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Trent to Expand in Tier-II, III Cities via Franchises
| May 23, 2008 |  (Be the first to rate this story!) Loading ... |
The delay in opening of malls, closure of retail complexes and surging property rentals, among others, have prompted Trent, the Tata Group’s retail company, to opt for the franchise route to open its Westside chain of department stores in tier II and III cities. Under the franchise deal, Trent will own and provide the stock to the franchises.
Trent has 30 company-owned Westside stores in Mumbai, Delhi, Kolkata, Lucknow, Baroda, among other cities. The stores, which sell womens wear, menswear, kids wear and cutlery, range from 15,000 to 30,000 sq ft each in size.
The company plans to open nearly 30 stores under franchisee route in the next couple of years in smaller cities, such as Allahabad, Patna, Guwahati, Madurai, Aligarh and Jammu. The franchise-run stores will be half the size of the company-owned stores at 8,000 to 12,000 sq ft, a Westside release said.
Neeti Chopra, head of marketing, Trent, said, “The Company will own stores in top 30 cities and open stores under the franchise route in the rest of the cities. The franchise route will help us to overcome the property challenge in these cities and scale up our operations quickly. We will also get the first mover advantage in these cities, which do not have much retail presence,'’ Chopra said.
Trent and franchise holders will share profits from the stores at an agreed percentage. The company is expecting Rs 6 crore to 10 crore sales per store from the franchise stores.
According to retail sector analysts, apart from getting good real estate deals, the franchisee route helps them to overcome issues like having managerial staff in smaller towns, identifying catchments areas, tackling local issues among others.
“With the franchise model, their capital expenditure will come down drastically and make balance sheets leaner,” said Purnendu Kumar of retail consultancy Technopak Advisors.
News Published Under: Real Estate India, Delhi |
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