Max gears up for retail push in tier-III cities

Lifestyle International, the Indian arm of Dubai-based $1.5 billion Landmark group, has set its sight on tier-III cities with its value retail chain Max. It want to weave a synergy between company-owned stores in metros and franchisee model in the smaller cities, where value retailing has huge appeal.

Out of the total Rs 1 lakh crore retail industry, Max is aiming to tap Rs 30,000 crore to Rs 40,000 crore value retailing industry with its franchisee model. Landmark group runs Lifetsyle, a premium retail chain, Max hypermarket division and international brands division which has launched brands like Bossini and Kappa in the country.

It will be signing properties in 50 cities like Kozhikode, Mysore, Hubli, Manipal, Rajkot, Nasik, wherever the cities have over 5 lakh population. In Mumbai, it is planning to open stores in Vashi and Thane, and wants to take it to 8 in the next four years.

Interestinly, it is signing properties on behalf of franchisees unlike the popular franchisee model, where franchisees themselves deal with properties.The group has lined up Rs 150 crore investment for four years in the expansion and toying with the idea of master franchisee in the states and sub-franchisees in the smaller cities.

"All stores will have an area of around 22,000 sq ft with investments of Rs 5 crore per store. We plan to spend 3-5 per cent of our turnover on marketing," Vasanth Kumar, executive director, Max Retail division.On the company-owned stores side, Max is aggressively planning to expand them in tier-I and tier-II cities.

Currently, it has 6 stores, which it want to take to 20 by March 2007 and 50 till 2008. At present, it has 6 stores and its 65 per cent of business coming from apparels and 35 per cent from footwear and accessories.

It is seeing a business of Rs 10 crore to Rs 12 crore coming from the company-owned stores and half that amount coming from the franchisee model. It is expecting a turnover of Rs 200 crore turnover from its operations in the next two years. The group already has 50 Max stores in the west Asia and has operations in 7 countries.

Riding on the organised retail scene in the country, it will concentrate in malls than standalones.

"Going as a group, we want to grow as a mini anchor in malls since smaller cities have small malls. We open multiple stores in bigger cities and single store in smaller ones. For instance, we will open company-owned store in Ahmedabad and give franchisee right in smaller ones like Rajkot, Surat and so on," said Kumar.

The group has adopted an value approach as its model for growth. It has 50-member designer team in Dubai, which makes international designs to be launched in India. The Indian arms will source the material and adapt them to Indian needs and ready the merchandie to be sold in its stores.

The company imports consists of 100 per cent designs and 10 per cent merchandise. "We want to leverage on the design inputs and sourcing network of the group internationally," said Kumar. Max is also foraying into home furnishing with its private lables.

It will sell the entire basket of products including cushion covers, bed sheets, curtains and so on. In summer this year, it will also start retailing of toys, which is mostly unorganised and estimated to be Rs 6,000 crore.

"It may not bear Max brand name. We may also tie-up with international brands," he said. Kumar sees 6 per cent Max's business coming from home furnishing and toys in the coming years.

Currently, the Westside of Tatas, Big Bazaar of Pantaloons, Vishal Megamart are the major players in the value retail sector.