Spotting a big demand gap in small towns, textile and apparel major Raymond is looking to spread its presence into such markets and expects up to 10 percent like-to-like sales growth from this initiative, a senior company official has said.
“We had conducted a study last year and identified at least 1,200 urban townships with a population of over 50,000. We have no presence in at least 800 of those towns,” Mohit Dhanjal, Retail Director Raymond told PTI.
“We are looking to set up mini Raymond shops in these tier IV, V and VI towns, through an asset-light franchisee model,” he was further quoted by PTI as saying.
He said typically, it would cost Rs 50-60 lakh to set up a mini Raymond shop, and the company has tied up with local investors for this. He expects these stores can generate a revenue of Rs 1 crore each.
In the past two months, the company has set up about 40 mini Raymond shops, and will open another 60 stores by the end of 2018, he added.
The company has chosen small format stores as these towns do not require large stores that need higher investment.
“Larger stores of about 2,500 sqft require Rs 1.5-2 crore investment, and generate average income of above Rs 2 crore,” he told PTI.
Raymond operates about 767 stores, mostly under franchise model in 416 towns, and is also present in about 3,500 multi-brand stores.
The company expects an uptick in sales through its retail outlets in the current quarter, as well as the next quarter, with a spurt in demand, Dhanjal said.