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1-India Family Mart: A big deal in small towns

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Delhi-based Nysaa Retail Pvt. Ltd, which operates a chain of value retail stores under the brand name 1-India Family Mart across Eastern and Northern India, has stepped up its expansion plans. The fastest growing value retail chain in India plans to invest Rs 200 crore and open around 100 stores in the next fiscal.

1-India Family Mart has been consistently proving its mettle as one of the fastest growing value retail chains by providing affordable fresh fashion and general merchandise to its large customer base in Tier II and III cities. With its inception in 2013 and a vision to address the need of 75 percent of the population that resides in the small towns and cities of India, 1-India Family Mart looks to expand and accumulate around 12 lakh sq. ft. of retail space by 2020.

In an exclusive interview with IMAGES Retail, JP Shukla, Co-founder and CEO of 1-India Family Mart, talks about the thought behind starting his brand, the work that goes in catering to a small town, lower middle class audience and the company’s plans for the future.

Tell us about 1-India Family Mart.

1-India Family Mart started in 2013. Th e major motive behind this brand is to cater to a lower income group and be present in B, C and D towns. Currently, we have 66 stores and they are majorly in C and D towns. It’s not that we don’t want to come up with A and B towns, but C and D towns are our primary focus areas, coming up to B in later stages. Initially we were more present in eastern UP – we are there 12 districts of Bihar and 8 districts of Jharkhand, we have a store in Chhattisgarh and we’re coming up in 2 more there. We have a store in Uttarakhand and we are planning to expand to the Northeast as well, before the Puja season starts. The initial idea is to cover prominent districts – UP, Bihar, Jharkhand, Assam and Chhattisgarh. We are planning on expanding to 100 stores in these districts in the next two years and then we will think of expanding to other districts in the periphery.

We’ve already opened 66 stores in FY 2017-18. We plan to be 80 store-strong before Diwali 2018 and by the end of 2018, we aim to hit the 100 store mark. Stores can vary between 7,000 – 10,000 sq.ft. with the average store size being 8,000 sq.ft.

We specialize in apparel for men, women and kids, which makes up 80 percent of our business. Apart from this we have lifestyle products, accessories, home furnishings and household products that give us the other 20 percent of our revenue.

What’s your location strategy?

Since we cater to the lower middle class category, we try and open stores in areas which already have some footfall. We try and enter markets where we are first or second movers at the most. We try and give people some sort of an experience in these places – more than just shopping.

Take for example our store in a remote place in UP called Balrampur. Our store is – believe it or not – the only recreational centre there. People come to our store at the end of the day to relax and we are trying to build on this experience by creating activities around special days like Valentine’s Day. The ticket size is very small here.

Who’s your target audience and in this TG, how important is customer satisfaction in each group?

Our target audience is lower middle class, whose average monthly take home is between Rs 5,000 to Rs 25,000.

It’s very important – as important as when you would be targeting a high income group. We train our staff to ensure that our customers are a pampered lot and we were one of the first retailers to train our retail associates to look after all needs of consumers. Shoppers in C and D towns are a more confused lot, so they probably need more convincing and indulging than others in A towns to come and shop.

What are the marketing strategies that you need to employ to bring in consumers?

We do everything we need to do – from door-to-door pamphlets, targeted ads in print media, lucky draws, automobile pastings, hoardings. Ultimately, our marketing is not a very costly affair as compared to A towns or B towns, so we try and bombard the customer from all possible mediums. One of our most effective marketing campaigns has been scratch coupons which provide cashback – we activate this whenever there is a dull season and we find that this has done very well for us.

Tell us about your business model. How does your supply chain work?

The concept of ‘Value Retail’ has been successfully cracked by 1-India Family Mart by catering to the aspirational and pocket-friendly requirement of the buyers, bringing high street designs at affordable prices for the multitude.

As far as work goes, we have a centralized sourcing model. We source from different manufacturers throughout India. All the material finally gets accumulated at our central warehouse which is in Gurgaon and then shipped to our stores with the aid of a fleet which we have contracted.

Since we have a huge vendor base – almost 600 – which creates lines for us every day, we don’t even have to worry about outdated fashion as everything is already updated. These vendors are creating, innovating and finding the latest trends in the trade and then supply to us. We create visibility of their products through our stores in a short period of 40-45 days.

What’s your pricing strategy?

We work on an open costing model with the vendors, wherein the vendor has to present his costing and we price our products accordingly so that the vendor gets his share and we make a profit too.

Our business is purely price driven – not driven by fashion aspirations, hence we’re very conscious about pricing. We need to study data and figure out which are the best price points to sell our products at.

Internet penetration has increased in Tier III & IV towns giving them access to clothes via e-commerce. How do you counter the heavy discounting e-tailers have to offer?

To be precise, even if you look at established markets of the world, the e-commerce penetration is not beyond 4-5 percent. India has a long way to go. Aside from that, India is not India, it is actually Bharat and the periphery which we target, and Internet is still not very widespread, so Internet shopping will come 15-20 years down the line. So, we really don’t have much to worry about in terms of online competition for now.

How much are you planning on investing in your business over the next year?

We have recently raised close to US$ 7 million from Carpediem Advisors Pvt. Ltd – the company’s first and only external funding round since it was founded – and the majority of this money will go towards expansion. Apart from the 50 new stores that we are eyeing, we want to invest in technology, CRM, warehousing and store front training.

What kind of technology are you thinking of investing in?

I heard a lot of about social media and the importance of engaging people at the India Fashion Forum 2018. While net connectivity is low, everyone is certainly on Facebook and Whatsapp in the regions that we cater to and we want to invest in campaigns on both these mediums to engage audience.

Tell us about your CRM.

We already have more than 20 lakh registered customers. In as far as CRM goes, the main task is figuring out what these consumer’s need, what they are buying and offer them personalized services, so we can serve them better. This is the kind of technology I want to invest in.

Currently, 1-India Family Mart works to analyse data insights accumulated from our customer’s buying habits and trends. These insights then give way to a unique growth strategy by anticipating the fashion and lifestyle changes required by their consumers. So far, we have already implemented this in 35 stores and aim to further gain competitive insights regarding our customers’ frequency of visits, buying behavior, instant preferences and repetitions via Big Data.

We also don’t have a loyalty program as of yet, but we are looking to start one this year certainly.

How much revenue are you targeting in the next one year?

We closed FY2017-18 at Rs 250 crore and we are hoping to touch a top line of Rs 500 crore in net revenue by 2019. More stores have translated into significantly higher revenue, which has grown at a steady clip and 1-India Family Mart has been profitable for three years running.

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