There are many factors that have contributed to the success of Raymond but one of its key strengths, which has played a strong role in it becoming the fashion powerhouse as it is today, is the company’s successful yet fastest roll out of a new retail business format of The Raymond Shop (TRS) called the Mini TRS stores for the emerging Tier IV and V markets.
Mapping the success from its first Mini TRS store launched in Bihta, near Patna, in the month of March 2017 to clocking a rapid count of 100 stores in the next 12 months, the company has come a long way with its 200th outlet launched in October 2018.
In an exclusive interview with IMAGES Retail, Mohit Dhanjal, Director Retail, Raymond Limited shares insights into the success of the brand. He says, “Raymond has always kept its customers at the heart of its strategy and brought it by leveraging the entrepreneurial spirit of its channel partners. This is the success formula behind our rapid growth with the Mini TRS stores.”
As Mohit shares, this format has also created entrepreneurs which were not from the business of fashion but ventured into the field because of the strong Raymond brand equity and proven retail legacy. He also talks about how this franchising partnership has been beneficial for the company and the concept behind addressing the growth in Tier IV and V markets. Excerpts from the exclusive interview…
Tell us about the progress made through TRS retail journey under your mentorship?
Raymond offers complete solutions to a men’s wardrobe from fabric to readymade garments to custom tailoring. For over nine decades, the brand 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 by Raymond.
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 the Raymond store on 3 pillars: firstly, 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. Secondly, consistent desire to be the best in class in terms of the products and services. Thirdly, the success of our channel partners, which is a mainly franchise-led network.
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 and turned that challenge into the positive opportunity through relentless passion and grit.
TRS has thought beyond Tier I, II and III towns for new growth opportunity. Tell us about this different retail strategy and what were the challenges faced while setting up an organized setup in these markets?
An early realisation of creating partnerships with entrepreneurs has helped Raymond in the roll out of a strong franchise network across emerging markets and building marquee brand presence in these towns. We believe that this focus on potential emerging markets, strong partnerships, early mover advantage, stringent retail processes and quality control along with a customer centric approach will take Raymond 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 and 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 and III markets. For next level of retail expansion Raymond felt a need to evolve and develop new retail business model with right consumer proposition for the emerging Tier IV and V towns.
Based on its 60 years of experience retail and in-depth study of over 100 outlets in Tier IV and V markets; in September 2016 Raymond piloted a new business model internally referred to as Mini TRS (The Raymond Shop) which was then perfected over 6 months and commercially launched in March 2017. The first Mini TRS opened in March in Bihta (Bihar). Since then, over 200 TRS stores have been rolled out in last 19 months.
From the first store in Bihta, near Patna (March 2017) to 100 stores 12 months later; and now after opening our 200th outlet in October 2018, (seven months since we launched the 100th store) we are on the cusp of achieving our ambitious goal of launching 300 stores in 2 years’ time. Our team is truly setting new milestones in the retail fashion industry.
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 necessary fuel to make the business highly profitable in these emerging markets. The agile design and modular interiors ensure that the stores are set up within 15 days instead of regular 45 days. Taking into the account the challenge in availability of retail inventory in these towns, the store size has been optimized to 600-1200 sq.ft. vis-à-vis the average 2,500 sq.ft.
Tell us about the number of towns identified for this innovative retail concept? What are the key 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 past 19 months – a fastest retail store rollout in men’s fashion and 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 and asset-lite business model which paved the way for the brand to enter in to these emerging towns of India, which hit her to 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 is 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 percent of the stores 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 Omnichannel capability, through which the customers can access a curated range of products from our online webstore – Raymond Next. All the stores are connected through an interactive kiosk located in the store. In case a customer wants a product that is not available at the store, he can access our webstore and select the product from this curated range. He may then choose to get the product delivered either at the store or at his desired address.
What kind of convergence with Raymond’s vision and values does a franchisee have to meet for qualifying for the Mini TRS concept?
More than transactional relationship the company strongly believes in an ethic based relationship with its franchisees. It abides by its 5 cultural pillars.
The 1st pillar is Transparency in dealing and 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 build in such a manner that the brand par-takes in the setup investment. This ensures that both the franchisee 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 organisation. Commitments made are honoured 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.
Can you decode the distribution model and how this will be work for Mini TRS?
Raymond already has an extensive distribution network through direct and indirect channels such as agents, distributor and wholesaler networks that service over 15,000 outlets across the country. These direct and indirect channels of distribution provides 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.
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 1,200 sq.ft. with a minimum frontage of 15 ft and investment of upto Rs 50 lakh (interiors: Rs 20 to Rs 25 lakh and inventory: Rs 20 to Rs 25 lakh).
How would you evaluate the franchisee role and break-even for his investments?
The essence of the partnership is an entrepreneurial mindset and passion towards Retail Business. Our team works along with our Franchise partners on detailed profitability model with store P&Ls/ Business targets which are 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 and store team on retailing principles, emerging trends, product training and visual merchandising keeping it relevant for franchisee and customers.
What is the kind of support that the company is going to provide its franchisee which 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 emerging markets and towns 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 builds 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 mantra for growth that we internally refer to as 5Gs of growth. These are Competitive Growth (faster than the competition); Profitable Growth (+ve EBITA); Sustainable Growth (continuous year on year); Inclusive Growth (Company and Franchise partners) and Experiential Growth (enhancing customer experience). This 5G growth leads to exponential growth for Raymond.
What are your expansion plans?
Our ambition is to bring alive the Raymond brand immersive experience across all towns of India through our rallying cry #HarSheharMeinRaymond.