Ramesh Tainwala, who recently bought 48.5 per cent in lifestyle retailer Planet Retail, plans to give a new lease of life to the UK-based department store chain Debenhams in India. Planet Retail holds the master franchise for Debenhams here.
“Planet Retail opened Debenhams stores during 2007-08, at a time when retail rents were at their peak and markets were down. Original plan was to open 30 department stores, but the company ran out of cash after the third year. My entry into the company is part of a restructuring in the business,” says Ramesh Tainwala, chief executive officer, Planet Retail and president, Samsonite South Asia.
Planet Retail, which opened the first Debenhams store in India in 2007 could open only three stores in the country. The chain now operates only one in Gurgaon, after closing down the other two in Mumbai and Delhi.
Tainwala, with Indonesia-based non-resident Indian (NRI) V P Sharma, holds around 97 per cent stake in the company. The rest is held by Future Group promoter Kishore Biyani. To begin with, Tainwala plans to reposition Debenhams as a premium women-centric department store than a general merchandising outlet as the way it was earlier.
"The core strength of Debenhams globally is in the range of lables and brands that it owns in women-centric products and home-wear segment. We want to focus on that. Women are more open to experimenting with brands than men,” says Tainwala.
Retail consultants agree. “It is a good strategy. If you create a differentiation with positioning, that will drive consumers to your stores,” says Hemant Kalbag, partner and vice president at management consultancy AT Kearney.
Though Tainwala plans to retain the Debenhams' mid to premium segment positioning, he says the new stores will be 30,000-50,000 sq ft as against 200,000 sq ft in the UK.
The prices start from around Rs 800 apiece in apparel. He plans to launch Indian designer-wear, along with Debenhams' own brands.
"In the UK, Debenhams operates in many categories such as women's wear, men’s wear, electricals and so on. But with the smaller stores, we have the choice of presenting everything or focusing on a few categories.”
Tainwala thinks India can still absorb 30 stores of Debenhams in the top 13 cities in the next four years. The company plans to invest around Rs 300 crore on opening stores, putting in Rs 10 crore for each.
The success of Debenhams is important for Planet Retail as Tainwala expects the chain to contribute around half of Planet Retail's expected Rs 500 crore turnover in the next three years. Planet Retail has close to 200 stores across international brands, such as Guess, Next, Nautica and plans to raise the number to about 700 in the next three years.
What about break-even of the company? “I would be very happy if we can do it by the next five years,” he adds.
But department stores worldover are facing tough competition with advent of exclusive brand outlets and hypermakets that offer value. US chains such as JC Penny and Macy's are already reinventing in order to attract consumers, say analysts.
In India, almost all department stores like Tata's Westside, Future Group's Pantaloons, Shoppers Stop are changing the look and feel of their stores and adding new segments to woo customers.
Westside has recently forayed into gourmet retail apart from getting designer wear in its stores. It has hired international firm Fitch to redesign some of its existing stores.
Another UK-based chain Marks & Spencer, which had a franchise agreement with Planet Retail, ended it and signed a joint venture pact with Mukesh Ambani's Reliance Retail to achieve faster growth.
"The fundamental issue is what value preposition the department stores can offer to consumers? They have evolved as multi-brand apparel stores, neither a value play like hypermakets nor a point of view that single brand can offer. I think department stores have limited potential,” says Kalbag.
But Tainwala believes Debenhams’ sharp positioning will do the trick. “We are only going to focus on lifestyle brands in mid and premium segments.”
