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Rediff.com  » Business » Mahindra to step up retail operations

Mahindra to step up retail operations

October 18, 2012 12:03 IST

After opening 100 stores over the past four years under the 'Mom & Me' brand, Mahindra Retail, the low-profile retailing arm of $15.5-billion Mahindra Group, wants to go full steam.

The company, which retails maternity and baby products under 'Mom & Me', wants to open 50 stores under that brand. It also plans to open 15 stores of its toy store, Beanstalk, over the next five and a half months, besides integrating e-commerce venture with physical stores and expanding its kidswear category by signing agreements with global brands.

The company has recently set up 'Destination Maternity' store as a master franchisee of the latter, which is based in the US.

Besides, the company will also consider setting up franchisee stores in the Middle East and Africa, for which it has got requests, said managing director K Venkataraman.

Also on the cards are integrating online and physical formats, as part of its 'hub and spoke model'. This model envisages larger stores of 3,000 to 4,000 sq. ft in cities and smaller stores on the peripheries. The idea is to increase customer comfort and to save on real estate costs.

"You can either click at home and collect products at the store after seeing it yourself or click at the store and get the products delivered at home," said Venkataraman. The e-commerce sites will also help stores that are smaller in size, say around 2,500 sq ft, which do not have the full range, he added.

When asked about the potential of e-commerce venture, Venkataraman said: "There is a certain potential of e-commerce venture. We are developing the market first."

Consultants such as Devangshu Dutta, chief executive of Third Eyesight, believe that integrating both channels augurs well for the business. "An offline retailer, who has built that relationship with customer, has better chance in online venture. You can encourage customers to cross shop across channels," said Dutta.

The company is also looking to expand its stores via the franchisee model. Currently, the chain has two franchisees out of 100 stores, said Venkataraman. "Cities such as Mumbai and Delhi can take 40 to 50 stores each, but due to expensive real estate costs, we need to go slowly," he said. Mahindra Retail has 25 stores in Bangalore.

"Out of 700 cities, top 100 are important for us but we have not decided how many stores we will open in the next three years," Venkataraman added.

The company, which has got Rs 300 crore from its parent company Mahindra Group till now, is looking at revenues of Rs 200 crore for this financial year. Although Venkataraman declined to comment on whether the company has broken even, he said retail is a long gestation business.

EXPANSION IN KIDSWEAR

Mahindra Retail is looking at concluding licensing pacts with UK apparel brands in kidswear in the next couple of months.

The company is also adding brands such as Benetton and Jiny & Jony to expand its kidswear segment. It already has exclusive agreement with US-based Disney and Fisher Price of Mattel.

"Till July last year, we had only private lables, but we realised that older kids need more products and brands. We would like to add more brands," said Venkataraman.

Third Eyesight's Dutta believes that there is enough headroom, given that there are not many brands in the mother an infant segment and consumers want more choice.

Although a number of both online and offline stores selling maternity and baby products have come up, Venkataraman says there is still a huge demand for such products. "In every city, there are not enough stores catering to this segment. We are trying to create a market for products catering to mother and infant, while the demand is huge," he said.

According to Venkataraman, the segment is recession proof because people spend disproportionate share of money on child irrespective of income levels. "Knowledge and education is required to promote such products. We are trying that with our website and customer initiatives," he said.

Raghavendra Kamath in Mumbai
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