No competition from multi brand stores

The Collective, a part of Madura Garments Lifestyle Retail Company Limited, recently opened its third flagship store in New Delhi. Varun Jain spoke to Ram Narayan Iyer, COO, The Collective, about the company’s future plans, the competition, luxury in India and much more.

Varun Jain (VJ): What is the idea behind setting up “The Collective”?

Ram Iyer (RI): The Delhi store is basically the third store for us. The first store we opened in Bangalore in October 2008 and the second was in Mumbai in 2009. This store is spread in area of 17,500 sq ft and spreads across two levels. If you look at “The Collective” from the design perspective, some of the elements that we really looked into is to make it modern and contemporary and we infused in a lot of colors. The Collective is positioned very interestingly. While on one end of the spectrum, we have all the luxury brands, like the brands we see in DLF Emporio. And at the bottom end of the spectrum, we have brands that operate in a mall like a Promenade, which has the premium brands. The Collective, plays in the mid space, stretching from super premium to luxury, which is a kind of a white space. So, we operate in that space. And we have done that very interestingly by bringing in a portfolio of brands. The way we have made the store, is like a different world.

VJ: How do you anticipate the luxury segment market in India?

RI: The size of the luxury market in India at this point in time is about 2,400 crore, for the entire super premium apparel segment. If you look at the countries which are growing in the luxury segment are, India, China and Brazil. All of them are showing a growth in excess of 25%. No other country shows this kind of growth in this segment. Either they have flat growth or there is a decline. We see a lot of potential in these 3 markets and the market is certainly growing.

VJ: Who are the target audience of “The Collective”?

RI: Based on our history, 59% of our customers are entrepreneurs, industrialist and a SME kind of a profile. 29% is corporate and 11% is IT’s and BPO and the balance is the small other components. This is the occupational profile. If we look at the age profile, people between the age group of 25-34 accounts for 52%. Age group between 35-44 accounts for the next 20% and the small 14% is in the age group of 45-50 years. So, a typical customer for us is in the age group of 24-35 years who is an Entrepreneur or an Industrialist. Therefore, he is not a guy straight from the boardroom, always wearing a suit.

VJ: Will you be carrying your own brand like a Louis Phillipe in the store?

RI: We carry only Heritage from Van Heusen, which is the top end offering from the brand and Luxor, the higher end from Louis Phillip. So we will not be carrying the regular premium stuff from our brand because we also have to make sure that the positioning of the brand doesn’t suffer.

VJ: With many luxury brands downing shutters in India and other luxury brands lowering the cost of their products in order to sell them, do you really think there is market for luxury brands in India?

RI: A lot of times a store shuts down also because of the economic model. At the end of the day, retail is all about the 5 P’s. One having a very clear point of view of who you are and who you want to be. In our case we clearly wants to occupy the white space between the super premium and luxury. We want to be the  store that offers best fashion brands for the men and the women. Secondly, its all about the Product.  If you have a great store but not great products, its simple, you won’t sell. Third P is all about Presentation. You have good products but it should be presented in a manner that you just fall in love with it. The display, the visual merchandising all needs to be in place. Fourth comes the People. This is the most important P among all the five of them. You have everything but then the experience at store level is not great, it will not help. Two people who are most important in our business are the customers and the associates. This is between the two where the magic really happens. Taking care of the staff is as much critical as taking care of your customers.

VJ: What would be the expansion and the investment plans for “The Collective”?

RI: The investment per store is around Rs 8 crore. There are two routes of expansion we are looking at. One is to saturate the existing cities like opening one more stores in Delhi and Mumbai and the other route is to go to the new towns. The new towns that we have shortlisted is Chennai, Hyderabad and Chandigarh, because therse are the places we have some visibility of the real estate.

VJ: How do you look at the competition in the space where “The Collective” operates?

RI: We don’t have any competition from the multi brand stores that we have. From mono brands we can say yes, because some of the international brands have their own stores. But strictly speaking, we don’t see any direct competition because our concept is much broader. We offer a wide range of options to customers. But if you look at the share of wallet perspective there is a competition. So from the format perspective the answer is no but with the share of wallet perspective, its yes.

VJ: Post slowdown, what lessons you learnt to sustain your business?

RI: Biggest lesson you have to learn is to invest on front of house. In terms of front of house experience, don’t compromise, give the customer the best product, the best experience, the best kind of ambience, but really pull up yourself on the back of house. I think there is always a lot of fat in the backend that can be trimmed. So you have to be very passionate in terms of back of house, you have to really push hard in terms of building the efficiencies in every aspect. Philosophically, you have to make sure that, you focus on achieving the single store profitability. And the third important lesson I feel for retailers is all about understanding not what you sell but what you don’t sell. So make sure you manage your inventory right, make sure you buy right.

VJ: What do you think of FDI in multi brand retail?

RI: I am a great believer of competition. In a competition, the benefit is to the consumer, the consumer wins. We have to work much harder. On 100% FDI my view is that, the more the merrier. The government needs to work on certain things. They should bring down the duties; let the products come to the country. They have to also open up the economy.

VJ: Do you see weather as a challenge?

RI: Weather is what it is. No one can change the weather. You have to change your point of view, what you should buy and what you should offer to your customer. What the consumers look for is freshness and excitement.

India has lots of opportunities with so many festivals we have round the year. Then we have all those big fat traditional weddings, wherein everybody wants to look good. So I would say rather on worrying about the weather focus on the occasions.