Jay Prakash Shukla
CEO & Co-Founder 1-India Family Mart
Lack of space, high costs in metros pushing retailers to tier 2 & 3 cities
1-India Family Mart, established in 2012 and owned by Nyssa Retail Private Limited, is among the leading value retail chains in India. The company provides affordable fashion apparels, lifestyle products and general merchandise across India. The company opened its first store in Uttar Pradesh and soon expanded operations across Bihar, Jharkhand, Chhattisgarh, Haryana, Rajasthan, Punjab and the North East. It has over 50 stores across east and north India now. CEO and co-founder JP Shukla shares his insights on apparel retail in tier 2 and 3 towns.
What is the size of the Indian apparel retail market? What is the year-on-year rate of growth?
We see immense growth in the retail industry and India has come to stand at the 3rd position globally. According to a ball park figure, the current fashion retail market is worth ₹2,97,091 crore ($46 billion) and will grow at a promising rate of 9.7 per cent to reach ₹7,48,398 crore ($115 billion) by 2026. Looking at the statics, Indian retail can be expected to grow at around 6 per cent year on year.
How has the retail scene in tier 2 and 3 towns in India evolved?
According to recent studies, Tier 2 and 3 cities like Lucknow, Jaipur, Chandigarh, Kochi, Patna and Bhubaneshwar are the next retail destinations owing to increasing real estate rentals of tier 1 and metro cities. Also, the retail sector in tier 2 and 3 cities has witnessed a much higher investment of ₹42,724 crore ($6,192 million) between 2006 and 2017 as against ₹8935 crore ($1,295 million) that came to tier 1 cities during the same period.
Some of the key reasons to take into consideration regarding the evolution of retail sector in tier 2 and 3 cities are factors like lack of available space in retail malls in metro cities, increasing lease rentals in metro malls, and high land prices in tier 1 cities. These factors have made it difficult for retailers to own real estate in these cities, which in turn creates opportunities for business growth in smaller cities. Therefore, it encourages entrepreneurs to discover business in tier 2 and 3 cities.
Are Indian start-ups now focusing on tier 2 and tier 3 towns in India?
Yes; depending on the current market situation, it seems the right choice to start your business in tier 2 and 3 cities. Keeping in account factors like lack of available space in metro cities and high land prices, starting a business in such cities makes business sense. International airport connectivity across cities such as Lucknow, Kochi, Bhubaneswar, Nagpur to name a few, and the rising levels of disposable income have prompted various global and local brands to plan their expansion plans in these cities. I believe it is for these reasons investors and start-ups are moving to small cities.
Who are your major competitors in the 'value-for-money' segment in apparel retail?
V-Mart is our biggest competitor; otherwise we are faring better than most of our peers in terms of financials and areas of presence.
Which are your top three revenue generating markets?
According to our data, the top 3 revenue generating markets area-wise are Uttar Pradesh, Bihar and Jharkhand. Taking product vertical into consideration, the top revenue generating segments are menswear, followed by womenswear.
What is the average size of 1-India family mart stores?
The average size of a store is approximately around 7,500 sq ft.
Which are the best selling price points in tier 2 and 3 towns?
Keeping in mind the per capita income of our consumer, the product range is priced from ₹79-₹3,000.
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