British retailer Marks and Spencer Group Plc (M&S), which operates in India through a joint venture with Mukesh Ambani-promoted Reliance Retail Ltd, is developing an alternative model for expansion in India. The company has opened five pilot standalone beauty and lingerie stores in India and plans to open one more in March.
In an interview, Venu Nair, managing director of Marks & Spencer Reliance India, talks about the expansion plans for the company, the increased focus on beauty and lingerie products and the expectations from the Indian market. Edited excerpts:
How big is Marks and Spencer in India?
We are essentially a departmental store for the family and we are a retailer for the middle class. That’s our positioning and that’s the segment of population we target. We have 56 stores in 27 cities. We have five standalone beauty and lingerie stores (two in Bengaluru, one each in Jaipur, Mumbai and Kolkata) and that is a special format. It’s a concept which we are trying out only in India.
We will open one more store in Lucknow. The reason to do standalone beauty and lingerie is to grow faster in the category because there is a lot of opportunity in that segment. We are offering a more private environment for the ladies to shop. The plan is to open six stores and based on the learnings from that, we will take a view on how we can roll it out. Rest all are full line stores where we have menswear, womenswear, lingerie and beauty and kidswear, depending on the space.
How has been the growth in these categories?
All these categories have seen double digit growth. Menswear and womenswear are obviously the larger ones. Being one of the few international brands in the women’s western wear space, we offer the latest fashion and style and which we have adapted slightly for India. We launch the same collections as in the rest of the world at same price and at pretty much the same time but in India, we offer a lot more colour and print. India loves colour. If we have two colours in the UK, we would have five or six in India. Secondly, we do a lot more print in India than we do in other markets. We have also adapted for the seasons in India.
How has the joint venture with Reliance Retail worked out for you?
We were at just Rs280-290 crore in revenue five years ago or in the year ending March 2012. Since the inception of this joint venture, we have always had double digit like-to-like growth. The JV has worked extremely well for us. In the last 18 months, growth has also come from online platforms. We launched our brand on Myntra first, then Ajio and we have launched with Amazon this week. We have three platforms where we trade online. Online is very new to us in India.
Which are your strongest markets?
The big cities are the strongest. That also has to do with the fact that we have more stores in these cities. We have 10 stores in Delhi and nine in Mumbai. Those two are the big markets. Apart from these, Bengaluru, Chennai and Hyderabad are strong. We have two stores in Kolkata and we would like to do more. We have also gone into cities like Guwahati, Amritsar, Ludhiana and each of these markets has done very well.
What potential do you see in India?
India will continue to be a big and one of the most important markets for us. India has the highest number of stores outside the UK. With India growing at close to 7%, a population of 1-1.2 billion, a sizeable chunk of consumers under the age of 35 years and the disposable income continuously growing, we expect to grow at a similar pace. India is one of the top five sourcing hubs for us globally. 30% of M&S clothing products sold in India are sourced from India. Plus, India is the only country where we have airport stores.
What are your revenue targets?
I can’t share the target but it’s fairly aggressive. Over the last seven years, we have been earnings before interest, tax, depreciation and amortization positive. At a PBT (profit before tax) level, we have made a loss but most of it is because we have opened new stores. Last year (FY16), our sales were up by 17% and this year (FY17), the sales grew by 21% in the first half. Post demonetization, the first two-three weeks were slow but after that, we are pretty much on track. We haven’t seen a big change.
How has the Indian consumer changed over the years?
Holiday has become a big segment here. By holiday, I mean the range of swimwear and beachwear across men, women and kids. Two years ago, we hardly had any holiday segment. People are travelling a lot more. Shorts (for men and women) is another category which wasn’t there three years ago. Men are wearing a lot more colour now