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Mahindra Group plans to rejig retail business, may open stores outside India

Sagar Malviya, The Economic Times

Mumbai, October 18, 2012

Mahindra Group plans to rejig its retail business by changing the product mix at its stores with more apparels, expanding aggressively through franchisee stores and even setting up stores abroad.

"We might look at apparel centric mother and kids store," K Venkataraman, MD of Mahindra Retail, said. He said the company plans to increase the share of apparel in the total merchandise at its ‘Mom & Me’ stores to 60% from 40% now.

Mom & Me caters to children and expecting and new mothers across categories such as baby food, strollers, toys and apparel. Mahindra Retail also owns toys chain Beanstalk.

So far, the Rs 200-crore company has been selling apparels mostly through its own private labels along with some of its exclusive licensee brands such as Disney and Fisher-Price. It recently started stocking kids brands such as Benetton and Puma in their stores and plans to bring a few international brands in the country.

That’s because apparel offers almost double the margins compared to other merchandise such as toys and baby products. The product mix change will reflect in almost half their stores, said the company.

"This move will surely increase the viability of their stores," Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said. "But women’s wear is fashion driven and it requires more planning in merchandising and stocking needs to be appropriate compared to other products within the segment. Hence, the risk also increases," he added.

In India, brands such as Lilliput, Gini & Jony, Catmoss and Benetton Kids account for nearly two-fifth of the total organised children’s apparel market worth Rs 3,000 crore. However, there is an influx of international brands in the segment since last year. Tommy Hilfiger, Zara Kids, Benetton Kids, Disney Mothercare, Chicco and Burberry Kids have steadily increasing their presence nationally and even in smaller towns.

Mahindra Retail plans to bring local entrepreneurship into play as it charts an ambitious expansion plan that will cover several small towns.

The car-to-creche retailer, which launched its first store in 2009, plans to add around 50 outlets, including franchisee stores, to its existing network of 100 Mom & Me stores. Mahindra Retail is also looking at some proposals to take Mom & Me to South Asia and Africa, Venkataraman said.

"It is something that we are considering actively but we have no clear-cut plans now," he added. He said Mahindra Retail plans to remain focused on specialty formats and has no plans to enter crowded retail segments such as food and grocery. Experts too feel that specialty retail with a razor sharp focus is generally more viable in the long run.

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