stores next year and hopefully we will open more. Each store needs a capital investment of close to Rs 60- Rs 70 lakh. Therefore we are talking an outlay of Rs 24 cr for these 40 stores and overall there will be an investment of Rs 80 and Rs 100 cr for 300 stores which will be spread over 3000 sqft. We also sell through almost 5000 MBOs.
Will the future stores be company owned or franchisee run?
At present we have only three company owned stores out of 144. Of these 139 stores are franchisee run and 2 are COFO stores. Many more of the upcoming 156 stores will be company owned because we feel that’s the only way to replicate our retail identity and provide an experience to the consumers.
We will continue to open more stores in tier I to tier III towns in our currently stronghold territory of South and West India. But, simultaneously we will start focusing on north also because of the weather.
What are your eCommerce plans?
We have a plan to launch our own e-commerce portal, but not immediately. We have an omni-channel strategy, but we are progressing one thing at a time. We want to first set enough footprints with good infrastructure on the ground so that we can support our future online business and it will not be the discounted ones.
Target age group?
Our target audiences include 20-40 year old men and women having profile as self employed businessmen, professionals and students too. The price range of our products starts from Rs 650 to 10,000.
What is the sales ratio of apparels and fabric?
Today, apparel is not more than 15 percent in the store even in terms of space. On an average, our apparel doesn’t form more than 15 and max 20 percent of the stores sale. We expect 60 percent of the people entering the store to get the product tasted or tried. About the bespoke clothing, only thing we need to do is create confidence among people about the quality of the bespoke tailoring being offered.
Do you plan to expand your footprints in the overseas market?
We are already exporting small quantity of linen fabrics and till now export is not been our priority. We have two stores overseas, one in Dubai and one in Muscat and planning to take our identity of linen fabric and apparels especially to the Middle East market because of the weather. Hence in a year or two we will open two to three stores in the region.
What is the significance of the linen textiles in the current time?
Linen is one of the most expensive fibers currently in vogue probably even more expensive than silk in India. Linen doesn’t degenerate the way cotton does. For a country like India it’s a fantastic product for our tropical and hot weather. It gives comfort, both in hot, warmth and cold weather. It is naturally antibacterial, anti fungal and it is the darling of the designers around the world. In the last couple of years a move towards casual wear is growing.
Keeping in trend of what’s happening around the world a lot of interest is already been generated in linen. Now the linen is there in every store of the top 1000 retailers in the country. It is there in proportion of 8-15 percent. Linen’s characteristic of style, fashion, comfort and it goes with casual wear is what attracts people more.
What is your production capacity of linen textiles?
We are India’s largest producer of line yarn in the country with 50 percent market share. With so many new players entering the market, our market share has gone down from 65 percent to 50 percent. We produce roughly about 6000 tones of yarn and 10mn meters of fabric at our manufacturing unit in West Bengal and we are expanding the capacities.
What are your product expansion plans?
Two years ago we launched linen readymade garments under the brand Line Club Studio. We have started with men and hopefully in our journey we will start expanding it to women wear too. We also have launched designer led women’s ethnic line clothes. Hopefully we will strengthen this brand further. We are looking three basis segments as men’s, women wear and home textiles.
What is your current turnover?
The Jayashree Textile full business turnover is Rs 1500cr and we expect 8-10 percent growth. All our stores are profitable. The EBOs contributes downwards of Rs 130cr to our overall retail revenue.