Store opening: Brands tread carefully

Wednesday, 15 September 2010

Single store profitability is the operative phrase these days. Retailers are keen to ensure that each of their stores is profitable. While some time ago the accent was on aggressively adding to the store count, today apparel retailers are opening stores only if they are sure they will bring in immediate returns — in just one or two seasons. In the last few seasons, EBOs were seen as a magic formula for success. Brands rolled out stores indiscriminately wishing to take advantage of the consumer boom.  Then came the slowdown and many stores went belly-up. Now the strategy is to take it slow and easy.

Van Heusen, for instance, does not open a store unless it promises to be profitable in the first season itself. Each store has to justify at least 20 per cent profits. The retailer is reviewing franchisee return on investment with greater interest. This year, Van Heusen is seeing a robust like-to-like same store of growth of 40 per cent. The Collective, the destination store from Madura Garments, is taking it one store at a time and ensuring that every single store is profitable. It has two stores in the country — one in Bangalore and one in Mumbai. Both stores have achieved single store break-even.

Since consumers have a strong preference for casual wear, The Collective has increased its casual wear merchandise by 25 per cent this season. Casual wear contributes to around 60 per cent of its total sales. Van Heusen also owes its growth story to its extensions into the casual fashion segment with the launch of party wear and denim. Indus League too has been engaged in several localized marketing initiatives. For instance, for the Urban Yoga brand, the retailer has tied up with gyms and yoga centers to make sure it has adequate walk-ins to stores in that neighborhood.

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