Apparel Online India Magazine March 1st Issue 2019 | Page 61

INDIA’S PREMIER SOURCING SHOW
Madame driving growth from smaller markets of the country
RITIKA TANEJA,
SHOPCLUES
“Growing internet
users in Tier-2, Tier-3
have facilitated the
entry of e-commerce
in these regions.
Also, our homegrown
labels, priced
competitively for
these consumers, give
us an edge over other
online portals entering
these markets."
RADHESH
KAGZI, 109°F
"The spending power
is vis-à-vis lesser than
the metros, but the
desire to own fashion
is probably higher.
The average ticket
size for us in these
areas is about 12 per
cent lower than the
metros.”
ATUL BAJAJ,
PUMA SPORTS
INDIA
"Tier-2 and Tier-3
are actually very
important areas and
a lot of times for
Puma, Tier-2,3 towns
are more profitable
than Tier-1 because
their rents are more
rationalised as well.”
strategies. While few consider that the rural consumers will
not react effectively to the discount season, others opine
that they work almost the same way across geographies.
For an online player like Shopclues, these areas contribute
75 per cent of business during EOSS. Meanwhile, retailers
unanimously agree that the sweet spot for consumers from
small towns lies between Rs. 300-Rs. 1,000.
Talking about the customer shopping pattern, Bipan
of Madame, points out, “Consumers in the Tier-2 and
3 markets are conservative and less excited about
experimenting with newer silhouettes. They prefer more
traditional/basicwear. However, price isn’t a huge criteria
now. Overall sales forecast is the predominant challenge
as the customer base is really small. But with the help
of e-commerce, acquiring new customers has become
easier.” In terms of store size, for Madame, it ranges
from 645-1,075 sq. ft.approx., and around 400-500 sq. ft.
for 109°F and for a multi-brand store like V-Mart, the
average store size ranges between 6,500-10,000 sq. ft.
Meanwhile, Atul Bajaj, Executive Director, Product,
Merchandising and Supply Chain, Puma Sports India,
asserts, “Tier-2 and Tier-3 are actually very important
areas and the best part today is that the consumers there
are as much aware as their counterparts in metros and
they want the same brand experience which a brand
offers in metros. If a brand offers them that experience,
consumers in semi-urban and rural areas are willing to
buy the product. A lot of times for Puma, Tier-2,3 towns
are more profitable than Tier-1 because their rents are
more rationalised as well.”
Moving ahead
With the recent announcement of policies and changes
on the personal income tax front in the interim Union
Budget 2019, it is sure to lead the additional disposable
income and rural growth. Also, there is approximately Rs.
1 lakh crore worth of disposable income in the consumers’
hands, which will ultimately help consumption. As Lalit
affirms, “Once again the Government has validated the
fact that the youth and income earners, who earn below
Rs. 5 lakh per annum, are a big chunk of the population
size (almost 95 per cent) in India. The reforms
introduced in the interim budget will add to the lifestyle
betterment and ultimately result in a consumption
spree, which will definitely benefit the retail brands.”
There is an increasing understanding that the retail
sector is bound to grow in the times to come. Ritika
apprises, “While expanding the brand, footprint
is expected to take the label to a wider audience;
big retail players (like, V-mart, Vishal Mega Mart,
Pantaloons, etc.) have therefore started focusing
and investing heavily in Tier-2 and Tier-3 towns.
According to most of the fashion journals, the fashion
retail industry in these areas is expected to increase
business by triple times by 2025. Currently, Shopclues
covers 29 states with operations in 30,000-plus pin
codes and plans to add 5,000-plus pin codes, which will
mostly be in the rural areas.”
Honest price shop concept like that of V-Mart, which
primarily follows a cluster-based model approach to
expand, has already covered 162 towns in 16 states and
is operating more than 201 stores, largely in the Tier-2
and beyond markets. The retail store chain has added
close to 31 stores last year and will continue to open
around the same in the coming years as well. According
to Lalit, the potential consumption and aspiration in
these areas will grow by more than 15-20 per cent in
the coming years. For Puma Sports, Tier-2 and Tier-3
areas play a huge role and it garners ‘about 50 per cent
of the brand’s overall business and this is expanding
at a faster rate in comparison to Tier-1 cities’. Puma
prides in offering a unique proposition between sports
and style and that’s something that has been working
greatly for the brand in all parts of the country. Overall
the consumption will continue to grow and with the
convenience, the small city dwellers will get the
availability of their favourite fashion brands in close
proximity. There sure is a huge scope for organised
retail to expand in every corner of the country.
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