V-Mart Retail Plans On Adopting Online-Offline Business Strategy

Value fashion and lifestyle product retailer V-Mart Retail, after its successful stint in the cluster-based business model, is reportedly planning on adopting an online-offline strategy with new stores and a warehouse, as the company looks at investing $13.7 Mn (INR 100 Cr) in next fiscal.

“We are considering an omnichannel (online-offline) strategy, and plan to get into online retail to reach our customers. It may happen by end of next year,” media quoted V-Mart Retail chairman and managing director Lalit Agarwal as saying.

2002-launched V-Mart claims to have a chain of 186 stores across 153 cities in 15 states and union territories in India, and has a strength of 5868 employees. The retail — which sells clothes, accessories, footwear and everyday staples — follows a cluster-based business model, particularly focussed on tier II and tier III geographies.

“We are looking at setting up a new warehouse to service our stores. It will come up in Uttar Pradesh or Bihar,” Agarwal said. About 75% of V-Mart stores are located in Uttar Pradesh, Uttarakhand, Jharkhand and Bihar.

The brand has a central warehouse of 2.2 lakh sq. ft. in Bilaspur, Haryana, from where all products are distributed through a mix of market placement and company-owned vehicles.

It has further set a target to invest $41 Mn (INR 300 Cr) to double store count and treble its turnover to $482 Mn (INR 3,500 Cr) as the company plans on adding more than 200 stores in the next five years to create a network of 400 outlets. In 2017-18, the company reported a revenue of over $165 Mn (INR 1,200 Cr).

Retailers’ Shift To Omnichannel Retail

It has been observed that as many online retailers are shifting to omnichannel retail with a focus on physical stores.

Reliance Industries Limited earlier announced to foray into the ecommerce segment with a hybrid online-offline model. Reliance Retail opened 3,500 stores last year and aims add 4,000 more this year. Also, its 7,500 stores witnessed some 350 Mn footfall last year.  Apart from Reliance and V-Mart, Kishore Biyani’s Future Group is also working on a similar hybrid model, Tathastu, under its Retail 3.0 plan.

According to reports, the Indian ecommerce logged a total revenue of $25 Bn in 2017, which is projected to grow at 20.2% a year to hit $52 Bn by 2022. The existing players, Flipkart owns 31.9% market share in Indian ecommerce space, followed by 31.1% by Amazon. Also, Paytm Mall is moving ahead to grab the third spot quite aggressively.

In April 2018, Bloomberg report quoting a Jeffries brokerage report stating that the stock-market performance of V-Mart Retail made the company the world’s best-performing department stores chain this year, as its shares rose 10-fold since it began trading in February 2013.

A recent report quoted Agarwal saying that online medium provides the company with an opportunity to leverage its geographical spread in servicing customer needs using both online and in-store mediums.