Retailing lacks talented entrepreneurs

Mr Suresh J. CEO, Arvind Brands and Retail, in an interaction with the Retailer, gives first-hand account of company’s brands

 

Retailer: What are the difficulties you experience in running the retail business smoothly?

Suresh J. (SJ): Major problem is that the level of buying consumers products is not at par with the international market and difficulty is to get talented entrepreneurs for running the retail business. In our case, we require different kinds of experienced persons for our brands. A person who is very good in MegaMart may not be good for an Arrow outlet. Another important issue is supply chain management. Procedures of sourcing and distribution of products need to be improved. These are the big challenges we are confronted with. For supply chain management, we are introducing Oracle technology.

 

Retailer:  How many stores (both small and big formats) do you have? How do consumers like your stores?

SJ: We have 83 small MegaMart stores, each of these spreading over an area of 3,000 to 6,000 sq.ft. The number will go up to 125 by March 2009. Similarly, we will add five larger format stores of MegaMart by March 2009. Right now, we have one in Chennai, which spans 50,000 sq.ft. We have also four outlets in Dubai and have plans for further expansion. Indian consumers go for vanilla because of non-availability of big-box. But, whenever consumers get an opportunity, they go for larger outlets. Besides apparel, we are into luggage segment. We are also inclined towards footwear and two to three more segments with the aim of becoming number-1 retailer.

 

Retailer: Are Indian consumers at par with international consumers in accepting all the global brands?

SJ: I won’t accept this because the per sq.ft sale of any of the Indian retail brands is much lower than that of any international brand. It is growing but not comparable to US’ or UK’s. It will take some time.

 

Retailer: What will make the industry more prosperous?

SJ: My key recommendations would be to abolish the service tax, remove apparel category from purview of weight and measurement. Currently, the industry is struggling in areas such as interpretation of tags and labels attached to products and increased cap on FDI in retail (to effect smooth flow of foreign investments in the country and protect local players’ interest by introducing additional incentives in the form of reduced corporate tax).

 

Retailer: What constitutes the support you give to franchisees? What are the requirements of a novice (franchisee)?

 SJ: We have a very good training programme, which includes grooming, handling customers and good products knowledge. The investment of franchisees depends on the brands. For a brand like Arrow, the fixture will be Rs 2,000 - 2,300 per sq.ft and the stock will be around Rs 1,200 - 1,500 per sq.ft. In case of brands like Excalibur or Flying Machine, fixture will be Rs 2,000 per sq.ft and the stock will be around Rs 1,100 - 1,200 per sq.ft. So, basically, an Arrow store will require Rs 23 lakh as a fitout and Rs 10 -  15 lakh in terms of stock. So, an Excalibur store will cost Rs 5 - 8 lakh in terms of fit out and Rs 8 - 10 lakh for stock.

We check out the financial capabilities of franchisees for investment of Rs 20 - 25 lakh albeit it’s not necessary. But, we favour some experience in retailing of franchisees.

 

Retailer: What are the measures to be adopted to raise the profitability at the store level?

SJ: First, sale per sq.ft should be increased. Secondly, proper interior and window display of product, location and staff behaviour (which divert consumer attention) play an important role in boosting sales.  

 

Retailer: What is your advice to growing apparel entrepreneurs?

SJ: Lots of opportunities are coming up for them. If they have their own place, there is a good prospect in seeking franchise from large companies and then set up the business.

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