Celio, the menswear French brand foreseeing e-commerce as an opportunistic move to have access to the smallest markets of the country along with planning to increase its store count from 40 to 75. As well as having 13 percent annual growth e-comerce channel the brand is aiming to achieve overall 40-50 percent growth YOY with all the formats and have Rs 500 cr of turnover by 2020.
While unveiling the future strategies of the company Rajiv Nair, CEO, Celio Future Fashion Limited also spoke about Version 2 transition happening in retail and concerns grappling the e-commerce sector in the country to the Indianretailer.com.
What is your market presence and what are the future strategies for the Indian market?
Along with 40 EBOs we are operating through shop-in-shop format in 140 locations of the country. Also we are available on fashion websites like Myntra and Jabong with not very good discounts offering. Also we do operate on Amazon, Snapdeal and Filpkart but because of their requirement of high discounting we cannot really play much in these portals.
Our first goal is to penetrate the market as far as possible with having 75 to 80 EBOs by 2019 across top 8 to 20 cities rather than trying to be in bits and pieces here and there in cluster B and C towns. We are there in cluster B cities as well but the whole goal is first cater top cities. Also in the year down the line we will strengthen ourselves with selectively present across 50 to 100 regional MBOs.
Will these be the company owned or franchise owned stores?
We are also getting into the franchise model but we will be little bit cautious because the quality of the franchisees in India is a big question mark. We are not really looking for the investors in franchisee but the partners who have the monetary capacity and more importantly they are the entrepreneurs want to be the retailer.
When are you planning to launch your own e-commerce portal?
By 2017 we will launch our own e-commerce portal. We are right now focusing on digital as an area for marketing but in a year time we will foray into e-commerce on our own. Most brands will get into e-commerce with the approval of 100 percent FDI. We already have catalogue site available so most of our products are visible on our website its only the matter of developing back-end and the logistic side and payment gateway compatible.
How Celio find future in eCommerce? What are the strategies?
E-commerce is disrupting the infrastructural challenges and facilitating access to the consumer of smallest markets. Brands are looking at e-commerce as an opportunity and not as threat and Celio alos sees future in the e-commerce. In the last two and half years we have grown from 0 percent to 13 percent from e-commerce. Hence, our goal is to steadily grow on e-commerce along with keeping the prices close to retail stores. The whole idea is to grow between 40-50 percent with all the formats. Also there are exciting opportunities of advertising marketing with websites like Scoopwoop, tinder and youtube. Also people are tapping gifting opportunities.
What is your revenue target?
Currently we are close to about Rs 200cr as a company and in three years of time 2019-20 we should be about Rs 500cr.
After high street to mall transition what version 2 kind of transition is happening in retail?
Access is the most important word. Ten years back barring cities like Mumbai, Banglore and Delhi, consumer didn’t have access to brands in retail most of the access was through high streets and I feel high streets in India are still not very great infrastructural model for the consumers to go and access brands. Even today high streets in India struggle alot more with the transition happened into malls in the last 10-15 years.
I think version 2 of transition is happening with malls where dominance of departmental stores in malls is actually getting challenged by single large format like Zara and H&M stores anywhere between 15,000 to 30,000 to 40,000 sqft of occupied area.
These stores have started challenging consumers who were earlier looking for assortment of options from departmental stores. Apparently consumer has also evolved with the financial abilities to spend. He is little bit more confident and willing to to go to single brand large format outlets.
Malls and brands are definitely reshaping all are making store experiences more experiential and everybody is getting ready for next challenges amid massive changes happening in retail. But still in India going into the mall is a painful activity.
According to you which are the concerns grappling e-commerce and what could be the future?
E-commerce is trying to find its own space. Price led discounted model is kind of working but it’s not very profitable. Its monetary benefits to the investors are yet to be proven. The amount of money getting pumped into e-commerce is to some extent in a valuation term is getting down. E-commerce partners are not doing that well and investors are not as patient as they used to be two years ago.
In future e-commerce will have to get into economic model of pricing and it should be more convenient and choice generator for the consumer not just the price generator. Discount model will slowly come down, fly by night operators in e-commerce will go away, there will be a lot more consolidation and people with deep pockets will have to stay back. There is a huge investment require in the back-end of e-commerce as well. It’s not a short term game but in the long term it will fructify like Amazon sustaining in US since 16-18 years.
Being a French retailer what problems you face post 100 percent FDI in single branded stores?
There are a lot of restrictions to going 100 percent FDI in single and. In single brand there is a difficulty of sourcing requirements and not all the brands can go to 30 percent local sourcing but in multi brands its infact prohibited. There is a lot of lobbying that’s happening where small mass merchants across the country putting in a lot of pressure to the govt to saying that the development of large scale retailers should be prohibited because they see it as a threat to their livelihood or income.
Finally which models of retail will emerge in the future?
All kind of models will emerge. It will not only be e-commerce but also will be web to store. Store to store transfer of goods happening because of e-commerce as it becomes an enabler. In store to store transfer one can auto transfer goods from one store to another and a third party logistic service provider picks up the goods from the other store and directly delivers it to the customers residence.