V2 Retail. Inspired by
Bharat's millennial consumer
The answer is that theglobal realities faster than one may realize. For instanceincreasing digitization arguably the most dramatic of technology inflections of thelast few decades - is being driven by millennial engineers. Millennials are moreknowledge-driven that their predecessors. They are quicker in embracing technologies. Theyare better connected with global trends. They are usually decided in their choices. Mostof their decisions are influenced by the social media. They increasingly buy online. Theyare more brand-conscious. They are more experiential-driven than thrifty. They like toappraise a wider choice before purchase. They are more impatient with a growing focus onnow' than later'.
Interestingly India sits at the centre of this global millennial phenomenon for anumber of reasons. India's median age of 28 years makes it effectively a millennial-drivennation. The country comprises possibly the largest millennial population in the world.Nearly 80% of the country's millennials are connected with a digital device of some kind.Millennials account for a large third of India's population nearly half of the country'sworking age population and nearly 71% of India's total household income. More than 50% ofthe incremental income earned by India's millennials (after essentials) is directedtowards eating out apparel and entertainment while only around 10% of their incrementalincome is saved.
This millennial revolution has kickstarted three inflection points.
The first inflection is that of price-value. The consumer of the past was driven by theprospect of buying products cheapest; the modern-day millennial-mindset consumer seeksproducts around the best price-value proposition. This may sound like a small shift inconsumer preference; it has in reality kickstarted a large number of superior products andservices towards an unprecedented growth journey.
The second inflection is of differentiation. A larger number of consumers seekdifferent experiences. For the millennial-mindset consumers normal is boring. They needto buy into differentiated products and services. They are increasingly willing to spendmore for them. One area where we are seeing a complete transformation is in the area ofapparel purchases where today's purchase is driven less by the functional and more by thefashionable. Wardrobes are being churned faster fashion cycles are shorteningpromotion-driven fashion weeks have increased the fashion designer community hassubstantially increased and the number of times people buy apparel has increased from acouple of times a year to around once every couple of months.
The third inflection is digitalisation. The world' has been captured in the palmof one's hand. Money has evolved from paper to virtual. Stores are open' round theclock. Product varieties have become virtually endless. Stores commute' toconsumers.
The convergence of these inflections has disrupted the world threatening the sluggishbut energizing the nimble.
At V2 Retail we perceive these developments as attractive opportunities. In the lastfew years we completely transformed our business model with the objective to capitalizeand in some cases establish a first mover's advantage.
We are addressing the sectoral opportunity by presenting a wide assortment of productsin India's organized retail. We are offering a choice that addresses the aspirationalneeds of Bharat's consumers. We are providing the consumer with far more reasons to spendmore and live better.
We have strengthened our differentiation through a superior price-value positionextending far beyond the sabse sasta' positioning. At our company the differencestarts from our store design the friendliness the engagement quality and our offeringsmix compromising a larger proportion of non-food (especially apparel). The result is thatV2 Retail is shifting the needle from quality products to holistically superiorexperiences.
What provides me with optimism is the passion at V2 Retail. This is an organizationwith a new and younger management team. This is an organization that possesses theself-confidence to perpetually question itself. This is an organization that keeps askingWhy not?' when coming to new initiatives. This is an organization with a relativelyde-layered organisational structure making it quicker to communicate. This is anorganization where if we have to fail we would prefer to fail fast and move on. This thenis an organisation with a distinctive workplace excitement. This passion translated intostronger fundamentals during the year under review. The Company incurred a one-timeexpense of around Rs 26 crore on account of Corporate Debt Restructuring impactingmargins. The Company has virtually no competition in India's organized retail sector inaddressing the lower middle-class. The inventory days is expected to moderate in comingfinancial year. To this encouraging reality we bring the prospect of quicker storerollout: the Company launched 15 stores in 2016-17 12 in 2017-18 28 in 2018-19 and aprojected addition of 25 in the current financial year - without debt that shouldtranslate into a corresponding area of 0.3 million square feet or 33 per cent of our totalretail area by the close of FY20. At V2 Retail we see a vast under-addressed market thatis making our business model increasingly relevant. We face exciting days ahead and Iwelcome you to stay invested in that journey.
Ram Chandra Agarwal