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This year is Going to be the Year of the EBOs for us

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After establishing the brand in the minds of the consumers through an effective advertising campaign Lavie the lifestyle brand from Bagzone Lifestyle Pvt. Ltd., is looking to expand exponentially through exclusive brand outlets pan India. Today Lavie stands at a total number of 300 points of sale with 9 being exclusive outlets. The aim is to position Lavie as a daily high fashion brand. Nivedita Jayaram Pawar spoke to the man spearheading this growth – Sandeep Goenka, COO, Bagzone Lifestyle Pvt. Ltd.

Lavie launched in 2010. What are some of the milestones so far?

It has been a slow but very promising journey. We consciously took a slow base to be able to understand the consumer better. The vision was to be a complete women’s accessories brand. So we started with handbags and gradually went to ladies footwear. The response has been very encouraging. In the handbag segment we have been seeing very good growth and traction. This year we are growing at the rate of 70 per cent. Lavie contributes to 15-20 per cent to the overall Bagzone business. That’s good considering the ticket size of handbag is much lower than luggage.

In the art leather (synthetic leather) segment you are one of the highest priced among your competitors. Has price been a hindrance in the growth?

Our range starts at Rs 800 for a wallet and goes up to Rs 7000 for a laptop bag. But the price point that has suited us the most is between Rs 2800-3500. But what we have realised is that if you give the consumer the right quality, fitment, ornamentation and styling they don’t hesitate to buy. We have seen a very favourable response on the price point. Indian consumer is value conscious – if they see value in the product they will buy it.

The year 2011-2012 was all about gaining traction among your channel partners and consumers. What’s the focus currently?

Now it’s all about expanding our points of sale. Today we are almost the number one or number two players among our channel partners. That’s been a big milestone. Now we are heading towards strengthening our EBO count. Today we own and operate nine exclusive Lavie stores. By the end of 2014 we are looking at a store count of 20 at an investment of around Rs 20 crores.

We have realised that though the consumer is well aware of Lavie it’s not possible to present the brand in its entirety in a MBO. There isn’t much you can do with just four feet wall space. An EBO will give a true insight into the brand, present options, variety and the strength of the brand. This year is going to be the year of the EBO for us.

What about e- commerce?

e- commerce is where the young generation is headed towards. Brick and mortar took its own sweet time with challenges like retail infrastructure, presence, etc. But for e- commerce all you need is a back-end office. Sitting in Bangalore you can reach out to consumers in Bareilly, Jamshedpur, etc. You can also offer a larger variety without worrying about space and rentals. We feel e- commerce will be an important platform for expansion. Apart from our own website and we also retail from popular e- commerce sites like Jabong, Myntra and Flipkart.

What percentage does e- commerce contribute to the kitty?

Currently it’s quite low at 5-6 per cent. It’s too early as we started only this year. We do hope that by the end of the year e- commerce should reach 8-10 per cent.

What’s the turnover?

Lavie currently has a turnover of Rs 50 crs. We are looking at closing the year with Rs 75 crs. Estimated turnover for next 3 years is to be Rs 200 cr and by the next 5 years, Lavie is expected to have an annual turnover of next Rs 500 crs.

In your years of operation what have you learnt about the Indian consumer?

There have been many learnings. When it comes to handbags, the Indian consumer wants organisation. She prefers a top zipper, a divider and multiple compartments inside. Though they are very aware of the latest styles and trends they want it to be customised according to their needs. In the footwear segment Indian women prefer flats. But within that style they want nice ornamentation, comfort, utility, style and variety. Actually India has the largest variety in flat footwear.

Internationally in Europe, United States and Middle East pumps, wedges and peep toes above 3-4 inches rule. The standard heel height that’s popular among Indians is between 1.5-2.5 inches. Anything beyond that becomes party wear. That was the biggest learning for us.

Please tell us something more about a typical Lavie store – investment, size, location, etc

A typical Lavie store is spread over 400-600 sq ft carpet area. This is the apt size to give the complete brand experience. We are not a Zara or a Marks & Spencer and so we don’t need large spaces. In terms of location we prefer both high streets as well as malls. Typically a Lavie store would need investment of Rs 40 lakhs.

Are you looking at the franchisee model?

Right now we own and operate all the exclusive brand stores. But in the near future we are open to the franchisee option as well.

What about your foray in the eyewear segment? When is that due?

The whole vision of Lavie is to be a complete accessories brand. So after gaining some traction in the handbag and footwear segment we will be looking at entering the eyewear segment. But we don’t believe in rushing into it. We do feel our bread and butter will remain bags and footwear.

What are some of the challenges in this segment?

Currently we import over 90 per cent of our products from China. Local manufacturing hasn’t taken up as yet. So there are no good manufacturing facilities in terms of organised factories. Basic raw materials are also not available. It’s still being operated from unorganised unit in places like Dharavi and Madanpura in Mumbai. Setting up well equipped local manufacturing units will reduce the cycle time to reach consumers with newer styles and designs.

What next?

We are looking at gaining more business for Lavie with the right EBOs and e- commerce. We want to go deeper in to the footwear business as we see more opportunity there, bigger than the handbag business. But it’s also more challenging. The first two seasons gave us huge learnings. We are currently working on it.

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