Toonz fashion stores to expand presence through franchising

First few Toonz fashion stores would be company owned and company operated; growth path at the later stage would be via franchising.
Sharad Venkta, CEO and MD Toonz Retail India Pvt. Ltd.

The exponentially growing kids’ wear market in India has definitely paved way for a lot of brands to explore the market and the home grown brands are cashing upon the opportunity, given their understanding of Indian markets. Following similar footprints, Toonz Retail has launched Toonz fashion stores. In a conversation with Retailer media, Sharad Venkta, CEO and MD Toonz Retail India Pvt. Ltd. revealed the strategies of operation and expansion plans of these newly launched fashion stores.

Talk to us about Toonz Fashion. What was the basic idea behind launching this new format store?

The idea behind launching Toonz Fashion stores was that the kids fashion industry has been on a rise and since we already generate more than 50 per cent of total revenue from apparel category, Toonz Fashion stores was the obvious extension. The Toonz fashion stores will be an all-apparel and accessories store that would strengthen our positioning of being “India’s Most Stylish Kids Store”.

Given the rising competition, how do you plan to scale up with Toonz Fashion?

We will be introducing wide range of ethnic and party wear within SUPERYOUNG and SUPERYOUNG CELEBRATIONS. Looking at the demand among kids, we are also launching complete range of denim apparels, sports themed apparel and ‘glow in the dark’ T-Shirts. Post these launches, number of options available would shoot-up by at least 50 per cent and ASP would go up by at least 20 per cent.

What would be the Store model for Toonz Fashion?

Toonz fashion stores will be relatively smaller than existing Toonz outlets and apparel as a category have a greater margin than categories like basics and baby nursery, which will result in higher GMROF than the existing Toonz outlets.

You are planning 200 Stores in 2 years. What would be the mode of expansion - Franchising or company owned stores?

First few Toonz fashion stores would be company owned and company operated; growth path at the later stage would be via franchising. Looking at Toonz growth story so far, we are confident about the rapid growth of Toonz fashion stores via franchising route.

You have presence in small towns as well. How is the demand there different from that in metros?

In Tier II and III cities the markets are sustainable and the availability is restricted.Limited availability of qualitative and trendy products, high disposable income and low cost of real estate makes the market attractive and sustainable.  Being situated in these cities, Toonz becomes the ultimate shopping destination even for nearby towns, making it a lucrative market for us.

What kind of growth and sustainability can one expect in kids retail?

Kids’ apparel market is estimated to reach Rs 90,000 crore by the end of 2016 and is growing at the rate of 15 per cent per annum, which makes it one of the fastest growing markets in apparel segment. Further increase in the number of nuclear family, increased media exposure, disposable money has resulted in an increase in the purchasing power and change in shopping habits and strengthening the kids’ retail segment.

What are the challenges in this segment?

The kids wear market is highly fragmented and faces a lot of challenges due to poor brand recall, high rent costs, and continued competition from neighborhood shops. There is always a challenge to maintain superior quality products at a reasonable price as compared to the non-branded and lower cost products. 

As we are spread across geographies, we also have to make sure that the product mix is in accordance with the regional requirements and tastes. Apart from that, kids’ sizes vary a lot and maintaining the stock availability becomes a task.

What are the emerging markets in kid’s retail in India?

Kids’ retail as a market is growing sustainably, smaller cities and district centers are growing owing to the increasing awareness about the product range and quality of merchandise available for kids, till few years back they had to travel to metro cities to purchase these products which are now available in their own town at the similar or lesser price.

With the rise of Omni-channel retailing, what according to you is the future of offline stores in this segment?

Online retailing provides greater geographic reach than the offline model and is available to the customers to shop from, 24-hrs of the day. The convenience of shopping online is no doubt the greatest benefit, as consumers can select a product and purchase it within minutes. But on the other hand in offline mode people can try things on or feel the quality of item while buying plus customers don’t mind to pay more for products once they are confident of the quality and fit after they touch, feel and try the merchandise. One of the largest pros for in-store shopping is the ability for customers to receive the product immediately.

Our experience shows that in India, customers residing in Tier III and IV cities are inclined towards online shopping due to supply gaps in meeting their demands. The moment brick-and-mortar retail is available providing option to satisfy their demand with added advantage of touch, feel, compare and choose from, customers have preferred the brick-and-mortar retailing over eCommerce. So we think offline retail stores are here to stay for a long time.

 

Sharad Venkta
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