When Max Fashion Retail was conceptualised in 2005, the mid-market consumer segment was almost 40 per cent of the total market. Today, while the overall market is growing at 7-8 per cent year-on-year, Max brand is recording growth in double digits, says Vasanth Kumar, Executive Director of Lifestyle International’s Max Retail Division in a tete-a-tete with Retailer magazine.
“We are growing at more than 12 per cent. Today, the mid-market consumer segment is still valued at some Rs 70,000-80,000 crore. This particular segment is going to be the fastest growing segment for the next 10 years, simply because it is lead by organised retail. Although the bulk of the total market is still in its unorganised phase, the mid-market segment is getting organised fastidiously, and that is why we want to capitalise on the growth,” Kumar added enthusiastically.
Max entered India a decade ago and has about 135 stores in 50 cities. After reading the market carefully upon its arrival, the brand strategy to focus on value-fashion customer and mid-segment families was clear. What else could be the reason behind launching products between the ranges of Rs. 200 to Rs. 700, and still record a decent per annum growth.
“It was a conscious decision and our focus from the very start has been value-fashion peers. Since our launch, we have been growing on 38 per cent CAGR annually. While the whole segment would be growing at 12 per cent per annum, we are growing triple the segment average,” said Kumar.
1 Store Every Two Weeks makes for 90 by 2018
Max is already operational in the top 50 cities in India and by 2018, with an aggressive store expansion plan underway, it is looking to add another 10 cities to its fold. More importantly, it is recording a rapid growth in the existing cities. The top seven cities – which are all metros – contribute to a total of two-thirds of Max’s business.
Separately, this is where the GDP growth is the highest because it is led by young middle class; the white-collared, service and IT industry professionals. Max witnesses a sensibility connect with the aspirational class and not the middle class, which notifies Kumar, is a separate segment. The company, he claimed, is on the mid- to upper-mid section, metro yet service-industry customer base. “Currently, we have 135 stores in India and we are adding one store every two weeks, which means 30-35 stores every year. At that rate, we will add 80-90 stores in the next three years,” shared Kumar.
E-Commerce & Omni-channel? “Let’s Max that opportunity!”
There is a significant shift in the customer expectation now, thanks to eCommerce. Today, customers value convenience more and they also want the brands to deliver better fashion and better product quality and better service. Upping its offering through the online channel, the eCommerce channel from the group – lanmarkshops.in – is expected to go live in January 2016. Max stores, which are already connected internally through inventory-sharing, are improving their service abilities by way of thinning the number of non-satisfied customer due to non-availability of products.
“If any particular product is not available at the store we have the ability to service through some other store. They can pick up from any other store, and pretty soon we will start delivering on their addresses as well. In cities like Bengaluru and Chennai, where we serviced through other stores, the response was phenomenal. Come January, we will deliver the items directly to customer,” explained Kumar. All these services, he said, are now becoming normal; and the customer does not see it as a favour.
These all are steps that the brand is taking towards an eventual Omni-channel strategy, because today even marketing is undergoing a sea of change and the traditional media is getting transformed onto the digital media entirely. The transactions undertaken by millennial generation today, which forms the core target audience for the brand, are digital in nature. “Connecting with bloggers and using social media is the need of the hour, as much as it is partnering with the traditional media to leverage their digital initiatives,” suggested Kumar.
We have two parts of everything today, be it TV, magazine or retailing: offline and online. In that sense, a brand going online is a natural progression. “We are enabling our top 30 stores with Wi-Fi services; the tablets placed there will enable the customer to scan through the entire range available. In the value fashion segment, Max is the only mono-brand. The advantage we have over others is that all the others are multi-brands whereas we are the only mono-brand in India. And it makes it easier for the customer to interact with us because they have to communicate with one entity: Max, whether it is a product, store or the website,” Kumar asserted.
The customer’s knowledge and experience is getting leapfrogged by the day, and India is becoming a melting pot for eCommerce start-ups. So, there is a fast developing ecosystem which is leveraging and enhancing customer’s expectation and consequently increasing consumption also, a reason why hyper-local opportunities have opened up markets immensely.
Max’xing the Millennial Participation
“In the new stores, like the one in DLF Mall of India, we have started implementing the new retail entity of Max, which will be more digitised,” Kumar elucidated. In other words, through the use of LEDs on the Video Wall, Max is looking to relay videos of their properties such as Elite Model Look, a fashion ramp show for which they are sponsors; Max Design Awards, the brand’s collaboration with fashion institute NIFT; and Max Fashion Icons and Little Icon in tier II cities, based on fashion hunt programs. “Now with the digital enabling of stores we can showcase all these events in all the stores simultaneously. We can even go for a webcast,” explained Kumar.
Many brands are investing in Customer loyalty programs today, how are you channelling that aspect?
We have a customer base of 5 million at Max. Landmark has another 5 million customers in their data base, which makes it a total of 10 million customers we can leverage through loyalty schemes. Once we have integrated the platforms with the parent Group, we will float the customer loyalty online, which means very soon the customers can burn the points earned while transacting online. They can also know the latest trends, the store networks, can locate stores by using them.
How is the brand’s concept differentiated from a multitude of companies catering to the mid-market consumer base in the apparel & accessory space?
Our understanding of the Indian customer is solid, aside from the network the Group Company Landmark has with more than 300 stores in 18 countries. We are able to get relevant International designs and trends and at the same time offer Indian ethnic wear, having the advantage to play both the roles. We are the only mono-brand in India to have more than 100 designers on board, half of which are based out of India.
For us, getting it right season-on-season with a 35 per cent growth is the mantra. Because of the 19 country participation and a transnational presence, we are fairly accurate in reading the trends. From ethnic orientation to understanding the International market, our brand specialises in offering global fashion with Indian sensibilities.
Eighty-five per cent of our products are manufactured in India, so we have a price advantage as well. That is why we are able to get the best of both the worlds. We deal in Indian prices and International fashion.
In terms of business, how important it is for a well-known brand like yours to create retail store experience for the customer?
Simply put, the reason for our existence is store experience, without which we wouldn’t live as a brand one single day. For a hardcore brick-and-mortar retailer like us, the focus is always been creating a retail store experience and we continue to reinforce that image of ours. We keep our retail stores as a place where we keep our retail leadership visible. We compliment it through our digital online and Omni-channel initiatives. The prime piece of action for us is retail space. Because that is where we can engage with the customer, can connect with them and understand their needs in one shot.
Even if you see the trends abroad, where eCommerce started 20 years ago, more than 90 per cent of the business in fashion either happens in the store or happens with enabling the web along with the store, and we call that web-enabled offline sale. The retail flow at physical stores is the main piece of action. From launching new collection to bloggers meet, everything for us happens on the floor.
We give our digital customer enough reason to visit the store and see what we actually are. But obviously, in the end, allow the customer to choose whatever channel he or she wants.
What is the revenue targeted by the Group in the next 4-5 years?
Going by the 20-15 per cent annum growth, the target of the Group is to reach $2 billion by 2020.