Vedant Fashions, which owns brands like Manyavar, Mohey and Mebaz, plans to double retail floor space to two million square feet in the next few years.
“We are at 1.1 million square feet and in the next few years we are targeting two million square feet,” said Arif Raza, chief, retail business development & projects, Vedant Fashions.
Majority of the company’s EBOs (exclusive brand outlets) are owned and operated by franchisees. The company’s draft red herring prospectus filed with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO) mentions that as of June 30, 2021, it had over 300 franchisees and a total of 537 EBOs (including 55 shop-in-shops and 12 international stores) spread over an aggregate retail floor space of approximately 1.1 million square feet in 207 cities and towns in India and eight cities internationally.
About 90.14 per cent sales was generated by franchisee-owned EBOs in the financial year 2021.
Moreover, 60 per cent of Vedant’s retail area is in Tier-2 and Tier-3 cities while the balance is spread over Tier-1 cities.
Raza said that going forward, too, the company would try to maintain the 60:40 ratio in terms of retail area between Tier 1 and smaller cities and towns.
Next year, the company is planning to add over 100 stores. “In the last one year, we opened 65 stores. But every normal year, we intend to open 100-plus stores. Next year, the budget is for 100-plus stores,” said Raza.
For most companies and categories, smaller towns and cities worked better during the Covid-19 pandemic. Raza said, “The whole disruption taught us that smaller towns and cities have potential and our brand is acceptable.”
While the sales per square feet differs hugely between Tier 1 and the smaller cities, Raza pointed out that the cost in the smaller towns and cities was also much lower. “So, it works,” he said.
The pandemic has also led Vedant to look at data more closely. “We have to be accurate when it comes to merchandising. We cannot have too much of dead stock. We have almost become a tech company now,” said Raza.
Raza also said that the wedding season was panning out well for the company. “In terms of revenues, 2021 is better than 2019,” he said.
The reasons are two mainly: pent-up demand and a move towards organized retail. “We are part of organized retail and could control our vendors, suppliers and staff,” pointed out Raza.
For the smaller and unorganized players, the pandemic was a bigger blow.
For the year ended March 2021, Vedant had revenues of Rs 564.81 crore and net profit Rs 132.90 crore compared to revenues of
Rs 915.54 crore in the previous year and profit of Rs 236.63 crore.