Micky Jagtiani, chairman of the $3.8-billion Dubai-based Landmark Group, has not forgotten his roots. Whenever he visits his corporate office in Bangalore, he is generally driven around in a Hyundai Accent — a sedan meant more for the aspiring manager than the multi-millionaire. This low-key businessman is reported to have said that he wants to open a small retail shop in India and retire. Actually, he now has quite a few retail shops in India. From a single retail outlet in Bahrain in 1973, Jagtiani’s retail empire comprising a host of brands such as Home Centre, Lifestyle, Babyshop, Shoe Mart and Max, is today spread across 15 countries including Spain, the Gulf and China. But making it big in India is what Jagtiani has always dreamt of — and that dream is finally coming true. Having played it safe for over a decade (the first Lifestyle store opened in Chennai in 1999 and there are only 28 outlets), Lifestyle International is now ready with massive expansion plans.
Lifestyle International, whose turnover is expected to grow to Rs 1,998 crore in 2011, up 55 per cent from Rs 1,286 crore in 2010, plans to spend Rs 725 crore — through a combination of debt and equity from the parent company — on store roll-outs over the next three years, and is set to take on big retailers such as Shoppers Stop (SSL) and Future Group’s Pantaloon head on. It hopes to have 58 Lifestyle stores by 2014 up from the 28 now. In comparison, Pantaloon has 50 stores now, while SSL has 38, and both plan to add about five stores every year.
Expansion of its Home Centre brand — a home décor and furniture store, similar to SSL’s Home Stop and Pantaloon’s Home Town — is also on the cards. As is the plan to increase the number of Max stores — an apparel and footwear private label that has been hived off into a separate brand catering to the value segment where price points do not exceed Rs 1,000 — from 48 to 75 over the next two years.
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“We have differentiated from our competition and want to bridge the gap in every segment and price point,” says Kabir Lumba, managing director of Lifestyle International in Bangalore. While the competition focuses on the premium or the discount segments, Lifestyle aims at the middle-income executive. For Lifestyle, price points are a differentiator and this is why it has focused on expanding in Tier-II towns such as Coimbatore, Cochin and Durgapur.
Spot The Difference
Lifestyle aims to be different from competition in private labels, by turning them into stand-alone stores. While no other retailer has done this, Lifestyle has successfully created a chain of Max standalone stores. Kishore Biyani’s Future Group has the most private labels, but has no private label brand store yet. It converted some products into brands, though, such as its Lombard brand of menswear.
“Converting private labels into brands is a great strategy. But opening them as individual stores is risky and needs time,” says Govind Shrikhande, SSL’s managing director. Globally, Max is a $750-million business for the Landmark Group and has 150 stores, 45 in India.
Max sources its designs from West Asia and shares the vendors of the global team. It has 120 dedicated vendors in India. “The Max brand addresses the value segment. We launched four stores between 2006 and 2008. That time we did not know how successful it would be,” says Vasanth Kumar, executive director of Max Retail. Max is now a private-label cash cow with Rs 380 crore in sales in 2010-11. “The plan is to hit Rs 1,000 crore in three years,” he says.
Lifestyle International also hopes to build its Home Centre business. At present, Home Centre has 12 standalone stores and 13 within the Lifestyle stores. Although it generates a turnover of Rs 300 crore, the margins are low with only 3 per cent net profit. It involves maintaining a large warehouse of almost 100,000 sq. ft in Chennai, to maintain inventory. About 65 per cent of the stock is imported and to manage inventory better, the company is now planning to operate furniture in flat packs or knocked down units, which can be transported to the customer’s house. Other retailers such as SSL’s Home Stop (four stores) and Pantaloon’s Home Town (10 stores), too, follow this strategy.