The shifting paradigm of Indian retail has afforded the opportunity to Cantabil to revamp itself for an evolving market. Although well known for its deep discounting strategy, the brand is now looking to create a new image in the minds of consumers and increase revenue. Other than this, Cantabil aims to open around 75 stores each year which will be a mixture of company-owned and franchisee outlets.
Retail industry in India took a long time to spread and develop and it took even longer for the consumers in the country to get comfortable with organised retail segment. From the very beginning, Indian consumers have been going to traditional kirana or departmental stores for their clothing needs, and it was only a few years back that they started shifting towards retail brands.
According to a study by Technopak, the Indian retail market was worth Rs. 41,66,500 crore (US $ 641 billion) in 2016 and is expected to reach Rs. 1,02,50,500 crore (US $ 1,576 billion) by 2026, growing at a CAGR of 10 per cent. And the fashion retail market which is worth Rs. 2,97,091 crore (US $ 46 billion), will grow at a promising CAGR of 9.7 per cent to reach Rs. 7,48,398 crore (US $ 115 billion) by 2026. However, the awareness about fashion brands and acceptance and adaptation for them among consumers did not just come over time, but took a number of measures and strategies by the retail brands across the country to break the wall.
Since pricing has been one of the major factors for Indian consumers from the very beginning, deep discounting strategy is what the organised retail adapted to get closer to them. And Cantabil is one such brand which acquainted with its consumer group as a discount-oriented firm, made a place for itself in a competitive market and is now slowly moving away from the discounting strategy.
No more discounting
Cantabil initiated with the business of designing, manufacturing, branding and retailing of apparel in 2000 and today has an assortment of products in menswear, womenswear, kidswear and also accessories segment. “While men’s category has the largest share wherein we offer both casualwear and formalwear, and the product basket ranges from jackets, T-shirts to denims, trousers, sweatshirts, etc., womenswear range under the brand Crozo including mostly westernwear is gaining traction over time. We also have a kidswear brand called Lil Potatoes and accessories range under Kaneston. Menswear contributes to about 80 per cent of the total revenue generated,” informs Deepak Bansal, Director, Cantabil.
The brand caters to middle-class consumers who like their fashion game to be minimal and subtle. Cantabil launches two collections annually – Autumn/Winter and Spring/Summer and ‘merges the ongoing trend with the brand’s concept to offer fashion trends in minimal sense’ for its target consumer base. The average ticket size at Cantabil remains around Rs. 3,400 till October and tends to increase further during the winter season.
The brand was offering its target audience discounts up to 80 per cent throughout the season during the 2011-12 period, which according to the management was because of the slowdown in the retail market. However, moving away from deep discounting strategy, Cantabil will offer a maximum of 20 per cent discount on regular days of the year and up to 60 per cent during the end of season sale. “We are trying to move away from this strategy and change this perception in shoppers’ mind in order to gain new consumers and increase revenue.
Offering such discounts lets consumers cast it out on the quality aspect of the product and the company is being hampered by such deep discounts. The step will help enhance the belief of the consumer on the product and simultaneously the profit of the company will also improve. Selling a product in deep discount lets consumers have apprehensions in mind about the quality,” maintains Deepak. Cantabil clocked a revenue of Rs. 290 crore in the financial year 2018-19 and is aiming to grow the numbers by more than 30 per cent reaching Rs. 390 crore in the current fiscal. The brand maintained that the revenue target will be achieved by the new stores.
Cantabil started majorly with its manufacturing process and then entered the retail side of the business. There was a time when the firm used to manufacture for brands like Raymond, Benetton, Splash, among others. Moving forward and expanding the retail business, Cantabil stopped supplying to outside brands and now manufactures only for the in-house brands to fulfil the needs and demands of its own range of brands. “We have a state-of-the-art manufacturing facility equipped with CAD-based designing and cutting systems, automatic cutting machines, loop making machines, quality check systems, specialised sewing machines and elaborate pressing machines, etc., for suits and blazers, shirts, trousers and the likes,” asserted Deepak.
He further added “A major part of womenswear range is also produced at our manufacturing unit. We source kidswear and knitwear from outside and also a percentage of menswear and womenswear range. These are mostly outsourced from vendors across India. Fabrics too are majorly sourced from Indian mills; however few specialised fabrics like terry are imported from China. We are planning to source few of the products from Bangladesh in the times to come because of the duty benefits. Currently, India is our preferable sourcing destination since the transport cost within India would be comparatively less and also sourcing from other countries requires ordering in big quantity. Right now, we have a set-up in Delhi and we keep increasing it according to our needs and most of our requirement is met by the local vendors.”
While it is easier to outsource what can be manufactured in-house, it does require going deep into the details in order to maintain the design aesthetics of the brand since the process of manufacturing and interpreting the same design could be different for two different manufacturing units. According to Cantabil, the design aesthetics are maintained by keeping in mind that the quality of the products meet the AQL of the brand and are not compromised at any stage. Deepak avers, “The proportions may vary depending upon the function of the product and its market. Different inspection levels will command different parameters of samples to inspect, hence the quality checks are monitored in three levels namely initial, mid and final inspection.”
Furthermore, the brand prides in having an in-house design team who analyse various fashion trends with the help of forecasting engines online and offline to come up with the right trend. Deepak adds, “Conceptualisation is one of the imperative fashion design stages that helps the designers develop a theme based on the trends of colour, trims, fabrics, etc. The mood board helps the designers create the theme for the range or collection. The inspirational board is helpful in drawing the final theme. The role of design department is significant as they help in design conceptualisation. They ensure identifying the right fabric in order to enhance the appeal of the silhouette by providing functionality and cost-effectiveness and also right trims, colour palette, etc.”
Approvals on merchandise are given in accordance with the following quality standards:
Critical Defects:These are defects when accepted could harm users. Such defects are unacceptable. Critical defects are defined as 0% AQL.
Major Defects:Defects usually not acceptable by the end users, as they are likely to result in failure. The AQL for major defects is 2.5%.
Minor Defects:Defects not likely to reduce materially the usability of the product for its intended purpose but those differ from specified standards; some end users will still buy such products. The AQL for minor defects is 4%.
Presently, with a retail presence of 270 stores in around 16 states, Cantabil is aiming to open 75 stores on year-on-year basis and the focus area for the brand would be Tier-3 regions. The stores will be a mix of company-owned and franchisee outlets and Cantabil will invest around Rs. 15 crore in order to carry out the expansion drive. While the company owns few exclusive stores for its womenswear and kidswear brands, it majorly retails all its product range at Cantabil stores only.
Cantabil has been in the market for years now and already has had a good presence in the bigger markets including Delhi-NCR and other Tier-1 cities. Moving forward, it is targeting Tier-2 and beyond regions for a better market familiarity and brand presence. “The company is targeting Tier-3 cities now as the business viability in these locations is very good. Major expansion will be carried out in Haryana and Punjab, UP, Rajasthan, MP, etc. There is no competition in the smaller towns, the rentals are less and the business is very good as compared to the rentals. Profitability is also very high. Earlier, we were not present in Tier-3 cities because of the conception that these areas do not have purchasing power and that notion is breaking now. When we entered the Tier-3 market, it drove more than expected results. So now we are focusing on Tier-3 markets. Around 70 per cent of Cantabil stores are in Tier-1 and Tier-2 regions and remaining 30 per cent in Tier-3 towns and we are trying to increase that part now,” says Deepak.
In an endeavour to change the brand image from that of a discount-driven brand, Cantabil is adapting a number of measures including online and offline marketing strategies as also social media marketing. “During the opening of a new store, we start doing aggressive marketing both in online and offline space and also follow a digital marketing kind of campaign. We have an elaborate database of our customers and we keep sending them information about new products, new campaign, etc. Also, we tend to increase the marketing budget based on the requirement and purpose. In last year, we spent 1 per cent of our revenue on marketing activities,” informs Deepak talking about the brand’s aim to move away from deep discounting. Cantabil registered a turnover of Rs. 290 crore last year with a growth of around 45 per cent as compared to the previous year. Besides an elaborate expansion plan for Tier-3 markets, the brand is planning to expand its product range and launch deodorants, innerwear, etc., in accessories segment.