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The offer upfront

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Priyanka Joshi New Delhi
The Loot is using clarity of its brand message as part of a classic discount model.
 
Numbed by discounts? Wearied by another "Upto 40% Off!" poster ("upto" being the operative word)? Exasperated by yet another crumpled T-shirt with an unravelled seam trying to palm itself off cheap?
 
Susil Dungarwal knows the feeling. And, as the man behind such retail pioneers as Haiko Supermarket, Kids Kemp and The Loft, believes that discount stores are the retail future of India. If done well.
 
"Discount stores are an idea waiting to happen," he says, upbeat as ever at the launch of his 13th discount store under the signboard The Loot.
 
Er, The Loot? Indeed. The very name has a message that has already attracted crowds in Mumbai, Hyderabad and Vizag, and the brand now enters Delhi with a store at Pitampura, promoted by Jay Merchandising, a franchisee.
 
Jay has put in a claimed investment of about Rs 12 crore, and expects the concept to deliver a turnover of Rs 25 crore in its first operational year.
 
The Loot's retail proposition is simple: we sell cheap by brand policy, not as an aberration of circumstance or season, so it's full value at lower prices. "This is not second hand or defective merchandise being sold by us," promises Dungarwal.
 
So far, so frank.
 
But how does The Loot make any money?
 
The trick, as Wal-Mart has shown in the US, and Big Bazaar is showing in India, is all in the cost compression of the high-volume, low-inventory business model.
 
Dungarwal explains: "We buy in cash instead of credit, and second, we take bulk merchandise from brands, thereby saving a lot of money." Cash-and-carry deals imply sourcing discounts, even as operating costs are kept low to walk the tight rope of a discount store.
 
For costs to stay low, goods have to turn into cash quickly, having spent minimal time in transit or on the shelves. This means matching stocks with shoppers' needs to near precision. This takes both quick learning and major crowd-pulling.
 
The Loot's emphasis in Delhi is on the usual mix of casual clothes, semi-formals, footwear and accessories, but the hangers may have to change their wares continually in response to demand.
 
In all, Dungarwal expects to have 30 stores by next year. "We will have three new stores by March-end in Nashik, Baroda and Surat," he says, adding, "We also have a tie-up with Spencers Stores where we will have a shop-in-shop set-up."
 
The standalone stores, around 15,000 sq feet, would serve the main purpose, as the shop-in-shop units penetrate tier II and III cities.
 
The Loot is targeting annual sales of Rs 100 crore by March 2007. "We might look at a public equity issue then," says a confident Dungarwal.

 
 

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First Published: Feb 08 2006 | 12:00 AM IST

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