High profitability in Kidswear Franchise

The new crop of brand savvy parents with growing purchase power has led to a surge in consumption in the kid’s fashion segment. Not even a decade back getting a hand-me-down infant’s jeans from an NRI relative was a practice among the young well-to-do urban parents. It is amazing to see how the market scenario has changed in the last five years.

Global Brands who got it right

Global Brands started with company owned outlets by the master franchisee initially.. Then they started operating unit franchisees with the consignment model and have now started giving out master area franchisees under the outright purchase model. One of the most trusted brands in the apparel segment at present, UCB has diversified its portfolio into kidswear to emerge as the complete family shopping destination. Other global brands that have attained equal success through franchising include US Polo Assn, Tommy Kids, Adidas Kids, Allen Solly Junior, Poney and Carter’s.

Rajat Kapoor, Owner Ajanta International Group, who last year got the Master Franchisee of Malaysian Brand Poney in India stated, “We have opened three stores in six month and will be present through online and offline models.”

Mahindra Retail has also tied up with American kids wear firm Carter's. Prakash Wakankar, CEO, Mahindra Retail says, “We have plans to open 40 Caters Store-in-Stores at BabyOye outlets in 15 cities across India and online.”

Many Franchisees are working in an ingenious space where Kapskid, a Kapson Fashion Pvt. Ltd. undertaking is a MBO housing all the major global brands for kids such as Levi’s Kids, Nike Action and Jordan Kids.

Global brands can also have more than one partners in India. For example, Mothercare operates in India through a joint venture with New Delhi-based real estate firm DLF Ltd as well as through a franchisee arrangement with the country’s largest department store operator, Shoppers Stop Ltd. With more than 100 stores in India, the brand is expanding by setting up stand alone store with DLF Ltd and Shop-in-shop with ShoppersStop.

Luxury takes off

Global luxury brands are operating in India through a master franchise agreement. Les Petits, a multi-brand children store at DLF Emporio, Delhi holds a master franchisee for all the leading global luxury brands. Likewise Unique Eye Luxury is the master franchisee of Armani Junior.

Home grown designer kidswear brand Kidology is present in one company operated stores and six shop-in-shop arrangements within India. Neha Sanchar Mittal, MD, Kidology, states, “we are focusing on developing smaller format 300-500 square feet stores in the right locations to expand responsibly and maximize our per square foot profits.”

Indian Market – Eating a big pie

While the global and the luxury brand can be touted as the emerging segment, the domestic players appease the mass market with their strategic USP. Toonz Retail, the home grown kidswear retail chain is headed towards completing their 100 stores.

Max Retail, a family shopping destination attributes 25% of their sales to the kidswear. Vasanth Kumar, Executive Director, Max Retail says, “We are opening one store in every eight days. Twenty percent of our Max Retail stores are franchised and are targeted at the tier II cities as the real estate and operational costs are higher in tier I cities and also the tier II cities are evolving fast as a matured retail market for fashion.”This year Max Plans will open 40 stores out of which 10 will be franchised.

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Franchising – a viable business model

Franchising has been a growth booster for the retail industry as a whole and kidswear segment is no exception. Supam Maheshwari, Founder & CEO FirstCry.com explains, “The local knowledge of a franchisee together with our excellent product and retail strategy creates an unbeatable combination. All our existing stores are franchisee stores and we intend to continue that in the future too.

Rajat Kapoor shares, “Our franchise model thrives on the principles of retail franchising model that include setting up store, percentage margin, whole sale discount, market contribution.”

Both the franchisor and franchisee should evaluate all the vital parameters and appreciate the fact that it is a long term commitment for both. Sharad Venkta, Managing Director & CEO, Toonz Retail India Pvt. “The local entrepreneurs who may have the ability to run retail stores but lack in backend support and buying power. That is where we come into the picture. The profitability of our company is driven by the profitability of the franchisee.”

Ecommerce finds growth in offline

Omnichannel retailing being the trending business strategies for major retail brands has become the top of mind for kidswear brands. Ecommerce brands such as Firstcry.com and Babyoye.com have set up offline stores to accentuate their brand experience. Maheshwari says, “Our hybrid retail model gives parents the flexibility to buy from both the platforms.”

Babyoye.com was acquired by Mom n Me, a retail outfit owned by Mahindra Retail. Now renamed to Babyoye. Wakankar shares “Products are available for early pregnancy to 3 years of age in stores and upto 7 to 8 years of age online (BabyOye.com) and on the BabyOye app. We are also one of the few players with an omni channel presence.”

The Future

Today Kidswear Brands are reaching out to its customers through all the three channels – online, physical stores and mobile apps. Franchising will play a substantial role to play in defining the rules of the game.