REVOLUTIONISING RETAIL BUSINESS

When men go out shopping, the general presumption is that they are least interested in the activity. But honestly, the case is otherwise. Just like women, men are very careful about what they are wear, style and about their overall personality. So, when it comes to a special occasion, they will never compromise and will definitely search for a customized outfit. This is why Raymond has a special place in their hearts. In this era of e-commerce, where everything is available at the click of the finger, Raymond is exponentially growing its retail presence.

THE MAN OF THE MOMENT

Each one of us has a few mantras that we swear by and Dhanjal is no different. He has three corporate mantras: First, Ambition should be greater than the Resources available (A>R). Second, holistic growth measured through 5 dimensions; viz. Competitive growth (faster than the competition); Profitable growth (+ve EBITA); Sustainable growth (continuous year on year); Inclusive growth (company and franchise partners); and Experiential growth (enhancing customer experience). Third, Dhanjal advocates that ‘Customers should be at the heart of everything.’

These mantras have helped the Raymond retail team to conceptualize and leverage the Mini TRS model, which now has the potential of adding 15% of incremental revenue in the retail channel on a year-on-year basis. But the journey hasn’t been easy for the brand while exploring the Mini TRS model. “It took us almost six decades to reach 689 stores and we were looking to open 300 stores in just 2 years. So the challenge was about changing the mindset: it was about how you bring in out-of-the-box thinking that favours exponential growth – think 10x and not 10%,” he adds.

BUILDING ON NEW TRENDS

In today’s era of retailing where everything is about ease and comfort, Raymond is focusing on customization and personalization to woo their customers. “So, there are consumers who would rather get a personalized ensemble made because then it is only made for them, which is unique in that sense. As such, Raymond is betting big on personalization and customization where it is about creating an experience for consumers and giving him the full wardrobe solutions from fabrics, custom tailoring, readymade apparel and accessories,” he says.

Further, the penetration of technology, especially mobile phones, has created tremendous levels of awareness across the emerging towns of India. Hence, consumers in these towns have high aspirations as they are now aware of the lifestyle trends. However, what they lack is accessibility which more or less has stalled the consumption levels in these areas. Dhanjal claims that the Mini TRS has bridged this gap.

“When we started rolling out Mini TRS stores, the first thing that we realized was that these towns have entrepreneurs who are looking for suitable business opportunities. All they required was a retail model that would work for their towns and consumers. Today, Mini TRS are doing 1.6 times more than what our initial business projections were,” he points out.

GROWING RIGHT

To analyze the performance of each of its stores, apart from maintaining a profit and loss statement, Raymond expects each of its franchisees to project his/ her expectations so that using its past knowledge and data science, the brand builds a revenue model around it. This helps Raymond review the stores’ performance on the basis of projected footfalls, average conversion, and overall revenue a store is generating. These assumptions are then regularly compared to the actual performance managed by dedicated Area Managers.

The brand’s franchise partners are empowered to recognize and leverage opportunities through well-structured engagement plans. It is with this idea of empowering franchises and generating sustained buzz at stores, the Retail team works on a robust framework of Local Store Marketing (LSM). From 621 store campaigns/ consumer activations the team propelled to over 12,000 LSM store activations. However, while this is just about the business’ key performance indicators (KPIs), Raymond has also set up KPIs for learning and development through a mobile application called, OneButtonConnect.

“With objective to recognize star performers we rank our franchisees on five parameters – growth, overall sales, efficiency of reward program, local store marketing measures, and most importantly customer feedback. Every quarter our franchisees are rated on these parameters and rankings are then released to team. This promotes healthy competition among our stores,” Dhanjal shares. Furthermore, considering the unique proposition which Raymond has to offer, the brand realized it also requires a thriving tailoring ecosystem and hence the retailer has set 53 tailoring hubs which are connected to its stores.

“You don’t see or hear much about them because they work behind the scenes. It is their craftsmanship and skill which creates that customized look for the customer. Majority of the tailoring orders generated from these new stores are manufactured in these hubs and are sent back to the store. So, they are helping us connect the dots,” Dhanjal adds.

FUTURE PLANS

Raymond is committed to continue to grow its retail footprint and soon will cross the 1,000 stores milestone in coming weeks. In the next 2-3 years, the retailer is looking to open 100 stores every year. Apart from this, the company has undertaken various digital initiatives to improve customer and store experience. An example of this is StyleMe experience, which is a technology enabled tool (magic mirror) that helps customers see how the fabric will look on them in different style and options.

“This is a big initiative that we plan to roll out. Also, in order to help entrepreneurs and our franchisees, we are also streamlining our entire supply chain model wherein our merchandise would be displayed on a mobile app called MIDAS which will enable real-time stock order and better inventory management,” Dhanjal explains. “Through our CRM platform we are also leveraging on artificial intelligence and data analytics to predict customer buying patterns, which will further help us innovate and expand,” Dhanjal adds.

THE NEW RETAIL BUSINESS MODEL

The 980+ stores spread across 585 towns mark Raymond’s presence as widest and largest chain of men’s lifestyle stores. Around 920 stores are managed by franchisees, of which around 250+ entrepreneurs have multiple stores across India. Another interesting fact about the Mini TRS is that of the 300 stores, close to 160 are opened by first-time entrepreneurs, who were either professionals or ran traditional businesses and were looking at new retailing opportunities. Dhanjal explains that the reason why this model is attractive for new entrepreneurs is because of its asset-light and agile form, while they are open to new ideas and passionate about consumer and retail business.

“When you go and talk to them about a new idea, they are more receptive towards it. The Mini TRS model is actually flexible and asset-light as the investment levels are lower; roughly Rs 50 lakhs as against Rs 2 crore for a larger TRS format. Once an entrepreneur becomes comfortable with the Mini TRS, he/she can look at a bigger platform,” Dhanjal says. Of the Rs 50 lakhs of investment, Rs 20 lakhs is utilised for interiors and IT systems, Rs 20 lakhs for merchandise and inventory, while Rs 5 lakhs for miscellaneous expenses. On the operational cost side, rentals are about 10%, the manpower cost is 5%, electricity and utility costs are 3% while 2% is spent on miscellaneous expenses.

Typically, the realized margin for a store is 10-12% after expenses. The Mini TRS has the potential to generate revenues between Rs 0.75-1 crore per annum as compared to the larger format that generates revenue of Rs 2.5 crore. Dhanjal claims that the model is built in such a way that the franchisee is cash-positive from the first month and within 24-30 months they are likely to recover the investment. Elaborating on the selection criteria for taking a franchisee on board, Dhanjal says, “The franchisee or entrepreneur’s investment hygiene is extremely important along with the inclination to do business. The entrepreneur’s experience and how involved he is in the business are among the things we look at.”

FRANCHISE FACTS

MINI TRS

STARTUP INVESTMENT: Rs. 50 lakh

EXPECTED REVENUE/MONTH: Rs 6 lakhs

OPERATIONAL EXPENSES: 20% of revenues

ROI: 2.5 years

TRS

STARTUP INVESTMENT: Rs. 2 crore

EXPECTED REVENUE/MONTH: Rs. 20 lakhs

OPERATIONAL EXPENSES: 20% of revenues

ROI: 3 years

Comment

5 4 3 2 1