X5 Retail, a company which has introduced a novel concept of organizing Themed Weekend Bazaars with holding exhibitions for ethnic products in malls across the country is planning to expand in tier I, II and III cities along with opening six retail stores till March 2016. During brief discussion about the company Pradeep Singh Shekhawat, Founder & CEO of the company unveiled the future plans to Indianretailer.com.
Please tell us about X5 Retail?
X5 Retail is in the business of bridging the gap between emerging entrepreneurs, retailers and craftsmen and premium malls across the country. X5 retail is a company which has introduced a novel concept of organizing ‘Themed Weekend Bazaars’. We are the first organized players in India to set up such a concept in the most organized way.
X5 Retail offers a perfect mix of modern contemporary designs with Indian art and craft. The company has tie-ups with over 500-600 retailers and this continues to growing product categories from different parts of the country. X5 Retail has successfully delved into the offline space with exhibitions round the year at various malls in Mumbai, Kolkata, Hyderabad, Bangalore, etc.
Themed exhibitions are done from time to time but X5 Retail is the only player conduct this activity on all weekends and in multiple locations. The products offer a mix, changing from season to season and festivities by festivities managing over couple of hundred exhibitors, product categories each weekend -all locations put together.
Having a successful venture in the offline space, X5 retail recently launched its online model in the name of IndiaExhibitionCentre.com. IEC is first virtual online exhibition which has all the features to bring in all the traditional exhibits and exhibitors on a single platform to sell and showcase their products. The objective is to offer the customers a range of pocket happy lifestyle products with a consistently great shopping experience. There will be different themes from time to time which will be promoted and marketed through different style icons and mascots. It will provide a pan India market to all entrepreneurs and artisans from all across.
Our 80 percent target consumers are women between the age group of 25to 50 years.
Please elaborate on your business model?
Our business model is a market place arrangement both offline (doing since the last 27 months) and online. We waived off things such as high rentals, costs of fit outs and lock-in periods. The retailers don’t have to deal with the mall neither the fit out costs. We provide the entrepreneur a least risky business model. Stakeholders, Exhibitors, public retailers and organizers (self) – it’s a win – win situation for all. It is a boon for malls relatively facing a tough time going to the new age competition and new age malls coming up.
It is a solution for malls who want to give an additional offering to existing customers. The company has given lot of earning potential to the entrepreneurs. It has provided them with an opportunity to sell products which are priced reasonably in a warm environment at a very cost effective price. The entire thought process is revolving around one thing and that is how can X5 Retail give additional or a good business option and possibility to entrepreneurs/Incremental business without any investment.
The company is self-sustained as of now and this has happened through company accruals and savings, but we are in talks of raising funds in this year 2016. The success of the company also stems from the fact that except the core activities like concept creation, VM, Product and merchandize development, marketing, operations and finance most backend activity is outsourced to maintain the focus.
What is a total investment? And where did you raise the fund from?
Total investment so far is around 2Cr with a yearly turnover of 36.30Cr. For the online arrangement, the company is looking for investment and talks have just been initiated with a couple of PE funds. The investment goes till 50Cr, which will primarily be for A&P budgets, and to be used stage wise in a span of 2 years.
What inspired you to enter into ethnic products exhibitions space?
It all began with an idea to develop a retail concept to bring all the traditional artifacts of the country, fusing with current trends and designs onto one single platform in the modern retail environment. We found this concept as an untapped business opportunity and soon the wheels were set in motion to start with its first of its kind flea market which brings all the small scale merchants, retailers, manufacturers to a bigger platform in the best of high traffic shopping space.
There was no other player operating in this space and we also felt a latent need gap in the malls of the country. The malls had everything to offer – right from branded products in various categories but what was lacking was unbranded merchandise at an affordable cost.
Thus, seeing this gap, we sold our concept to suburban Mumbai’s high traffic mall Infiniti Mall, Malad and thus the company started its first Exhibition ‘Crafts of India’ in Infiniti Mall, Malad in, 2013 with 10 exhibitors displaying a variety of products relating to the arts and crafts of the country. X5 Retail has always emphasized on the product mix and it has been an epitome in the area of having a spectacular Visual Merchandizing. The malls then started readily accepting the concept as they were able to offer something interesting to its customer base and it helps to add footfalls with a wide merchandize relating to seasonality & festivities. Exhibitors also display their collection with the least possible risk unlike displaying their products in a 5-star ambient environment.
There are various exhibitions and flea markets across. But only X5 Retail has been able to reach this place where there is uniqueness of its vast offering of different crafts.
How has the journey been so far?
It’s been a challenging but very interesting too if we see the other side of the coin. Being an unorganized sector, there was huge effort to bring artisans and craftsmen out of their comfort zones into modern environment. A lot of research and hard work has gone into building a vast craftsmen and artisans base. Right from convincing them to join hands with us, to checking the price points, providing optimum fulfillment to each exhibitor and giving something new to the consumer has been our task. With the onset of the online journey, article coding, product shoots, pricing was a major task and it was and continuously being done the company. We are confident of achieving our targets for 2016.
What is your product range?
We have a wide range of product category from apparel, jewelry, home décor, foot wear, gifting items and much more. The product range which will be a part of IEC includes bandhani, chikankari, phulkari kurtis, saree, suits, dress materials, gowns, lehangas, indo-western, mojaris, kolhapuri, clock, decorative, wood crafts, paintings, marble crafts, bed sheets, silver plated artifacts, pillows and covers, mats and carpets, imitation jewellery, wedding jewellery, fashion jewellery, pearl jewellery, scarves/stoles, perfumes, gems, crystals and stones, digital print bags, jute bags, canvas bags, wedding bags, ngo crafts, lights and lanterns, torans and much more.
What is your current market presence?
X5 retail started its first offline Exhibition ‘Crafts of India’ in Infiniti Mall, Malad, Mumbai in 2013 with 10 exhibitors displaying a variety of products relating to the arts and crafts of the country. With a differentiated positioning and with products focused on a unique consumer segment, today X5 Retail is present in more than 15 High- Traffic malls who are served by more than 200 exhibitors developed from every corner of the country. The company started with just two people and will be a team of 50 employees by Feb’16. Today X5 Retail is with capital efficiency and is a profitable business marketplace model.
How many exhibitors and craftsmen you have aboard?
On the online space, we already have 200+ merchants showcasing more than 15000+ products and the number is to keep increasing as the traffic on the website picks up. On the offline space, there are 500 to 600 exhibitorsshowcasing 5000+ products and by Jan 2016 we will be having 1000+products.
How do you see the offline and online demand for ethnic products across different cities in India?
According to Indian Handicrafts Industry, the sector is economically important from the point of low capital investment, high ratio of value addition, and high potential for export and foreign exchange earnings for the country. The export earnings from Indian handicrafts industry for the period 1998-99 amounted to US$ 1.2 billion.
The demand for ethnic product is large even within Tier I, II and III cities and this demand frequently drives small town consumers to big cities for their shopping requirements. The onset of the e-commerce revolution is also changing the game. Consumers are able to purchase many, if not all, popular ethnic product brands from the comfort of their homes.
With many physical brands setting up online stores and others selling through online portals, customers who do not have access to physical stores can purchase the brands online. And we’ve experienced it real-time through our presence in various malls across different tier cities with even different regions in India. The demand on the offline and online space is equally increasing where some consumers still prefer to touch and look at the product. Online marketplace is already booming with big players like Flipkart, Amazon have become major giants. Indian Exhibition Centre is sure to make a mark in the Indian ethnic product space.
How ethnic products in different categories are competing in the retail market?
Indians who have settled in other countries find a vast range of branded product categories. While it may always remain difficult for Indians abroad to integrate Indian clothing in their everyday wear, ethnic remains the go-to choice for occasion wear, especially at Indian gatherings. Migration for education and employment have led to over 300 million Indians living abroad, Indians for whom rituals like mehendi and fasting, and the spectrum of colors from the red of bridal outfits, to that of the darkest kohl, still evoke very powerful memories and emotions from back home.
Ecommerce platforms that work with ground level artisans in rural India, helping cut out the middlemen, such that these artisan communities can thrive and earn fair wages, are already beginning to cull out specific target markets outside India that love these beautiful products.
This westernizing is not only restricted to Indians staying abroad, Indians of different languages or religion residing in other parts of the country would also have an upper hand with such a marketplace where everything is available. For example, A Sikh living in Chennai will definitely and forever reflect the taste of Punjabi products. Similarly, it goes for a Bengali or a Gujarati. We have observed fusions, adaptations in terms of clothing, accessorizing and such.
What are the challenges that you have come across so far?
There have been no serious challenges. Ups and downs are a part and parcel of any business. We have always been focused about our business and where we want to take it forward. We would want to provide the best customer experience and platform for our exhibitors. Most of our investment has been done on team building and development.
How do you see the competition from the players like Craftsvilla.com?
Craftsvilla provides an interface to about 5,000 artisans across India to sell handicrafts, antique jewelry, tribal artifacts and ethnic products. The entry of e-commerce in the handicrafts sector has raised hopes of empowerment of crafts persons, giving them freedom to choose buyers who can offer them higher prices.
Craftsvilla.com's business model has limitations. Those sellers have to take care of the content and pictures on the portal snatches from them the opportunity to directly associate with the business. Experts say it's only in terms of volume that craftsmen can benefit. The wholesale dealers continue to get increased returns.
With respect to X5, we are the only players present in the offline and online space. We have reached out to more than 500+ exhibitors in the offline space showcasing more than 5000+ products and Jan 2016 will be having 1000+ products in a short span of two years. We are already having 200+ merchants showcasing more than 15000+ products and the number is to keep increasing as the traffic on the website picks up.
What are your expansion plans ahead?
We are planning to expand to the cities like Pune, Chennai, Ahmadabad, Surat, Delhi, Chandigarh, Bhopal, Raipur, Bhubaneswar, Kochi and many more. Currently, we are looking at Tier I, Tier II and Tier III cities as the market exists in much smaller cities. There is a huge potential for growth in these markets. We have also been invited by other malls in Cochin, Bangalore, Hyderabad and Vishakapatnam.
Ongoing activities ones are in Both Infiniti malls in Mumbai and In Orbit mall in Vashi & GVK mall in Hyderabad. In the upcoming months, we are looking at mall activities in Forum Mart- Bhubaneswar, DB Mall –Bhopal, Magneto Mall- Raipur, C21 Mall- Indore, City Center –Hyderabad, ForumRangoli –Howrah, V R Mall- Surat and many such.
Further we will be setting up 6 new retail stores under the brand name Masakali in various cities during the first quarter of the Calendar year 2016.
The focus of the organization remains in bringing the authentic Indian craftsmanship to the center-stage of today’s retail ecosystem.
Any plan of going for the next round of funding?
After successfully creating a profitable business model, which is highly scalable, we are now set for the next big leap. Our business plans, concept and ideas have been now ready with short term and long term objective. We’ve an ambitious target for 2020 and this can be achieved only with proper funding.
We have couple of funds which have shown keen interest through connections, but formally we will start approaching from Jan’16.
with FDI approved in the offline retail impact, how is it affecting the online ethnic product space?
With the onset of FDI, there has been a mixed reaction from people. As long as it is concerned with ethnic products, I think it will be a good opportunity with investment coming in for Indian handicrafts which have a high demand in the overseas market. India’s handicrafts have shown enormous exports and with the investment coming in, the demand is likely to increase. With respect to the online space, I think it will be a too cluttered market since, brands like Amazon, Flipkart are already working on aggregator - based model and receiving funds from global and private equity firms.
Since, we are in both spaces it gives an upper hand to us. And historically it’s been observed in developed markets that both spaces (offline as well as online) are thriving, growing (a country’s political, social, economical situations are different impacts).
What is the current turnover of your company and target for the coming fiscal year?
The gross merchandize value (GMV) sold through our offline market platform in a year is about 36-40 Cr with gross profitability of minimum 20 percent. This year our target is that this figure touches 60Cr.
What is your opinion on startups venturing into ethnic product category?
According to IIM-A report by Diptesh Nandi, the export market for the handicrafts segment is 13400 Cr annually. 8 out of 10 Indians do not know of a credible place to shop for authentic ethnic goods. A lot of startups such as Craftsvilla, C-Bazaar, etc have entered this ethnic product category space. The motto is to tap the potential of the ethnic goods market, to create a sustainable business proposition and the same time act as a medium to create awareness and interest about different cultures.
X5 Retail, also being a startup would want to provide its customers an experiential buying environment along with a comprehensive product list to choose from. It’s an untapped and unorganized market but a lot of opportunities to galore.
Have you ever considered funding any startup?
Currently, we are not looking at funding any startup.