 "Kabir Lumba")
With consumers showing an affinity for products with discounted price tags, retailers have been feeling the heat from the tightening of purse strings. Kabir Lumba, managing director of Lifestyle International, a part of the Dubai-based Landmark Group, talks about his plans to keep operations lean as he works to keep sales growth intact. Edited excerpts from a chat with Antonita Madonna:
How has Lifestyle weathered the downturn in consumer spending?
The festive season wasn't very tepid. It was slower than expected but not all that bad. You cannot judge the consumption story over what happened in one quarter. During the sale, things were better than expected, so there is a shift towards buying more when there are discounts. At an industry level, too, retailers have been growing at single digits.
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The slowdown was mostly in the latter half of the year, do you expect that to continue?
The first half was good and the third quarter was slower than expected but the January quarter has been better. We started our end of season sale a week before, last year, so that helped. But unless India's image improves, the sentiment won't. If investments don't pick up, the situation cannot improve. If GDP growth does not pick up, it will have an impact on consumption. If the image or perception of India does not improve in the meantime, investments won't come and consumption won't lift. My estimate is, if sentiments improve in the next three to four months, it will be okay.
Do you have a Plan B or will you choose to wait it out?
We can't control macro-economic fundamentals but can surely control our business. We are looking at leaner operations, and specifically, maintaining an optimal headcount. We encourage the staff to multitask to grow their career and income, rather than hire a sea of people that will take everybody down. We have 8,000 people at the front-end of Lifestyle.
Where else would you cut costs?
On the marketing side, all of us are aware that costs are high, while there are challenges in the market. So, we have to work backwards and be prudent. Our marketing spend is lower than 5 per cent of revenues, while we ensure we don't underinvest.
We've grown at about 35 per cent over the last five years and our verticals have recorded a double digit like to like growth this year.
What is Lifestyle's revenue expectations?
Company-wide, we expect to end our year at close to Rs 4,000 crore this time. We aim to grow this revenue at 20-25 per cent year on year and keep the momentum. Three years from now, we should be able to achieve a topline of between Rs 7,000 and 8,000 crore across Lifestyle, Home Centre and Max.
How much does each of your brands contribute to the topline?
Lifestyle is our department store, Home Centre our home offering and Max our value brand. Of the three, Max is seeing tremendous traction with growth of over 50 per cent. Of course, it is on a lower base, but we expect it to close with over Rs 1,000 crore this fiscal.
Home Centre deals with a very difficult category. The rupee's fluctuation puts pressure on us as most of the goods are imported. Having said that, we expect the vertical to clock about Rs 400 crore this year. With rise in new home-buyers, there is a lot left to secure from the unorganised sector.
In Lifestyle, we do not depend excessively on imports. Lifestyle contributes about Rs 2,300 crore. Max will open 20-25 stores every year, Lifestyle will open about six stores and Home Centre about two-three stores.
