CityKart Retail Pvt Ltd – one of India’s largest value retailers – founded in January 2016 and since then there has been no looking back. The brand, which focuses on family fashion retail in Tier II and smaller towns of Uttar Pradesh, Bihar, Jharkhand, Odisha, West Bengal and the Northeast, currently operates 29 stores in 5 states and 25 cities across India.
Helmed by Sudhanshu Agarwal, the company’s Founder and Chief Executive Officer, CityKart is slowly yet gradually organising India’s unorganised fashion retail.
Making Fashion Accessible
Unlike many large retailers who focus heavily on grocery, CityKart focuses on family fashion retail through its affordable and value for money products addressing all age group.
“At CityKart the products are nominally priced between Rs 99-1,499,” Agarwal reveals.
About 80-85 percent of the company’s revenue comes from apparel and its primary target audience is the lower middle class.
“A shift towards organised retail, improved business models, changing demographics, and rising per capita income has cemented our trust in serving this TG and geography. Even after being the most populous part of the country, Tier II and III cities and towns are highly under-penetrated in terms of organised retail. Basically, these are the places where people have newly increased purchasing power and aspire for a shopping experience,” states Agarwal.
“At CityKart, we have witnessed a definite shift of consumers from unorganised to organised retail, and we are confident about serving this segment,” he adds.
With an average store size of 8,000-10,000 sq. ft., the brand focuses on high-street locations, typically targeting locations at the start or end of the main market street of the city.
Currently, the brand has no plans to go online. “We are currently not focused on the e-commerce aspect but may look at including it over next few years depending on our customers’ requirements and depending on what infrastructure permits,” states Agarwal.
In addition to catering to under-tapped retail consumers, CityKart is increasing their profits by optimising and chasing the right business model.
Over the last few years, CityKart has retooled its business models after a decade of learning. With an increased focus on improving store economics, the brand has found its strength in its inventory management. The company has also invested in a best-in-class Management Information System (MIS) that keeps rigorous control over stock and highlights the critical areas related to sales and stock numbers.
Elaborating on this, Agarwal says, “We are currently deploying an ERP System which is completely end-to-end integrated: from POS to Inventory Management, Store Operations, Financials Controls etc. We are also using Customer Loyalty application as well, and other applications aimed at reducing manual intervention and increasing efficiency and loss management. Apart from this, we are working to develop more applications as per our growing requirements.”
This increased focus on perfecting the technology and business has even led to the company’s continuous growth. The company is growing at a CAGR of 30-40 percent and closed its last financial year with a turnover of around Rs 200 crore.
According to Agarwal” “With an expectation to grow by 50 percent in the current fiscal year, the brand is envisaging 12 new stores this year.”
The brand is targeting 150 plus stores in next five years and looking forward to venture deeper into the present territories, as well as enter into adjacent markets like Madhya Pradesh and Chhattisgarh.
“As for now we are not planning on testing international waters, but we may in later years target markets with similar tastes to our home territories – e.g. Nepal,” says Agarwal.
The brand, which is targeting Rs 320 plus crore of net revenue for FY 2018-2019, has been experiencing flat same store sales growth for the last few years on account of economic issues and competition. It is targeting 10-15 percent same store sales growth in the current financial year on the back of economic growth and also on account of focus on small towns.
“The entire garments market in India is expected to be around US$ 60 billion currently, of which no more than 5 percent has moved towards organised retail, in comparison to developed economies where this proportion could be as high as 60 percent. We believe that the share of organized retail could easily double to 10 percent over the next few years. Given our focus on territories and cities where the penetration of organised retail is no more than 1 or 2 percent, we believe that we could easily maintain growth rates of 30-40 percent per annum for the next several years,” concludes Agarwal.