Zudio the new engine driving retail giant Trent's revenue growth

Retail giant Trent, best known for its Westside apparel stores in India, has a new growth engine. That is the apparel chain Zudio. Launched three years ago by Trent, which is owned by the Tata group, Zudio now contributes 13 per cent to Trent’s overall revenue, say retail analysts tracking the company. 

It is likely to touch 20 per cent in terms of topline contribution (for Trent) in the next few quarters, they say, at a time when a consumption slowdown is pushing consumers to cut back on spending.

Westside, on the other hand, which currently contributes around 85-86 per cent to Trent’s topline, will see revenue contribution pare to about 79-80 per cent in the coming months, experts said. While the rise of Zudio, said industry sources, is linked in part with Trent’s need to reduce dependence on Westside, the retailer has also put building blocks in place to ensure Zudio continues growing in good and bad times.

However, officials at Trent were not immediately available for comments. For one, Zudio remains a value brand within the Trent portfolio, with merchandise priced affordably and led completely by private labels, says Arvind Singhal, chairman of Technopak. In contrast, he says, Westside is a mid-priced brand, targeting a mature audience in cities. Zara, which is part of the joint venture Inditex Trent, is targeted at the brand-conscious.

“There is a clear price and consumer segmentation with Trent’s retail offerings,” Singhal says. “Zudio is also being pushed into tier-II and III markets where Westside may not be able to go,” he says. Industry sources that Zudio’s traction has been high on the ground, prompting Trent to fast-forward its store additions in the last few quarters. 

In the first nine months of financial year 2019-20 (FY20), Trent is estimated to have added 60 Zudio stores, taking its total outlet count to 100, said Aliasgar Shakir, research analyst at brokerage Motilal Oswal.

This is faster than Westside’s rollout of new stores in the same period, Shakir said, which stands at around 25 outlets. Also, Zudio has avoided malls and shopping centres, choosing to have a standalone store presence at inexpensive locations. 

No merchandise is priced above Rs 1,000, sources in the know said, with 50 per cent of the apparels within Zudio stores available for Rs 500 and below (a piece), lower than competitor Max’s pricing strategy. Max is the value retail chain promoted by the Dubai-based Landmark group.