New Delhi: Value-fashion brand Max is developing an alternative model to tap small cities, with a population of up to 500,000, to boost growth. Max, owned by Dubai-based Landmark Group, has been experimenting with a different retail format under the brand name Easybuy.
All Easybuy outlets will be smaller in size—half a typical Max store—and would sell every day, trendy garments at lower price points. The company started experimenting with the new model in late 2014 and currently operates 13 such stores in south India.
“We have been trying to get the model perfect before we expand nationwide. Over the next year or so, we’ll open one Easybuy store every 20 days. In the long run, growth will come from Easybuy,” said Vasanth Kumar, executive director, Max.
Max operates 150 stores across 20 top cities and some select tier-I towns.
For Max, said Kumar, the focus will always be the top cities, essentially the satellite towns such as Noida and Ghaziabad on the outskirts of Delhi.
“Max is more suitable for these satellite towns, rather than the metro cities. On the other hand, Easybuy should be the Max in smaller cities because we are targeting the lower-most segment of the market,” added Kumar.
While a Max store typically requires 10,000-12,000 sq. feet, Easybuy stores will be spread over 5,000-6,000 sq. feet.
The company has also altered its ownership strategy for Easybuy. All Easybuy stores are 100% franchised, while 80% of the total Max stores are owned and run by the company.
At Easybuy, garments are priced between Rs.69 and Rs.699, while Max offers garments priced at Rs.200-800.
Easybuy came into existence after Landmark group failed to establish Max in tier III cities because of high operating costs and a price sensitive-consumer segment. The company had set-up a Max store in Durgapur (a small city in West Bengal) few years ago but had to shut it down. “We failed at Durgapur and now, after two-three years, we have decided to go in there with a new brand and reduced pricing,” Kumar said.
Ankur Bisen, senior vice-president, retail and consumer, Technopak Advisors, said that it is a logical extension for Max to build a separate brand to look at growth opportunities in tier II and tier III as such markets are extremely price-sensitive.
“Affordability is always an issue in such markets as average household income is lower than in the top towns. Max is building a value-pricing model which delinks its association with Max and also solves the purpose of identifying opportunities in tier II and tier III cities,” said Bisen.
Max, which earned Rs.1,800 crore (retail value) of revenue in the year ended March 2016, hopes to cross Rs.2,400 crore this year, said Kumar.
India’s apparel market is projected to touch $200 billion by 2025 from $45 billion in 2014-15, according to a study by consulting firm Wazir Advisors.