Raymond to Continue its Growth Journey with #HarSheharMeinRaymond Motto
In conversation with Franchise India, Mohit Dhanjal, Director-retail, Raymond Limited, speaks about the journey, retail strategies and future plans of Raymond Limited.
“The team took the challenge of opening 300 stores in two year while our past annual average was only 25 stores. The team worked round the clock & turned that challenge into the positive opportunity through relentless passion & grit” says Mohit Dhanjal, Director Retail, Raymond Limited.
Tell us about the progress made through TRS’ retail journey under your mentorship?
Raymond offers complete solutions to men’s wardrobe from fabric to readymade apparels to custom tailoring. For over 9 decades it continues to be one of the leading premium retailers in India aspired by all generations. With the introduction of new product categories in the recent past including performance enhancing fabric such as the Techno-Smart series, the all-Natural Linen collection, Shoes to fit every occasion and feet, leveraging new age technology such as 3D printing for accessions, to the latest introduction of Khadi
My role is to imbibe the essence of #CustomerFirst in other words ‘Keeping customer at heart of everything’ that we do at Retail. We are building Raymond store on 3 pillars: firstly, consistent desire to be the best in class in terms of the products & services. Secondly, connect with the customers and how customers trust the brand. We are ranked as number one brand in terms of quality and trust in India. Thirdly, the success of our channel partners, which is a mainly franchise-led network.
TRS has thought beyond this with Tier I, II and III, Tell us about this different retail strategy and what were the challenges faced while setting up an organized setup in these markets?
An early realization of creating partnerships with entrepreneurs has helped Raymond in the rollout of a strong franchise network across emerging markets with building marquee brand presence in these towns. We believe that this focus on potential emerging markets, strong partnership, early mover advantage, stringent product quality parameters and customer-centric approach will take it to newer heights.
The key to the company’s successful yet fastest roll-out of stores is in its Agile Business Model which takes into account the consumer nuisances & market dynamics. As early as in 2008 the company realized the importance of emerging markets beyond Tier I. Between 2009-14 the company gradually expanded its retail presence to cover all Tier II & III markets. For the next level of retail expansion, Raymond felt a need to evolve & develop a new retail business model with right consumer proposition for the emerging Tier IV & V towns.
Based on its deep knowledge and of over 30 years in retail, in September 2016 Raymond piloted a new format which was then perfected over 6 months and commercially launched in March 2017. The first Mini TRS opened on 25th March in Bihta (Bihar). Since then, over 200 TRS’s have been rolled out in the last 18 months.
From the 1st store in Bihta, Patna (March 2017) to 100 stores 12 months later, and now we are at the cusp of opening our 200th outlet by end of Oct (7 months since we launched the 100th store)… this team is truly setting new milestones in Retail says Mohit Dhanjal.
Tell us about the business model of the Mini TRS shops.
Our business model is rooted in our Entrepreneurial franchise model that is proven and has evolved successfully over the years.
The new Asset- lite model requires an investment less than 1/3rd of a regular TRS which provides the necessary fuel to make the business highly profitable in these emerging markets. The Agile design & modular interiors ensure that the stores are set up within 45 days instead of regular 90 days. Taking into the account the challenge in the availability of retail inventory in these towns, the store size has been optimized to 600-1200sq.ft. vis-à-vis the average 2500 sq.ft.
Tell us about the research that went into Mini TRS before rolling out in emerging markets?
With urbanization, the emergence of over 1200 new urban towns, having a population above 50k show a potential to support The Raymond Shop (TRS). Having its presence in over 400 of these towns, Raymond felt a need to evolve and develop new retail format with right consumer proposition for the remaining ones.
With a presence of over 100 stores in Class 4 & 5, we took the opportunity to develop a deeper understanding of consumer and trade for scaling up our presence in these emerging markets of India. Back in Sep’16, basis our experience of having operated in similar markets we developed a new business model suit exclusively for class 4 & 5 towns. We piloted our new business model which was then perfected over 6 months & commercially launched in March’17. The first Mini TRS opened on 25th March in Bihta (Bihar). Since then, over 200 Mini TRS’s have been rolled out in the past 18 months.
In this VUCA world, we have leveraged the local knowledge & expertise of entrepreneurial franchisees with a growth mindset. The Mini TRS represents brand Raymond in these new emerging towns and acts as beacons of modern retail for these markets.
Basis census 2011 we have identified over 800 potential urban towns across India.
How many stores have been rolled out till now? What’s the formula behind the success of this format within a short span of time?
With this new business model we have rolled out over 200 stores in the past 18 months – the fastest retail store rollout in Men’s Fashion & Lifestyle category. With these new additions, Raymond is now present in over 500 towns – again a first for any apparel brand in the country.
The success formula has been 2-fold. First, the new agile & asset-lite business model which paved the way for the brand to enter into these emerging towns of India, which hitherto were inaccessible.
Second, the new business model was then brought alive by associating with like-minded franchisees in these potential towns by leveraging their market knowledge, hands-on operations and adherence to the business framework.
What are the growth percentage and revenue figures in the last one year and how much are you expecting in the next fiscal?
These stores continue to add incremental revenue and income to the company since they have opened in completely new markets and towns. Over 90% of the store opened have exceeded our expectations in revenue generation.
Is there an Omnichannel approach to this model in these micro markets? Are these stores digitally connected?
Mini TRS also has an integrated digital Omni-channel capability, through which the customers can access a curated range of products from our online web store – Raymond Next. All the stores are connected to the interactive kiosk …
Has online retail’s popularity enabled your plans for these micro markets or has it proved to be a hurdle?
The online market has surely helped us in our retail expansion plans:
- Increased aspirational levels of customers due to the high decibel media campaign
- Improved consumption basket by increasing the frequency of purchase across various product categories
How is the brand planning the growth within a particular city for Mini TRS for a healthy financial performance?
Mini TRS Business model proves to be the most promising one for emerging markets that are driven by the external factors like growing aspirations, the democratization of information, media exposure, young demographics, rising spending power and improving lifestyle standards.
We identify white spaces in existing cities by mapping all potential markets with defined catchment that can sustain our retail model. We then shortlist our franchise partner and location that is ideal for the concept.
Can you decode the distribution model and how this will work for Mini TRS?
Raymond already has an extensive distribution network through direct and indirect channels such as agents, distributor & wholesaler networks that service over 15,000 outlets across the country. These direct & indirect channels of distribution provide us the platform to reach the emerging towns with right product mix and faster turnaround time.
The only way that any organization can reach out to such markets in a relevant and engaging manner is also through franchising. At Raymond, the essence of creating partnerships with entrepreneurs in such markets was understood very early and that has helped the brand create very strong and engaged channel partners.
What kind of convergence with Raymond’s vision & values a franchisee has to meet for qualifying for the Mini TRS concept?
More than transactional relationship the company strongly believes in Ethic based relationship with its franchisees. It abides by its 5 cultural pillars.
The 1st Pillar is Transparency in dealing & interacting with people internally and externally. The brand has a transparent policy framework with standard and unbiased terms of trade for each channel type. The 2nd Pillar is Collaboration which is epitomized through ‘I am with you in this’. The franchise model is built in such a manner that the brand par-takes in the setup investment. This ensures that both the franchise and the franchiser have common interests in making the business relationship work. The 3rd Pillar is Meritocracy wherein it rewards and recognizes the franchisees on the basis of performance across 5 levels such as Total Value contribution, driving the Growth agenda, Customer Satisfaction levels at the store, Engagement through its Raymond Reward program (CRM) and initiatives taken in bringing alive the brand in their catchment markets through the LSM platform. The fourth Pillar is Personal Accountability - each employee is empowered to take decisions which are in the interest of customers and organization. Commitments made are honored and if there is a delay in action, the team will keep the stakeholders informed of such delays. And, the 5th Pillar is Bias for Action. If something that is not right quick action is taken on it or it is reported to the right team so that they may set it right. Opportunities are grasped and Gaps are addressed.
If somebody has to opt for a franchise for the Mini TRS stores; what are the parameters that Raymond would look for in a potential franchisee?
In addition to the above, the franchisee should have a suitable retail space ranging from 600 sq.ft. to 1200 sq.ft. with a minimum frontage of - 15ft and Investment up to Rs 50 lac (Interiors - ₹20-₹25 Lakhs & Inventory - ₹20-₹25 Lakhs)
How would you evaluate the franchisee role and break-even for his investments?
The essence of the partnership is an entrepreneurial mindset, passion towards Retail Business. Our team works along with our Franchise partners on detailed profitability model with Store P&Ls / Business targets which gets monitored on a continuous basis by our Area Managers. The catchment plans are then worked out to drive footfalls through sustained calendar activations for the stores. The team trains the franchisee & store team on retailing principle, trends, product training and visual merchandising keeping it relevant for franchisee and customers.
Such innovative Mini TRS concept would also need innovative product planning? How has the company looked at an affordable and interesting product mix for Tier IV and V markets? Is there anything exclusive in the product basket only catering to the Mini TRS stores?
The Raymond Shop continues to evolve as a one-stop shop for all the needs of a menswear wardrobe — all products and accessories, for all occasions, all services from custom tailored to ready-mades. We have an extensive range from Rs. 150 per meter to Rs 3, 00,000 per suit length. Raymond is the only brand in the world that has a product portfolio of 2000x price-point that provide us flexibility in curating a product portfolio for our Mini TRS from over 50,000 SKUs. This is a competitive advantage that helps us cater to the varied customer needs & market dynamics.
What is the kind of support that the company is going to provide its franchisee who takes on the Mini TRS concept?
We work with like-minded entrepreneurs, who have the right attitude for customer service and have a growth mindset to partner for retail expansion.
The key to its success lies with the conduct of engagement and training programmes that we provide on various subjects pertinent to modern retail like product training, customer relationship management, staff development, visual merchandising and operations, apart from evolving product portfolio that ensures the product offering is in line with the changing consumer preferences and requirements.
We actively engage with our franchise partners where their knowledge of their markets is leveraged through science and technology provided by Raymond to activate the brand in the local catchment and delivery superior last mile service delivery.
What innovative retail strategies have you lined up for the future?
Mini TRS will continue to provide the immersive Raymond retail experience across all formats and cities to its discerning customer. The key levers are ‘Single view of customer’ irrespective of which channel, city and store they shop in. ‘Think Global. Act Local’ brought alive by our empowering our store managers, franchisee and area managers.
Every franchisee is supported by an Area Manager who build local calendarized activation and marketing plans for each outlet depending on the local festivals as well as key talking points. Through a cooperative marketing pool, the activation calendar is implemented through the local franchisee and store so that they may leverage their local knowledge to maximize the efficiency of all such activities.
While there are broad brand guard-rails available, each city/ market develops and drives activations and promotions that are best suited for its market and customers
What is the kind of turnovers that the retail division is aiming in the years to come?
In retail, we have the mantra for growth that we internally refer to as 5Gs of growth. These are Competitive Growth (faster than the competition); Profitable Growth (+ve EBIT); Sustainable Growth (continuous year on year); Inclusive Growth (Company and Franchise partners) & Experiential Growth (enhancing customer experience). This 5G growth leads to exponential growth for Raymond.
Our ambition is to bring alive the Raymond brand-immersive experience across all towns of India through our rallying cry #HarSheharMeinRaymond. Integral to India’s growth story.