As appeared in Franchise Plus Magazine
in March/April, 2010.
| As appeared in http://www.franchise-plus.com/GuestArticle.asp
in March, 2010. Writer: Gautam Sahni / Franchise Dollar Store |
| | Why Franchising surging???
Fastest way to expand your business
The benefit of franchising is that it's a quick way to expand nationally & internationally.
As the tides of the economic crisis globally begin to fade, and we see consumer and investor confidence return, franchising continues to be one of the most viable options for those considering entering business for themselves or expanding their existing business.
For some businesses franchising is the only way to turn a solid hometown business into a thriving superpower. But it's not as easy as it sounds.
Franchising might sound to be one of the easier options for mass expansion, but it's not cheap. Franchisers spend huge sum of money on consultants and attorneys. They even spend heavily on developing the operating and training manuals.
Franchising Selling a Business rather than a Product
Franchising continues to be a strong option because the systems and support unique to this industry offer more stability than most businesses. However, it is not recession proof and during the recent global economic crisis many franchises had to reassess their business development plans and adapt to new market pressures to survive. In some ways it has been a survival of the fittest.
Throughout the economic downturn, franchisers who had fundamentally strongly mix of business model encouraged their franchisees to follow the franchise system, thus sustained and flourished. Franchising works because it is based on proven systems and those franchisees that rode out the downturn understood the importance of showing extra diligence in following the business model that they have invested in.
Similarly, if you are a business owner looking to boost your business, then entering a strong franchise system could be the right choice for rapid expansion. However, this is not the only path leading to potential growth. As a business owner, you should conduct due diligence and seek information on all alternatives including joint venture initiatives, licensing or distribution deals just to name a few.
Utilizing your business experience within a franchise system may provide quick market penetration and expansion into new territories, but it is not a get rich quick scheme. However, it is a sensible strategy for expansion and to take advantage of valuable assets and brand awareness that are already recognizable. But of course, it will require a defined goal and clear vision of what you want to achieve. | |
As appeared in franchiseindia.com on 4th January, 2010.
Discount counts
Modern retailing has given way to the newer concepts like discount retailing which have captured the interest of both the consumers and the investors (franchisees). The concept offers some interesting benefits for both. Read further to know more about such benefits.
Who wouldn’t love to save a penny? Every one loves discounts. Be it housewives saving a penny after a quick bargain with the shopkeepers on a purchased item or any one of us buying a piece of clothing at a lesser price than the MRP at local apparel store. But what if the discount is offered on a large variety of offerings and that too at a branded store?
The concept of discount stores is adopted from the West and has achieved great success in India over the past five years. Few of the major players who took franchise route to expand are Vishal Retail’s Vishal Megamart, Arvind brand’s Megamart, The Loot Store, US Dollar Store and Pocket. Talking of the importance of value retailing in India Jay Gupta, MD, The Loot Store informs, “India is very price conscious market. Mass consumers like value propositions that discount retailing offers.”
Target customers
Most of the discount stores cater to the middle and upper middle class who have disposable incomes but would like to spend more smartly and would churn out the most out of the bargain. The Loot targets at lower middle class, middle class and upper middle class segments. Talking of its clientele, Gautam Sahni, Director, Nanson Overseas P Ltd, Master Franchisee for US Dollar Store (Asia Region) avers, “Whosoever has 99 rupees in his pocket is our customer. While our middle class customer would buy a non branded American shampoo from our store, the upper middle class customers would buy a branded American shampoo.” The store offers 8,000 items across 11 categories. Sahni finds that the sale of its store increases by almost 10 per cent every month as in their case its more of impulse buying.
Customized value offerings
The Loot offers a discount of 25 to 60 per cent on MRP on the various brands. The discount that Megamart offers may vary from 27 to 50 per cent. US Dollar Store offers a discount of 25 per cent plus margin on its offerings.
Talking of the customization he adds, “We sell whatever sells in the particular region out of our bouquet of offerings. For example, we would sell pet feed only in tier I cities and not in tier II or tier III towns as the customers there would not demand that.”
While a US Dollar Store or Vishal Megamart would sell both branded and non branded stuff, Loot Store and Pocket sell branded apparel at discounted rate through out the year.
Opportunity
The Loot Store has 150 stores presently and plans to add another 50 by March 2010. The Loot has four different formats to offer to its franchisees. The store size may vary from 2000 sq. ft. to 20,000 sq. ft. whereas, the investment required from the franchisees ranges from Rs. 2500 to 3000 per square feet. The franchisee can take up any of the four formats in tier I, II or III cities depending upon the potential of the particular city. Arvind’s Megamart too offers two formats to the franchisees. One is with a store size 2000 to 6000 sq. ft. and the other having 40,000 sq. ft. area. US Dollar Store which has 86 stores pan India is opening 5-6 stores every month and is expected to take the count to 100 by March 2010.
Prospects ahead
According to McKinsey and Co. almost 40 per cent of branded apparel sales in India have achieved through discounts. Jagdeep Kapoor, Chairman & Managing Director, Samsika Marketing Consultants Pvt. Ltd. too avers, “The most attractive segment in discount retailing so far is the garment segment. However, the other sectors which might witness rise in discount retailing are the attire segments for example, shoes, belts and jewellery. This further indicates bright chances for more such formats to land.
As appeared in Navhind Times on 29th September, 2009. Written by NT Network |
| Monday, 28 September 2009 01:26 |
PANAJI: The willingness to change and meet customers’ expectation has kept the Dollar Store, located behind the Margao Police Station, true to its humble start of providing value for money. The opening of the $ Store in Comba has enhanced the look of the place and this is what today’s consumers have been waiting for, said its owner Mr Edwin Fernandes. The hygiene and clean ambience, attracts consumer to products such as groceries, packed and canned foods to toiletries, cosmetics and toys and much more.
Mr Edwin Fernandes has architect the store in the true style of the dollar brand seen in western countries. Although it has a very upmarket look, its products are of the lowest of prices. To keep up with customer’s demand, new items are regularly added. The built up area is over 800 sqft that includes the mezzanine.
As appeared in Franchise Plus online edition.
US Dollar Store targets 100 franchise stores by this year-end
Aug 06, 2009
Sujeet Kumar Jha
US Dollar Store is doing good business in India. Sale of all imported merchandise at only Rs 99 gives it an edge over competitors. Currently running 70 outlets all over the country, the company plans to take number to 100 by this year-end.
“We are growing in India with an average speed of opening at least four stores per month and I believe we will be able to set up 100 outlets by December 31,” Gautam Sahni, director, Nanson Overseas Pvt Ltd (the sole Master Franchisee of US Dollar Store for Asia), claimed while speaking to Inside Franchising.
Elaborating on their expansion plan, Sahni stated that US Dollar Stores is one of the fastest growing retail stores in India. “We are present in cities of various levels, from Bangalore to Wokha to Porvorim, and have entrenched ourselves better in tier-II/III cities than in metros since the craze for imported goods are higher in small towns,” Sahni added.
“Moreover, the current slowdown in retail has also proved to be a boom for expansion via the franchise route, and so our franchising appointment growth ratio has also increased,” said Sahni.
US Dollar Store sells over 8,000 products imported from different countries, including the USA. The range covers health and beauty, food and beverages, baby care, pet products, kitchenware, stationery, gift items, toys, decorative pieces, foods, sweets and candy, houseware, cleaning detergents, paper products, hardware, auto products, candles and medicine, besides other things. “For everyone who walks into our stores, we have something,” Sahni pointed out.
A prospective franchisee can make a choice between two given alternatives. His business may be carried out either in a 1,000 sq ft space (Rs 5 lakh as franchise fee) or in an area measuring 300-400 sq ft (Rs 2 lakh fee). The agreement will be for nine years.
The store fill requires, an investment of Rs 950 per sq ft. The amount comes to about Rs 9.5 lakh for the larger outlet, the overall investment touching Rs 20 lakh, and Rs 2.85 lakh for the smaller one, the corresponding sum being nearly Rs 6.85 lakh. The investments include franchise fees, store fitouts (both interior and exterior), inventory (store fill) and an optional expenses on IT, software and POS.
Though the margin varies from one product category to other, the average is about 25 per cent. The average daily sale in a store hovers between Rs 30,000 and Rs 90,000, depending upon location and footfall.
Sahni also informed, “We have an exchange policy for the goods, which are either not moving or are slow moving. But they should be in resaleable condition.”
The components of back-up support are – 50 per cent reimbursement of promotional expenses, training of manpower if needed, exchange policy and locking up of a territory (not operating other stores in that particular market/region within approximately 3 km radius).
As appeared in "Times of India" on 8th March, 2009 (Goa Edition)
US Dollar stores offering
US Dollar Store, a popular bargain store concept in the US, which had made a bow in India in 2005 (through Nanson Overseas Pvt Ltd), has today opened over 60 stores PAN India. The size of the store varies from 150 sq. ft. to 2000 sq.ft.
Shoppers are constantly amazed at the exceptional product value they receive at US Dollar Store for a single price tag of Rs. 99*. The look of the merchandise, its quality, and the overall value of the items far surpass that of in any other store.
Today’s consumers are more value conscious than they have been in the past. Their shopping habits have shifted from department stores to discounters. Consumers are much more value-oriented which has contributed to the growth of discount stores. The dollar stores mostly carry fast-moving merchandise which leads to Impulse purchase.
Not to miss the merchandise is procured from various countries like America, Canada, Thailand, Europe, UAE, China etc.
For many smart shoppers, the thrill of hunting down a great deal is as satisfying as the actual savings from the purchase. Customers visit and shop at Dollar Store because its FUN !
As appeared in “Franchise Plus” of January ~ February 2009.
Riding The
With the world battling recession, it is natural for everyone to wonder if it is spelling trouble for domestic retailers. We take a close look at the strategies our retailers are taking up to combat the current economic turbulence and its impact on the franchise model.
By Deepa Thomas
The retail sales during the festive season have been decent but the global meltdown is for sure pinching the pockets of certain sectors like real estate, aviation, broking houses and business services. Though many retailers persists that they haven’t been affected by the slowdown, they are conscious of the environment and are taking steps to manage their resources effectively. Unreasonable high rentals, highly-paid underperforming staff and unprofitable stores are supposed to be upsetting the balance sheets of many companies.
Due to the ongoing recessionary trend, retailers are revisiting their business plans. Some of the retailers have stopped taking forward their retail expansion plans and are consolidating by closing economically unviable stores, optimising space utilization besides focusing on performance improvements to tide over the situation. Not depending on the market valuation, retailers are now focusing on putting their business fundamentals right. They are now concentrating on having the right product mix rather than playing the volume game. Some are striking a revenue-share agreement with mall developers and others inking the franchise route. This way a lot of saving is achieved on fixed costs like rentals.
Commenting on the current state of affairs, Ashutosh Garg, CMD, Guardian Pharmacy says, “Indian retail will certainly see a slow down but the inherent strength of the domestic economy will ensure that players in the “essentials” space like education and health for instance will not be hit dramatically. Parents will continue to send their children to school in any circumstance because education of children is one of the most important expenditure in India and so is medication. Sumeet Mehta, CEO, Zee Interactive Learning Systems opines, “Industries that rely on discretionary spends like entertainment, will see a slowdown but luxury goods business should be stable.”
Jayant Kochar, MD, Go Fish Retail Solutions says, “Brands belonging to the luxury segment and those addressing the mass will not be affected by slowdown. Nevertheless, any brand belonging to any category that has a successful business plan and anyone who can execute it well will always succeed. Franchise business model is good for franchisees as long as the brand is good.”
Broking houses such as Enam Securities, Motilal Oswal Securities, India Infoline have started focusing on the franchise model rather than opting for their own branches to reduce investment outlay and yet expand their businesses across the country. As investors have put their investments on hold, wealth management companies like Way2wealth are finding it difficult to win new clients. But these companies are finding innovative methods to come out triumphantly from this situation. Sunil Ramrakhiani, COO, Way2Wealth elucidates, “Equity and mutual fund business, the largest contributors to our revenue is the most affected. Considering the uncertainties of the markets, we took the decision to re-align our product strategy and concentrate on developing our other businesses of insurance, commodities and currency futures trading more aggressively. We see these businesses to grow more rapidly than before, for which we have strengthened our team pan-India and have brought in industry stalwarts as Business Heads for each of these verticals”.
Considering the prevalent market conditions, big ticket retailers are finding it hard to raise resources from capital markets. Retail biggies like Kishore Biyani of Future Group which has traditionally issued a mix of equity and debt to fund expansion would now have to take on more debt to fund expansion. While higher leveraging will increase risk, slower expansion would make growth prospects unexciting. So with seven new stores planned this year, Shoppers’ Stop expects to grow at a faster rate of 50 per cent compared to the previous years when it had growth rates between 30 and 35 per cent. According to Shoppers Stop, Managing Director, B S Nagesh, the real estate cost and employee cost are expected to sober down this year, and that would mean a sharp increase in margins.
Future group’s strategy is to diversify into small convenience store formats called Big Bazaar Express Stores, rural retail venture Aadhar, and home solutions venture Home Town and concentrate mainly on value formats and low-cost models such as Big Bazaar and KB's Fair Price Stores. The firm plans to have a total retail space of 15-16 million sq ft by March 2009 from 11 million sq. ft in FY08 and aims to achieve total revenue of Rs 10,000 crore in the current financial year, up from Rs 6,500 crore in the previous financial year.
Vishal Retail is yet another player which has postponed raising Rs 2 billion through equity to expand retail space to 10 million sq ft by 2011. But to turn its dream into reality even in the current market condition, the company is seriously looking at the franchise route for expansion. Ambeek Khemka, Group President, Vishal Retail reiterates, “Footfalls have reduced as the trend is more towards saving than spending. Expansion through company-owned outlets has currently been put on hold but we are growing the number of stores through the franchise route. We are relocating some of our retail outlets to rationalise on the rentals.” This model will help the retailer to have access to franchisees’ properties for housing its retail stores and the franchisee in turn will get the opportunity of getting a share in the retailer’s revenues. Vishal, which began its franchise model from Indore in Madhya Pradesh, has 9 franchise stores. They plan to open 100 franchise stores by March 2009.
Franchise growth
The panic in the stock market coupled with reports of job cuts has pushed banks as well as consumers into saving mode and taken liquidity out of the system. The finance assistance from the banks has become increasingly scant for the real estate sector and the SMEs who need it all the more. The credit to MSMEs declines to all time low of 8% from a peak of 14% in 2002. Stunned businessmen are now thinking hard on how to trim their operational cost.
Milagrow, a venture catalyst recently conducted a study on ‘Sick MSMEs and Their Rehabilitation’. One of the findings was that 75% SMEs turn sick because of lack of finance and lack of managerial expertise and 53% due to government delays. Rajeev Karwal, founder-director of Milagrow, proposes the franchise model for expansion as it helps a business grow faster than a solely owner-driven business, develops good business equity and is a win-win situation for all the stakeholders.
Moreover there tends to be an inclination towards entrepreneurship especially in the wake of lay-offs. Gautam Sahni, Director, US Dollar Store, advises prospective franchisees that this is the time to cash on for known franchise companies as buying a franchise is less risky than starting a new business.
For many companies expanding is important as they wish to increase their market share and dominance. The current slowdown has seen an increase in the demand for franchising. It is evident from the fact that retail brands are expanding and it is happening mainly through franchisees. In the last 3 months, Zee group has signed up four Zee schools and expect to open 40 more Zee schools and 100 more KidZee pre-schools all over India in 2009 from the current count of 650. Hotspot, the mobility player, which has 500 company-owned outlets, embraced the franchise route this year. The company has already opened 100 stores in this format. Assured returns along with a healthy ROI are attracting prospective franchisees towards the brand, says Mahajan. The company is looking forward to opening 600 additional franchise stores next year.
Most of the retailers believe that franchisees give a significant impetus to growth since they are able to manage their environment more effectively. One such believer is Ramrakhiani of Way2Wealth. He says, “The franchise model is the fastest mode of expansion, driven by entrepreneur instincts. Franchisees are result oriented, build stable businesses, are well aware of balancing expenses and put in their best effort, as their investment is at stake. They understand cost cutting best and implement the idea of productivity best. Our immediate plan includes opening 25 new branches via the franchise model in Chennai, Bangalore and Hyderabad, Surat in the west and Kolkata in the east.”
There was a time when companies believed that they should attempt the franchise model only after their company-owned model stabilizes but it is not the case any more. In view of high real estate cost and liquidity crunch in the market, popular home fashion retail brand Roseby’s launched their very first store in India by appointing a franchisee.
Also on the rise is franchisor’s preference for multiple-store owner franchisees. Dheeraj Gupta, Founder-Director, Jumboking Foods is giving out new franchises only to those who can invest in more than five stores as he believes they are better able to weather ups and downs in the business than single-store operators because they have the advantage of economies of scale. Samir Kuckereja, CEO & MD, Nirulas agrees too. He opines, “Multi-unit franchisees are healthier as they have a long-term perspective on returns on investment”.
Times such as these are a boon for franchise business as many experienced professionals look for opportunities to be more in control of their own destiny. As a result of this, there has been a historic increase in qualified professionals who seriously assess owing a successful and proven franchise, feels Charles A. Parsons II, Director of Crestom International, a company that trains and offers strategies to manage companies profitably.
International brands
Since India is still expected to clock a growth rate of 6-7%, most of the international brands are finding our country attractive as compared to their home markets that are seeing a recession. Yet there is a mixed reaction from international brands. On one hand, we have international companies like Crestcom which is expanding the number of its franchises and Armani went ahead to open their maiden store at Trident Hotel in spite of terror strike but on the other companies like Carrefour are postponing their entry in the country.
To begin with, most of the foreign brands who wish to firm up its retail presence in the country are entering through franchise or license agreement, to have shop-in-shop presence within major chain of multi-brand outlets like Lifestyle, Spencers or Shopper’s Stop.
Crestcom International, which has 10 franchises in India, plans to add ten more in 2009 as Parsons II, Director, International Franchise Development of the company sees the current cycle as an opportunity to assist their clients with proven methods for effectively addressing both competitive and operational skills so they may become even better managed organizations.
Carrefour hypermarket which was supposed to open this year by appointing a master franchisee (in all probability Parsvnath) has put on hold its expansion plans in India for another 3-6 months fearing cold response.
As their current markets is shrinking internationally, if any international brand has the guts to expand and come to India, Susil Dungarwal, Retail & Realty Analyst, Squarefeet management signals this is the right time as currently two major costs - manpower and real estate is affordable. “But they need to evaluate whether the underlying demand for their brand will hold steady before deciding to enter,” alerts Mehta of Kidzee.
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As far as luxury retail is concerned, Dungarwal is of the opinion that as the profile of consumers for this category is not hit that badly by the slowdown, this sector will be stable. A person who wears a Zegna or Rolex will still want the same brand as it is very difficult for the luxury retail shoppers to cut down on their lifestyle brands.
Retail real estate
Retail biggies announced huge expansion plans taking it as a strategy to reach out to maximum people, to break even and achieve economies of scale as soon as possible. This surge led to sky-rocketing rentals in real estate space in the recent past. But undoubtedly, there is an oversupply of malls today. As most of the shopping centres are more successful as an eating joint or a hangout spot and rentals soaring up to Rs 300-600 sq.ft., retailers with paltry sales are unable to sustain. Deepak Parekh, Chairman, HDFC cautions, “There is a need to guard against over-exuberant development”. He adds, “Today, the top eight cities are witnessing a 20 per cent vacancy across 40 million sq. ft of operational malls and in all probability it may rise”.
It is good news for retailers today as the price of real estate space is undergoing a correction. According to Rajneesh Mahajan, director (retail), Cushman & Wakefield, “Retail rentals fell by up to 20% in several markets in July-September quarter, compared to the previous quarter and may fall further in the coming quarters.” Gurgaon, which has many functional malls, saw rentals dip by 9% in three months. Karol Bagh, South Extension and GK in Delhi saw a decline of 5-18%. The rentals slid 20% in Mumbai’s Linking Road and Kemps Corner while it fell by over 10% in Ghatkopar and Vashi. The rentals declined by 13-18% in almost all major locations in Bangalore.
This decline in rentals has been of immese respite for retailers. Sanjay Mahajan, CEO, Hotspot, attributes the profitability of his stores in the present situation largely to the reduced rentals. Clocking 275% growth this year compared to the previous year, Guardian pharmacy is continuing to build two stores per week but certainly negotiating better rates with property owners.
Sandeep Marwah, a Delhi-based property consultant is cheerful in the so called economic slowdown as he is busy globe trotting doing residential deals in London and America and commercial deals in India. He confirms, “Earlier as the property price was high, I used to do fewer deals but the global tension reduced the number of takers for real estate at such exorbitant prices. This has forced the correction to take place and now I am doing business in volumes. Retailers who could not have afforded to be present in prime high streets like Connaught Place and GK M block are seizing the opportunity as they are now finding the reduced rentals within their reach.” Shailesh Chaturvedi, CEO, Tommy Hilfiger, confirms, “We have opened a store in Khan Market last month, which was priced beyond our reach until early this year.”
Retail real estate developers like Unitech, which owns Metro Walk mall at Rohini in west Delhi does not have full retail occupancy despite higher footfalls because of high rentals. Very soon the developer plans to reduce the rentals by about 15 per cent from the present rate of Rs 100-150/sq.ft. To rationalise the plan, the developer may switch to revenue sharing model with 6 to 12 per cent retailers.
Exuding optimism, Pradeep Jain, Chairman, Parsvnath Developers goes on to say that the retail is bound to bounce back and holds media responsible for the present mayhem. He asserts, “There will be no decline in price in his commercial property as lack of quality land has led to increase in the cost of land and construction.
Another development in the real estate is that, several real estate companies have slowed down the pace of capital-intensive projects like malls and shifting their focus to developing mid-income homes, offices or neighbourhood malls with brands that serves the essential category.
New trends
A trend that the retailers are witnessed this season is an increase in the spend pattern of people in tier II and III cities. Chaturvedi, CEO, Tommy Hilfiger confirms, “In the last few months our stores in metros haven’t performed well but surprisingly our stores in B grade towns like Amritsar and Ahmedabad did exceptionally well. So we are weeding out bad shops and certain product line but opening ten stores in the top fifteen cities like Patiala and Jaipur in the coming year.” Spykar Jeans, which largely operates through the franchise model has seen 35% growth quarter on quarter but is presently in consolidation mode. They too have curtailed their expansion plans in the metros but continue to penetrate in tier II and III cities.
Discount retailing is a franchise format that is believed to be a sure shot success in times such as these as mid-income consumers migrate to discount stores/value-priced retailers and wholesale chains. The Loot Store, a discount retailer has seen 15% growth in the case of same store and 100% growth since last year. They plan to roll out more than 100 stores by March ’09 and 200 stores by March 2010. For US Dollar Store too, this year has proven to be good as the number of their franchise stores has grown from about 20 to 60 plus in this year. Gautam Sahni, Director, US Dollar Store says, “We are concentrating on franchise network as far as front end is concerned and making our backend (warehouses systems & procedures) strong enough to aggressively support the same.” Mahajan of Hotspot is not a supporter of a discount model. As he believes, long term success of any store revolves around value, variety and merchandise it has to offer. He says, “Rather than giving discounts, we offer better value deals to our customers. We prefer giving accessories, airtime, movie cards etc. along with selected models, this allows us to cross-sell our products and increase the store profitability and customers are also happy to receive free gifts. By promoting accessories, we are making profits as it is here that maximum margin lies.”
To beat the slowdown, companies are introducing products which are in the lower price point to generate higher sales. For consumers, buying private label products of a retailer turns out to be one-third cheaper. In fact, many customers who found their spending power squeezed took for great value in private labels.
Further, national brands and retailers enjoy 30% margin on private labels compared to 10% margins on branded products. For this reason, retailers having private labels or in-house brands in apparel, food and electronic categories are benefiting immensely in terms of sales. RPG Group’s Spencer’s Daily has seen its sales from private labels jump by as much as 20 per cent compared to the earlier quarter. Obviously in such a scenario, companies are pushing up the production of private labels. According to Salil Nair, COO, Shopper’s Stop, “Besides the right pricing and quality of in-house brands, the fact that they are created for a specific need of the customers, works in their favour.”
Besides shutting at least 10 per cent of their economically unviable stores as part of their cost restructuring, the company is exploring various sub-verticals to generate revenue and new store openings are being postponed temporarily. Spencer’s Retail has allotted as much as 65 per cent of space for its furniture business as they hope to generate about Rs 35-50 lakh a month from Livin Smart, their new private label in furniture. “We are adding 100 per cent more SKUs to the current range as this is a high sale and margin contributor,” Samar Singh Sheikhawat, Vice-President of Spencer’s Retail agrees.
Going forward
Retail industry feels that the present slowdown is more sentimental than real. The concern is more about operational challenges than slowdown. By taking corrective measures for efficient operation of the retail shops, the retail companies are trying to avoid a period of lower growth. The industry is striving that consumer spending does not come down as this may have a negative impact.
As bailout packages by governments, of such magnitude have never happened before Ramrakhiani of Way2Wealth feels it will take at least 6 to 12 months for things to stabilize, consolidate and industry to get back on track. Jay Gupta, MD, The Loot Store begs to differ as he feels the impact on India is marginal and temporary. “Being a huge market and a growing economy this phase will pass soon”, he adds.
We spoke to many industry stalwarts on the best solution they can offer to tide over the present difficult times. Here are some of their views:
Jain of Parsvnath feels government should pump in capital market stabilizing fund to assist entrepreneurs so that the companies don’t result in non-performing assets to the banks. Corrupt machinery and passing 20+ approvals of various laws, licenses and file various returns before starting a retail store are the environmental challenges retailers face today. Retailers may find respite to this problem as Jairam Ramesh, Minister of State for Power and Industries and Commerce, in his address at a recent event said that by 2010, the government will implement GST, which will be a single integrated goods and services tax. Gautam Dutta, CEO, PVR Cinemas is of the opinion that this is just a phase and we need to balance it out. He alludes, “Retailers should take this as an opportunity to contemplate on how well they know their customers, do a feasibility study and repackage their products to attract customers by bundling in more value.” “Persuasive marketing technique, hiring and offering better training to the front line staff and not cutting on advertising can get situation back on track,” suggests Sumit Lal, Director, Ecco Shoes. According to industry experts, in the next two-three years, at least two lakh people would be required by the industry, a major chunk of the jobs being on the shop floor. But retailers will face the real squeeze next year if they are tightfisted on increments. “To bring back the consumers, retailers need to try out some innovative techniques, take a close look at their product mix, which geographies to play in and what price points to offer or craft a customer-insight driven merchandise strategy and create an efficient retail operating platform,” suggests Rajiv Mathur of Akanksha Management Consultancy. Companies launching in India afresh through the franchise model, preference for franchisees interested to open multiple stores, demand for franchise partners in tier II and tier III cities are the trends franchise segment is witnessing. Franchisors are seeking franchisees for lack of money, so Kochar of Go Fish Retail Solutions cautions prospective franchisees to choose their franchisors wisely. With prudent rentals and salaries that are forecasted, franchisees can anticipate good times in the New Year!
As appeared in "FRANCHISE PLUS" on January -February, 2009
As appeared in The Realty plus Magazine January 2009.
The Mighty Rise of the US Dollar Store
US Dollar Stores has emerged as the biggest franchised Single price concept store chain in India promoted by Nanson Overseas Pvt Ltd …. in business since 1999.
US Dollar stores are FRANCHISED also. There are NO MONTHLY ROYALTIES to pay. These stores are very upscale in design and merchandise.
What's the deal with US Dollar stores!
Shoppers are constantly amazed at the exceptional product value they receive at US Dollar Store for a single price tag of Rs. 99*. The look of the merchandise, its quality, and the overall value of the items far surpass that of in any other store.
Today’s consumers are more value conscious than they have been in the past. Their shopping habits have shifted from department stores to discounters and mass merchandisers. Consumers are much more value-oriented which has contributed to the growth of mass merchandise stores. These stores mostly carry fast-moving merchandise which leads to Impulse purchase.
Economic downturns also add to the success of dollar stores across the industry through massive liquidation. When shoppers become more frugal in an unstable economy, discount retailers pick up new customers from all income segments.
In general, dollar stores keep prices low through cost-cutting measures. The long term success of any store revolves around merchandise. When it comes to offering customers quality, value, and variety for Rs. 99 only*, Nanson Overseas believes in the strength of working with their principal suppliers in USA and other countries as partners to grow their respective businesses.
Keys to success - us dollar store biz:
- sell extreme value products (Over 6000 SKUs)
- convenient locations(Over 50 US Dollar Stores PAN India – ranging from metros to tier-III cities.)
- treasure huntexperience, that intangible ‘fun factor' that keeps customers coming back for more….
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Franchise Retail India
Another US Dollar Store 99 opens… Now in Dehradun
Making a total of over 60 Stores – PAN India
US Dollar Store, a popular bargain store in the US, which had made a bow in India in September 2005 through a franchisee route, opened another retail outlet in Dehradun city on the posh Rajpur road. The outlet is franchised retail store. The franchise appointed by Master franchise retail US Dollar Store 99 being M/s Nanson Overseas Pvt Ltd.
In case of Dollar Store 99 a significant percentage of the products sold in the outlets are manufactured in the US, some of them came from countries such as China, UK and Portugal. From India, few export surpluses are sourced.
The stores stock products ranging from cosmetics, chocolates, confectionery and food products, toys, auto accessories and cleaners to healthcare products like sugar free jam, chocolates etc.
While most of the products are sold at Rs 99 * in store per piece, at times two or three pieces are sold for the same price through promotional offers, bringing their unit cost further down.
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As the business volume was substantial, the principals in USA are able to source the products at a very competitive rate. This benefit was passed on to the customers.
US Dollar Store 99 keeps rotating the products depending on consumer feedback and the bargains it could strike with the product manufacturers. While all the stores have the same products across the country, in some stores the volume and range differs depending on consumer needs.
As appeared in www.franchisebusiness.in on 15th December, 2008
As Big Retailers Swoon, Dollar Stores Enjoy Boom
Asmainline retailers throttle down on store openings, us dollar storescontinue to expand, catering to the growing numbers of shoppers lookingto save money on everything from tools to toys to bath supplies.
Dollarstores are one of the few stores right now that are expanding. Theytypically do well when the economy is not going well as everyone islooking for bargain deals. US Dollar Store in India are opt for retailfranchise route for expansion/franchise PAN-India and do selleverything at a fixed price of Rs. 99 in stores.
US Dollar Store 99 is on an expansion tear as well, adding 30 plus new stores so far this year nationwide.
Knownin the retail trade as "super discounters," dollar stores aim toundersell mainstream retailers by stocking leftovers, low-priced housebrands, surplus goods or overruns acquired at sharply discountedwholesale prices. Not to miss the merchandise is procured from variouscountries from America, Canada, Thailand, Europe, UAE, China etc.
As appeared in CNBC TV 18 on 18th October, 2008.
http://www.moneycontrol.com/ PLAY VIDEO
Source : CNBC-TV18
Rupee woes: Will dollar stores maintain Rs 99 tag!
Buying anything and everything for a dollar took the fancy of many in the US. When US dollar stores rolled into India, they tooka life of their own.The attraction of a single price tag and buying into thebig Americandream at just Rs 99 worked well for the aspirational Indian consumer aswell as franchisee Nanson Overseas. CNBC-TV18’s Ruchita Saxena unveil show Nanson Overseas converted its dying export business intoamillion-dollar enterprise.
Here is a transcript of Ruchita Saxena's comments on CNBC-TV18's show Enterprise Inc.
NansonOverseas was a supplier to US dollar stores for nearly 10 years. But in2005, things turned around and they started retailing in India inpartnership with the US dollar stores. It was a time whenexport houseswere hit hard by cheaper Chinese competition and the lure of a Rs99price tag was the only way out.
GautamSahni, Director, Nanson Overseas, says,“When we ventured into dollarstores we never thought it to be such a bigsuccess. Today, a DollarStore is successful primarily because we have a middle-class audienceas our customer. In India, I would say the maximum population is upperand lower middle-class. They are primarily our customers. We are aretail chain that has got some product for everyone. For any ageordemographic group, we have got some product to justify their shoppingneed, and that to at a price of Rs 99 which is impulsive in nature.”
Thatimpulsive shopping is perhaps what’s helped Nanson Overseas build a40-store network across the country in just threeyears. It clocks aturnover of Rs 10 crore and is in neck-to-neck competition with SankalpRetail, Value Stores and My Dollar Store. These two chains arenowslugging it out to clinch the top spot. But Nanson Overseas is stillstruggling to break even and consumers are only too happy to help.
A consumer says, ”We usually come once in a week orfortnight, and pick up all these small things.”
Anotherconsumer says, “The concept seems to begood. The rates seem to bereasonable when you compare it with the conventionalproducts in themarket.”
Evenso, it is becoming increasingly difficult tomaintain the Rs 99 tag. Therupee has depreciated against the dollar. The rental costs areescalating. That means Nanson Overseas will have to review its strategyif it wants to maintain the 25% margin of its franchisees.
So, what can the company do to ensure that customers keep coming!
Sahnisays, “Basically, the strength of a Dollar Store lies again inmerchandise. Today, we have got over 6,000 products available with us.Any store size of say 1,000 sq ft cannot accommodate morethan 600products in terms of variety. So, basically whatever variety onestoreneeds, we have got 10 times of the same variety available withus.So, our key strength is that each and everyone is our customer.Whosoever walks in to our store –from any demographic or any age group– they are ourcustomers, and we are bound to sell them something or theother at a valueprice.”
NansonOverseas is doing that, but only partly. Itis rolling out its newstores in tier-III cities like Bargarh in Orissa and Wokha in Nagaland,places where the lure for imported goods is higher thanmetros. Thisstrategy of expanding to tier-III cities is not only expected tosaveNanson Overseas from higher rental costs at shopping malls in primelocations, but also produce sales per sq ft comparable to any suchoutlet in a metro. An average 1,000 sq ft Dollar Store in a highfootfall area can generate sales as high as Rs 100,000 a day over aweekend. With this kind of money,Nanson Overseas is not many weekendsaway from reaching the 100 store mark.
As Appeared in “FINANCIAL EXPRESS” on May 30, 2008.
Cashing in on consumerism
Prachi Raturi Misra
Imaginebiting into a Chinese dosa in Lucknow, receiving orchids in Patna,slipping into a perfect fitted branded jeans in Meerut or visiting abranded spa in Palakkad.
Actuallyall of this is happening and happening at a break neck speed thanks tobrand consciousness in smaller cities and towns. It’s no longer aboutknowing thelatest trends, it’s also about sporting the latest brands,eating at thehippest restaurants, using the latest beauty products andstudying at bestinstitutes. It’s little surprise then that thefranchise business has taken offin India like never before.
Expertssay the franchise bubble is big and easily not the one to go bust for awhile.So, what is it that is leading to the franchise boom! Gaurav Marya, president, Franchise India, an umbrella organisation of variousfranchise businesses inIndia, is himself surprised at the growth ofthis market.
FranchiseIndia began in 1999. But the last two/ three years have seen thefranchiseebusiness embark on a new growth path altogether. AgreesMarya, “Between 2004and 2007, the franchised business systems grew inthe country by almost 100%,and this proved a positive sign for smallbusiness development in India and thecatalytic role played byfranchising to spur the growth of the system here.”
Today,theaccept ability for franchising is growing by the day and it has afairlywide industry spread. Franchise India estimates show that thatthere areapproximately 1,150 established franchisers, 75,000franchisees with an annual turnover around Rs 12,000 crore. Thebusiness employs around 3.50 lakh persons.
Thoughthe system did exist in India for years, it was at informal, locallevels. For example, a popular pickle maker supplying his pickle toother shops to sell exclusively was a form of franchise business. Butbusiness format franchising truly began in India in 1990s primarilywith home grown like NIIT and Aptech,for example, says Marya, can trulybe regarded as the torch bearers for franchising in India.
Today franchising business is not just better organised, but is also wellreceived,thanks to the growing awareness in consumers. Another important aspect leading to the growth, says Anjali Grewal who headsFranchise Guru, a body that helpspeople get into franchisee business,is the growing aspirations of people toturn into entrepreneurs. “With the growth of retail business in India, the awareness in general hasgrown up. Also, people who always wanted to get into businesses oftheir own but didn’t have the means or awareness are taking thefranchise business route.”
What is also spurring the growth, she says, is growing aspirations ofpeople. Take, forexample, the Live-in brand of jeans that she takescare of, “There are upcomingmalls in every place. Jeans is aspirationalclothing. It makes perfect sense for Live-in to be present in placelike Meerut.”
Whathas also changed, says Gautam Sahni, director, franchise, USDollarStore, is the fact that people’s aspirations have hit a new high.It’sfor the same reason, he says, entrepreneurs are coming up to takefranchises ofa store like theirs. “I’d say we are present in metros butour real business isin Tier II and Tier III towns, where aspirationsare sky high and people wantto buy imported things for their homes.”
It’sa little surprise that they began in 2005 and today have 45stores in 18states. “From Kohima to Shillong to Dharampur to Solan, you nameit andwe are there,” says Sahni.
Andit’snot one category that is growing when it comes to franchisebusiness. There ishorizontal growth across all categories. A pre-schoollike EuroKidsInternational Pvt Ltd, for example, that began franchisingin 2003 today has450 centres across India and they are doing prettywell in smaller places likeRajpura, Jodpur and Patna. These littleplaces today know a hip new way of education, thanks to the growingdisposable incomes.
Andif pre-school education gets the kind of importance that it does, it’slittlesurprise that a brand like Ferns ‘N’ Petals is making it big insay Kanpur, Dehradoon or Patna. Pawan Gadia, vice-president, Ferns ‘N’Petals Group, explains that the franchisee businesses are growing inIndia is because theyare providing budding entrepreneurs with a readybusiness. “See, we are cutting their learning curve. They can beginoperations from day one and with a brandon their side. They haveeverything to gain.”
Shahnaz Husain, one of the pioneers of franchisee businesses in India, ispretty impressed with the growth of the franchise market herself. Sheopened her franchise store in Kolkata way back in 1979. Today her chainof Salons has extended worldwide. Also Shahnaz franchise system is thebasis for other ventures like beauty training institutes, lifestyleshops and signature parlours where they provide both spa and salontreatments. Today Shahnaz Husainhas 300 franchise salons in India, manyof them are in towns like Raipur,Bhatinda, Mathura, Jammu, Silchar,Shillong and Palakkad.
Says Husain, “Today, people are much more aware of global trends, beautyandfashion, thanks to the exposure to media. The world has become a smaller place.There is a high awareness of brand names in small towns,too. Due to the increasing awareness, people in small towns are goingin for treatments that they believe will improve the appearances. Also,purchasing power has increased in smaller towns.”
Infact F&B is a sector that is getting very popular as well. Be itBaskins and Robbins, Pizza Hut or food courts like Club City, you namethe city and theyare there. Sonia Chowdhary, who looks after ClubCity’s franchise business,explains the logic when she says, “Today if abusinessman in Patiala is going out, he wants his family to go to a nice place and to get the right ambience. Also there is more disposable income, so he wouldn’t mind taking them out to a food court.”
Club City, for example, has brands like Club Thai, Club Salad and Dosa Plaza under its umbrella. It’s the ambience of choices, she says, that peoplefind most fascinating. “We are in Patna, Panipat, Ahmedabad and are onlygetting more queries everyday,” she smiles.
As appeared in “FRANCHISE PLUS” on May-June, 2008.
As Appeared in “FINANCIAL EXPRESS” on May 30, 2008.
As US Dollar Store count increases….. Now Saharanpur added.
Saharanpur has its 'US Dollar store' this month where consumers can buy over 10,000 imported items at an attractive price of Rs 99 per item.
"This is a new concept in India and I am sure it will take off in a big way due tothe attractive prices of imported products sold at 'US dollarstore'," Praveen Kumar, customer of the US Dollar Store, said.
Most ofthe products will be coming from America, the rest of the products will be from other nations. "No Indian product will be sold in 'US Dollar store'.
Most ofthe items from USA, UAE, Thailand, China are expected to be different types offood, gifts,toys, etc he said. 'US Dollar store' have a web-based and state-of-the-art point of sale system which would allow the US-based company to monitor the sales at the shop on a real-time basis and supply goods that are in demand.
As appeared in ‘THE ECONOMIC TIMES’ of 24th May’06
Malls flash foreign tag, save shelf space for imports
YAMINI DHALL, TIMES NEWS NETWORK, WEDNESDAY, MAY 24, 2006
NEW DELHI: The ‘Imported’ tag still rules the Indian psyche. The friendly neighbourhood retailer, who supplies the monthly quota of Malaysia-manufactured deodorants, Indonesian chocolates and made-in-China shampoos, has known this for long.
Now, the fact has been factored in by new-age retail shelves. Retail chains, both in fixed budget and niche high-end categories, are reserving more shelf space for specifically ‘not-made-in-India’ merchandise. In most cases, the brand barely matters.
“As long as it is genuinely imported, it’s okay,” says a merchandiser of an agency that picks up imported brands for small retail chains based in New Delhi and Punjab.
“There is a huge craze for imported products, especially in Tier II towns, where access to such products is a problem and buying options are limited. The brand does not really matter, because the general psychology is that the foreign products are superior to the domestic products,” says Vikas Gulaty, director and CEO, Mallz 99.
The retail chain is planning to expand to about 100 outlets in the next three years, has all its merchandise, from dog food to mascara, sourced from all over the world, but India.
“We have buying houses in Turkey, Europe, Japan, China, Indonesia and the US. We have 3,000 products in the portfolio and brands keep on changing. Sometimes, a particular brand does not make it back to our shelves. It depends on the global availability of the products,” he says.
The India-based franchise of One-Dollar stores US DollarStore, has everything shipped via Florida (though it is sourced from all over the world). “About 95% of the products in the stores are imported. The only brand which is made in India is Pepsi,” says Gautam Sahni, director, Nanson Overseas.
The craze for imported products is complimented by a high degree of brand recall, even for the lower-end brands. “It’s astonishing that people are aware of a lot of brands that are available in our stores, even though they have never been advertised here.
And the brand awareness is not just about expensive products. Even lower-end things like Pringle chips and Jack’s cleaner are identified and that creates more demand,” says Mr Sahni.
Similarly, the high-end Dr Morpene’s ‘Tango’ chain of stores and Ebony Retail, have both tied with luxury brands like Mineral Care and Southern Islands for their beauty sections.
“There is a demand for some of the products that our customers have tried during their sojourns abroad and have enough disposable income to try out others, especially in Punjab,” says an official from Ebony.
As Appeared in Franchise News /12th May'2008.
As US Dollar Store count increases….. Now Saharanpur added.
With US Dollar Store opening in Saharanpur shopping will never be the sameagain! No longer does one have to wait for relatives staying abroad to visitthem bearing imported goodies. No longer is an Indian housewife’ experienceinferior to that of her western counterpart. People of Saharnapur can now enjoythe finest of international brands and high quality items at the best bargainprices, ever.
US Dollar Store is committed to consumer to provide the most exciting, valuefor money merchandise thru world class fun stores . Everything sells for Rs. 99in dollar store (http://www.usdollarstore.org/)
US Dollar Store where everything sells for single price/Rs.99 . More than anytime during the past twenty years, consumers want the most for their money.They are tired of paying high prices for fancy names Instead , they want themost for the least. The frequent changes and replenishment of merchandise addto the excitement Shopping at US Dollar Store is akin to a treasure hunt. onenever knows when one hits upon the most unimaginable of deals.
As appeared in The Franchising World March-April,2008 edition.
'As appeared in Etalaat on Thursday, 21st Feb,08'
As appeared in Panchkula Bhaskar on 19th January,2008'
As appeared in “FRANCHISE PLUS” on JANUARRY-FEBUARY, 2008.
As appeared in "FRANCHISING WORLD" on September -October, 2007 .
As appeared in Franchise Plus Nov-Dec, 2005 edition'
US DOLLAR STORES TIES UP WITH INDIA'S NANSON OVERSEAS
Publication: PTI - The Press Trust of India Ltd.
Publication Date: 08-NOV-05
NEW DELHI : Florida-based single price concept chain, US Dollar Store on Tuesday announced its India foray by tying up with New Delhi-based Nanson Overseas Pvt Ltd.
Through the tie-up US Dollar Store will help in bringing international brands and merchandise at the fixed price of Rs 99 (US$2.15), a NOPL statement said here on Tuesday.
"Already franchise agreements have been signed up for a few located market places in North India as first phase expansion plan. Organised Indian retail, although young, is matured for the concept and we are flooded with enquiries from all over the country and are in the process of preliminary scrutiny/analysis," NOPL Director Gautam Sahni said.
The US Dollar Store and its experience in i nternational retailing, will judiciously offer a combination of most attractive and preferred merchandise mix localized to the need of the Indian customers.
Some of the items that would be on offer at those stores include food, bewerages, sweets and candies, babycare, auto accessories and fashion, amongst others, it said.