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Mahindra plans retail blitz with 65 new stores, e-comm integration

Raghavendra Kamath, Business Standard

Mumbai, October 17, 2012

After opening 100 stores in the last four years under ‘Mom & Me’ brand, Mahindra Retail, the low profile retailing arm of of $15.5 billion Mahindra Group, wants to go full steam.

The company, which retails maternity and baby products under ‘Mom & Me’, wants to open 50 stores under that brand, another 15 stores of its toy store Beanstalk in the next five and half months besides integrating e-commerce venture with physical stores and expanding its kidswear category by signing agreements with global brands.

The company has also set up ‘Destination Maternity’ store as a master franchisee of the latter which is based in US.

Besides, the company will also consider setting up franchisee stores in Middle East and Africa for which it has got requests, said its managing director K Venkataraman today.

The idea to integrate online and physical formats will be part of its ‘hub and spoke model’ where it has larger stores of 3,000 to 4,000 sq ft in cities and smaller on the peripheries, and aimed at increasing customer comfort besides saving on real estate costs.

“You can either click at home and collect products at the store after seeing it yourself or click at the store and get the products delivered at home." Venkataram said.

The e-commerce sites will also help stores which are smaller in size, around 2,500 sq ft, which do not have the full range, he added.

When asked about the potential of e-commerce venture, he said: “There is a certain potential of e-commerce venture. We are developing the market first," he said.

Consultants such as Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy, believe that integrating both channels augurs well for the business.

“An offline retailer who has built that relationship with customer has better chance in online venture. You can encourage customers to cross shop across channels," Dutta said.

Besides, the company is also looking to expand its stores via franchisee way. Currently, the chain has two franchisees out of 100 stores is also looking to have 10-15 stores out of the planned 50 stores, he said.

“Cities such as Mumbai and Delhi can take 40 to 50 stores each but due to expensive real estate costs, we need to go slowly," he said. Mahindra Retail has 25 stores in Bangalore.

“Out of 700 cities, top 100 are important for us but we have not decided how many stores we will open in the next three years," he added.

The company which has got Rs 300 crore from the parent till now, looking at revenue of Rs 200 crore this financial year.

Mahindra Retail is looking at concluding licensing pacts with UK apparel brands in kidswear in the next couple of months.

The company is also looking other brands such as Benetton and Jiny & Jony to expand its kidswear segment, Venkataraman said. Mahindra already has exclusive agreement with US-based Disney and Fisher Price of Mattel.

“Till July last year, we had only private lables but we realized that older kids need more products and brands. We would like to add more brands," he said.

Third Eyesight’s Dutta believes there is enough headroom in the segment given that there are not many brands in the segment and consumers want more choice.

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