Launched by Provogue India and taken over by the Apple Group of companies and Vemb Lifestyle, Promart targets small towns in the country by offering discount schemes (from 25 to 60 percent off) throughout the year. Aiming at the youth of the country, the company opened their first store at Ahmedabad in November 2011, and in less than 2 years, the multi-brand retail chain has expanded its presence to more than 40 cities.
Fashion is for everyone, and across demographic segments buying habits and preferences have evolved over time. Promart is a brand for all but focusses mainly on the larger population by default.
According to Punit Agarwal, CEO of the company: “The youth dominates our demography and they adapt, evolve, consume and reject ideas and things quickly and decisively. Hence for Promart, it’s primarily the youth between the age group of 18 and 35 that we are talking and catering to. They are the trendsetters, early adopters, and have more buying power. However, they don’t buy things; they buy what those things can do for them. We are talking to consumers who believe in value for money and who would not mind paying less for the same pair of jeans that provides them the same quality.” “The youth in tier II- IV areas are aspirers who are exposed to the media, which infl uences them to a great extent. At Promart, we take fashion to cities which are untapped by the stand-alone brands. We take these aspirations to places where the demand-supply gap exists” he adds.
The mantra is to find a way of being a “part” of the youth’s life. And if the brand has to fit in the life of the youth, it has to find multiple ways of adding value. With anchor brands such as Pepe, Wrangler, Spykar, Arrow, Mufti, and Puma under one roof, Promart has a wide assortment of offering for the discerning fashion-conscious shopper living in smaller towns and cities. The company claims to have achieved signifi cant growth month-on-month by opening around 50 stores, which are operational across the country.
The journey began with Promart’s first store in Ahmedabad, which already existed when taken over from Provogue. Promart has also entered the franchisee route with the signing of 50 franchisees across Maharashtra, Rajasthan, J&K, Punjab, and Haryana and is already running 5 franchised outlets in cities such as Ludhiana, Jodhpur, Hyderabad, and Nadiad.
“Promart is a value format multibrand 365 days discount retail chain, and in this segment, we have a good market share as the existing retailers are shutting shops. The company has already achieved a break-even and has clocked in a turnover of Rs 70 crore in 2011-12 fiscal,” informs Agarwal.
Expansion and Discount Strategy
From the very beginning, the company has focussed on tier II to IV cities and this is a part of the overall business strategy that Promart has decided on. Small-format stores (average size of 1,000-2,000 sq.ft.) help the company save capex and inventories. Promart is already present in cities such as Mumbai, Ahmedabad, Vadodara, Rajkot, Indore, and Raipur. “The company’s strategy is different from other retail players as we manage inventory on a cash-and-carry model which helps us get the latest stock, colours, and designs from the anchor brands,” states Agarwal.
He feels the company’s USP is not having a warehousing concept where in the goods are directly transferred to the stores from the distribution centre, helping them save on overhead costs. The brand also follows a cluster strategy which further cuts down logistics costs. For instance, if the company is focussing on Gujarat as a market to expand operations, it selects areas in and around that region with opening stores in Ahmedabad, Vadodara, Vapi, Rajkot, etc.
“Our discount offers throughout the year make Promart a good shopping destination for customers. During our end-of-season sale, we offer upto 70 percent discounts. On an average, we have 500 footfalls in each store, with a conversion rate of 60 percent. Since inception we have seen a 72 percent gradual increase in footfalls and the conversions have gone up to 55-60 percent as our brand has grown,” Agarwal maintains. “The company is breaking even at most of our stores and profitable in the rest,” he adds.
According to Agarwal: “With most of the discount retailers in the market, we have seen a trend of resizing the stores and changing the market strategy. Players have shut down unprofitable stores and changed their business strategies.”
He feels that with government’s decision of allowing 51 percent FDI in multi-brand and 100 percent in single-brand retail, the industry will get a boost. “Though it does not impact our business directly, the FDI move will see a double-digit growth, thereby creating more employment opportunities for people in the country. It will take a while for the government to reach a consensus as all the players in the ecosystem, investors, state governments alike will need time to evaluate various nuances and possibilities before the final decision will be taken. This step is in the right direction of strengthening modern retail in India,” he adds.
Market Positioning and Shopping Trends
Promart is positioned as a shopping destination for the non-metros. “Our focus lies in the fashion demands of those living in tier II–IV cities. We cater to the middle class burgeoning segment who wants a fashionable wardrobe at an affordable price. We have apparels for the age bracket of 20-40 years. We also monitor our stores to study the needs of the customers and address them better. For example, our Baroda store houses more denims since it has a footfall of men in the age group of 25-25 more,” Agarwal explains.
With the changing fashion trends, the likes and dislikes of customers also change. “We have observed that the youth falling in the age bracket of 20-30 years prefers Western wear more than Indian ethnic collection.
The office-going crowd also prefers wearing Westerns such as denims with shirts/tops and some even wear formal ensembles. The 40-plus age group tends to go in for non-fitted garments which make them look thinner,” he adds.
According to the company’s observation, earlier people opted for neutral/pastel colours, but with the new revolution of beauty at its best, they are experimenting with varied styles and designs. Louder prints and shades such as neon colours and greens are the new look of the season. Coloured block prints and flowing dresses are the next best thing that customers are opting for. People often want to stand out in the crowd and the mix-n-match/fusion look is the new trend that is fast catching up.
Promart stores display a wide array of collection from merchandise and accessories to footwear. The range of collection includes formal and casual wear, shorts and denims for both men and women, T-shirts, leggings and skirts at a price ranging from Rs 49 to Rs 1,899. “For our customers, the price bracket is not a problem since we provide them their favourite brands at discounts. It is for them to choose from more than 100 brands. At our stores, we have seen a trend of denims being the most popular choice. With walk-ins in the 25-35 age bracket, denims sell like hot cakes. The price point between Rs 800 and Rs 900 is more sought after,” he reveals.
Store Formats and Location
The company has made a strategic decision to have small-format stores within 1,000-2,000 sq.ft. to avoid unnecessary overhead costs and rentals. Every store has select group of human resources who have the market knowledge and expertise. Promart gives them the liberty to select the merchandise mix since they have tested the market and have prior experience.
The stores are designed in a way to keep the maximum floor space available for customer movement. The brands are laid out in such a manner that it is easy for a customer to locate and access a category in which all the related brands are showcased together.
“Opting for the right location is crucial to a business’s success. We are looking at options where target customers can be reached easily. It could be a mall or a high street; we do not plan on the mix specifically. We are looking for stores where we feel the customers can easily travel and shop. Traditionally high streets are preferred over the high-end malls. We do have a shop-in-shop at Mumbai’s Magnet Mall and we are planning on few more if the right proposition comes our way,” states Agarwal.
The company is focussed on regional marketing strategies. “We direct our techniques specifically for the city where we are present in. The idea is to localise the communication according to various regions where consumers can associate themselves with the brand. The messaging will be customised to suit the needs of consumers in different markets. Predominantly, we try to use the print media. This helps establish the brand more strongly than other mediums. For select stores, we also use radio or hoardings,” he maintains.
Promart also has a marketing calendar laid down with months and festivals which helps reaching out to customers during a high-demand season. “We are catering to a very captive audience today and hence below-the-line marketing activity is an important part of our strategy going forward. We plan to focus on consumer engagement activities for in-store consumer interactivity and promotions. We had Shopping ka MahaKumbh, a once-a-year chance to avail upto 70 percent discounts on the brands. For the same, we will look at conducting contests and lucky draws. We also run promotions such as reduced price on a particular purchase level and a price cut on premium products like mobile phones. Celeb visits are a great way to increase footfalls in the store and catch more eyeballs. Also, we distribute fl yers and pamphlets to increase footfalls in all our stores, which helps the brand get better recognition. Our plan is to look at cinema advertising too in the near future,” Agarwal adds.
Social networking plays an important role for the company to connect with the audience at large. So, Promart has an interactive Facebook page and a Twitter account to engage with the customers.
The value format retailing is a relatively new concept, tried and tested by few players who have now become redundant. The franchisees of the previous players had run into losses and made them sceptical on Promart’s credibility. “It was a challenge to convince them of our new business model, we were on a clean up drive to change mindsets. Also, there is a dearth of skilled manpower in India. The Indian retailers have to pay more for retaining manpower, which impacts the bottom-line in retail. Inventory management is also an ordeal. To plan inventory without a warehouse has been a great challenge, though we have been able to manage this front without much diffi culty. Also, the rising real estate costs have affected the rentals. Having said that, business and challenges go hand in hand, and it is a pleasure to overcome them and move ahead in the game,” says Agarwal.
Promart started off with a small team of 5 people and has now grown to a team of more than 100 in just 6 months. By the next year, the company plans to generate more employment and increase the head count to over 750 people.
For the stores, the company strategically places resources based on location and area of operation. Promart sources the talent pool from the local market or attracts prospective employees from similar stores who have a more or less similar business model already present in these places. “We have well-defined manuals for each process, which are shared with each of our stores. Promart offers guidance in all the aspects of retail, IT, visual merchandising, marketing, operations and HR. We monitor the employees at each stage and ensure that the company always stands to achieve customer delight. There are frequent visits and feedback sessions by the area managers and in case of a problem or any loopholes in the system, most matters are sorted almost immediately,” Agarwal informs.
For the franchisees, the company has a franchisee induction programme that helps understand each process of the business. “Our store managers and franchisees have the full liberty to select the designs and colours and merchandise for their store. They operate according to their local needs and preferences, as they know the catchment better. If they feel denims, formal wear/accessories or ethnic wear is more in fashion and would sell more in their region, we give them the liberty to stock the products in excess. They also have the right to buy brands and styles and as per price points saleable which are according to the need and demand in that particular city/region,” he further adds.
With aggressive growth planned for this fiscal, the scale of operation is going to increase; so the company plans to tweak the business model to suit the national presence and take advantage of the large scale of operations in terms of logistics and warehousing.
“Being in the business of fashion, we need to offer our customers updated products across various categories. Private labels help us provide this at times, with which we can achieve better margins compared to other brands and to house fresh merchandise. In terms of sales split, this varies and we make a conscious effort to keep at 10-15 percent. Inhouse brands also help us maintain the price point mix at store, which is very important for smaller towns,” informs Agarwal. Promart retails in-house brands such as Tramorp-Line of formal shirts and trousers for men; Profussion, which is a collection of Indo-Western outfi ts and ensembles for the modern women; and Protees, which is a range of casual wear for the fashion conscious men and women.
Speaking about the brand’s future plans, Agarwal concludes by saying: “After being prevalent in states such as Gujarat, Rajasthan, Uttar Pradesh, Madhya Pradesh, Maharashtra, and Punjab, we will expand to other cities. The company is planning to open 100 stores in calendar year 2013.”