V-Mart wants to become the H&M of small towns
Lalit Agarwal’s V-Mart is not impacted by the rise of e-commerce in India. In fact, he believes that there is a lot of headroom for growth as in small towns, buyers still want to touch and feel clothes before buying them.business Updated: Mar 16, 2017 18:01 IST
Lalit Agarwal has no qualms in admitting that at V-Mart, the company copies designs from international high street, and makes subtle changes that suit the taste of people living in tier-II, III and IV Indian cities.
“We do not want to create fashion… We are not in that space, but we copy fashion from Milan and Paris, and improvise on them,” said Agarwal, chairman and managing director of V-Mart, the retail chain that he founded in 2002.
V-Mart has 140 stores, concentrated in Northern and Eastern India, and 20 more are in the pipeline.
Agarwal says that he wants V-Mart to become what H&M stands for – fast fashion at affordable prices. “That is exactly where we want to be, but it will take us some time… We need to have more scale and higher volumes,” he said.
On average V-Mart sells 70,000 items a day, which is 25 million pieces of clothing every year.
Most of these are targeted at people who earn anything between Rs 10,000 to Rs 40,000 a month, living is small towns, are fashion conscious, but are not ready to spend tons on clothes. This unique need places V-Mart in a space where price is a key deciding factor, but Agarwal does not want to compromise with quality.
“We will give international fashion at less than half the price of what H&M gives, and will also provide better quality than them,” Agarwal said.
He works with a bunch of third-party apparel makers, has a team of designers who copy the design, add nuanced changes to it, and give it to the vendors to manufacture. For example, if a particular dress has a thin strap running on the shoulder, the design team adds a more cloth, makes sleeves, which gives a more covered look.
Agarwal says that H&M can’t give at V-Mart’s prices. “They have to pay import duties, and to international vendors. GAP, too, is expensive. The space Old Navy holds in America is what we want to do,” he adds.
But, isn’t V-Mart’s sales affected by the rising discounts that e-commerce companies provide? The answer is a straight “no”.
According to Agarwal’s estimates, more than 90% of buyers in these towns still want to touch and feel the quality, before making a purchase. They also spend between Rs 200 and Rs 300 on a particular piece. There is enough headroom for V-Mart and its likes (Reliance Trends being a competitor).
“E-commerce firms are struggling with their own business model of heavy discounts. They are running huge losses. For our customers who do buy clothes twice or thrice a year, want to walk into a store and buy clothes,” said Agarwal.
He believes that the shift from offline to online will take a much longer time than what people say. V-Mart is already targeting revenue of Rs 1,000 crore in 2016-17.