Apparel and textile major Raymond today said it would open 300 franchisee-operated stores in Tier-IV and Tier-V towns in the next 18 months, to tap the retail opportunity in the country’s hinterland. The company is looking at towns with less than 500,000 population for the expansion.
It plans to add 450,000 sq ft of retail space — this is an addition of half its present total — by the end of 2010-11. And expects revenues of Rs 200 crore from the newly set up stores in that period, a top company official said.
Raymond and its franchisees will invest around Rs 100 crore in setting up the stores, said Gautam Hari Singhania, chairman and managing director. The company is looking to open stores in towns such as Pandarpur in Maharashtra and Bijapur and Mandya in Karnataka, among others.
“We want first-mover advantage in these towns. It is a real penetration in the country if we enter Tier-IV and V towns, as there is a large opportunity there,’’ said Singhania.
The company has also strengthened its production capacities to take care of its expansion plans. It has added 6-7 million metres of fabric capacity in its Wapi facility, to take it to 38 million metres.
But an analyst based in Gurgaon, who did not wish to be quoted, said the company may find it tough to sell its high-end fabric and ready-made garments in smaller towns, as people there spend less on premium clothing.
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However, Deepak Khetrapal, chief operating officer, said the company will modify its pricing strategy in smaller towns to boost sales.
Raymond also has 36 stores in West Asia and plans to expand in the region, he said.
Last week, Raymond also announced it would develop homes on 20 acres of its surplus land in Thane, later making its realty division a separate entity.