Mumbai: Dabur India Ltd is known as a producer of ayurvedic herbal and food items. And it does not want this middle-segment image to be transposed on its retail foray.
The company has laid out the blueprint for its new business under its subsidiary H&B Stores Ltdand has reworked several strategies it had envisaged earlier. It now plans to open 160 stores by 2010 as against 120 planned originally. The company had earlier envisaged an investment of Rs140 crore for the project but now it says the investment will likely go up.
The project is likely to be funded through internal accruals and debt. H&B Stores Ltd is also thinking of venturing into markets outside India where Dabur has its presence. The stores, with sizes ranging between 1,500 sq. ft and 6,000 sq. ft, will have an international look and brand identity, which will be significantly different from that of Dabur’s.
“These will not be Dabur stores. Dabur is only a promoter. We will negotiate with Dabur on margins and display the same way we will do it with HUL (Hindustan Unilever Ltd) or P&G (Procter & Gamble),” said Peter Baker, chief executive officer, H&B Stores Ltd.
The company is in the process of finalizing the brand identity and it has engaged a consortium of Indian and foreign consultants for this.
The first store will open in January 2008 and the company is seeking advice from real estate consultants Cushman & Wakefield and Jones Lang LaSalle Meghraj for store locations. The company has also had a rethink on its original plan of opening stores in malls. “We will now open more stores in high street and residential areas and fewer outlets in malls due to increase in rentals and also to gain wider reach,” said Baker.
Private labels will constitute around 20% of the stores’ total merchandise while the rest will be international and Indian products ranging from general merchandise to personal care and pharmacy.
And this is where the Dabur association might come in handy. According to the Retailers Association of India (RAI), health, beauty and wellness is a Rs1,500 crore segment and contributes only 3-4% to the total organized market but is growing rapidly at 40% annually.
“Dabur will have the first-mover advantage since they will offer personal care products with advisory services and by offering these value-added services, they should be able to attract merchandise from rivals companies in the consumer product space,” said Gibson Vedamani, chief executive officer of RAI.
Staffing is also an issue, given the rush into organized retail, with the country’s biggest business houses either already operating in this space or planning to enter it in the near future. In order to retain talent, Dabur is planning to give equity to top managers in a range of 15-20% in the next three to five years.
“A retailer needs to work out ways to retain talent and stock options is one of them,”added Baker.