With 77 stores in 17 states and a team of 2,700 employees, V2 Retail Limited is known for being focused on growth from semi-urban and Tier-2 and Tier-3 cities. Despite the apparel retail giant facing around 27 to 35 per cent negative impact of COVID-19 on its overall business in the last fiscal year, it is all set to grow well now. In its endeavour to achieve that, the company has not left any department or area unplanned – right from its new warehouse equipped with all the latest technologies, to entering e-commerce operations and adding B2B and dealership-franchise models, to enhancing its own manufacturing and much more. V2 Retail is strategically moving towards becoming an omnichannel retail company.
In an exclusive conversation with Apparel Resources, Ram Chandra Agarwal, Chairman and Managing Director, V2 Retail Limited, who boasts of more than 30 years of entrepreneurial experience in value retail, shared his strategy to achieve this ambitious target.
Unhappy with the forced lockdown by various State Governments, Ram Chandra strongly highlights that it has had adverse impact on businesses. He further opines that lockdown should be voluntary and the decision whether or not to follow it should be left to the public, so the country’s economy can survive.
Before the pandemic hit the world, V2 Retail was undertaking all the measures required for long-term growth, and now in the new normal scenario, it is working with more and immediate focus on the same. To ensure the maximum use of the latest technology is also motivating for an initiative of shifting into the new warehouse (near Gurugram), spread across 1,65,000 square feet with a central height of 45 feet. It is equipped with SAP Extended Warehouse Management (EWM) which is used to efficiently manage inventory in the warehouse and for supporting the processing of movements of goods.
Similarly, the company is already using AI to manage demand planning, while its investment in Pick to Light and Put to Light systems is under planning.
Just a month back, the retailer started its e-commerce service which is being handled by around 20 newly hired professionals along with some old team members. The push behind this beginning is with the same vision and target to become stronger as an omnichannel value retailer. “Majority of other e-commerce websites has an average selling price of Rs. 500, while we have the same in the range of Rs. 260 to Rs. 270 without compromising on quality and service,” said Ram Chandra.
B2B and dealership-franchise models will be the next focus points for V2 Retail, as it has plans to associate with omnichannel‘ partners’ who will be supporting the company’s operations and enjoying various benefits and facilities too. “Our country has more than 5 lakh small retailers, and to serve them better, our B2B service will offer easy and cost-effective buying. We will tie-up with financial institutions which will provide credit facilities to our B2B clients. It will help them to do business comfortably and their margins will also increase. Our target is to make V2 Retail Ltd. one of the best omnichannel retail companies,” he added. The company is planning to keep a gross markdown of 30 to 35 per cent in bricks-and-mortar and online retail and 8 to 10 per cent in B2B.
As of now, private labels contribute 23 per cent share in the company’s total sales and the company is continuously growing in this direction, targeting 50 per cent of its overall turnover from private labels in the near future. The company’s own labels will be sold through all of its existing and upcoming business models.
The proportion of revenues from proprietary labels
|% of revenues||2||8||12.5||23||50 (target)|
It is pertinent to mention here that overall menswear is the largest segment in India’s apparel market (comprising 42 per cent of the overall market), while womenswear is 38 per cent and kidswear is 20 per cent of the market.The retailer is positioned as a one-stop family apparel hypermarket focused on addressing the complete needs of a family and enhancing family wallet. But menswear segment contributes 42 per cent in the company’s sale while womenswear and kidswear, each contribute 26 per cent. Ram Chandra sees it as a social impact. “Our Indian society is still majorly male-dominated, so it may be a reason that menswear is more in our sales, but we focus on catering to the needs of the entire family.”
Inventory was always a big challenge with retailers, and now with the pandemic, it is a more serious challenge than ever before. Keeping this in mind, the company will initially have the stock of around Rs. 100 crore in its distribution centre which will be increased according to sales. “We want to achieve a stock turnover ratio of 60 to 90 days in bricks-and-mortar retail and 7 to 30 days in online retail. We will ensure this to buy the best quality product in the best payment terms from best manufacturing companies. Our initial focus is on fashion, shoes and general merchandise with overall 25,000 SKUs,” he said.
Currently sourcing from 500 apparel manufacturers and suppliers, the company is making its sourcing quicker and will consolidate its vendor base too.
Nearly half of the stores of V2 Retail are in UP and Bihar, and the brand is receiving good response from these states right from the beginning. Even its stores in NCR have a good number of customers belonging to these states.
To minimise the cost and excel in quality, design and delivery, the company recently started its apparel manufacturing facility in Noida which is currently producing around 2,000 pieces per day. The company has the capacity as well as plan to increase it further to 30,000 pieces per day.
With all these strategies and initiatives, Ram Chandra is hopeful to grow well in future, but looking at the market dynamics, he doesn’t share a specific target of future turnover. Having said that, he is quite positive. In 2018-19, the company’s revenue was Rs. 748 crore (34 per cent up as compared to 2017-18), but in the same period, its profit was Rs. 20 crore as compared to Rs. 31 crore in 2017-18. As per him, the profit was down due to high cost of marketing and the company’s strategy lacking a high margin, but the future looks bright, as he believes that other retailers have had a lot of funding from private equity in the last two years, which will stop in new conditions.
V2 Retail Limited is completing a decade in 2020, and Ram Chandra is happy with the journey which has been full of challenges as well as achievements. “I am happy that we are among the top value retail companies… first one to start retail operations in North East and have promoted hundreds of small apparel manufacturing and supply chain entrepreneurs across India,” he concluded with pride.