Mumbai: Indian retail firms, reeling under a demand slowdown and rising costs, are eyeing the low capital-intensive accessories segment to lure consumers towards smaller purchases, industry officials say.
Top retail firms such as Raymond Ltd, Aditya Birla Nuvo and Titan Industries are expanding small format stores and offering a line up of accessories either exclusively, or in addition to their core offerings.
“Premium retailing is affected quite badly, especially the non accessories business, accessories is doing relatively better, as they are typically at lower price points,” said Anand Raghuraman, partner and director at the Boston Consulting Group.
Apparel major Raymond is planning a five-fold expansion of its retail chain that sells only its accessories such as ties, cufflinks, belts, and handkerchiefs in the next six months, while Provogue India is looking at an eyewear tie-up.
“We already have ten stores... and within the next six months we plan to open 50 more stores,” said Shreyas Joshi, president of its unit Raymond Apparel, which sells the popular brands Park Avenue, Parx, Manzoni and Raymond.
“These will be small sized stores which will be located in the airports and malls, basically high traffic areas selling accessories for all our brands,” Joshi told Reuters.
Aditya Birla Nuvo hopes to use accessories to lure reluctant consumers to its luxury chain “The Collective.”
“We believe that (in) the economically challenged times the consumer instead of purchasing a complete suit may decide to update their wardrobe with accessories,” said George Santacroce, chief executive, “The Collective.”
“The other reason is in a concept such as ours, the consumer sometimes before buying apparel often decides to first buy an international brand in the accessories category,” he added.
But it is not just apparel retailers who feel the need to diversify product offerings to attract customers.
Titan Industries one of India’s top watch and jewellery makers is expanding its ‘Fastrack´ stores to more than 50 in FY10, from just two now, its managing director Bhaskar Bhat told Reuters last week.
The Fastrack stores will sell sunglasses, belts, bags and wallets, in addition to its core offering of watches and jewellery, he said.
Lower costs, higher revenue
“We understand that the current scenario is slightly difficult..and so we have to go where the consumer is going,” Raymonds’ Joshi said.
“These are small stores having 100-250 square feet carpet area so investment and viability are much better...the whole idea is to bank in on the impulsive nature of the purchases.”
Raymond’s accessories business contributes about 10% to its overall revenues, and Joshi hopes to maintain a growth rate of 30% in sales of accessories even in fiscal year 2010.
Stores under Aditya Birla’s Collective format retail 70% apparel products and the rest are accessories.
“Acessories is slightly larger than what we planned. We originally planned accessories to be 20% but the success of accessories has been very strong so we are expanding it,” Aditya Birla Nuvo’s Santacroce said.
Softening real estate rentals, a key cost component for retailers has also fuelled expansion plans. Titan’s Bhat said rentals have fallen 10-15% on an average and expects further reduction in the near term.