The Hindu Business Line : Globus launching small stores to build private label biz

Mumbai, Aug. 27 Moving away from being a multi-branded retail chain, the $1.5-billion Rajan Raheja-promoted Globus Stores Pvt Ltd is planning to become a single store label brand under its own name.

Discontinuing its previous formats, including its value-for-money format — Pavilion, Globus will now launch smaller stores under its private label. “At present, 90 per cent of the merchandise that we have is under the Globus brand but with time we plan to convert the balance into our private label brand. Globus will be our mother brand,” says Mr Vinay Nadkarni, CEO, Globus Stores Pvt Ltd.

Adopting a single brand strategy for its stores, Globus plans to build its brand by roping in actor Kareena Kapoor as its new brand ambassador. Highlighting the new business model, Mr Akshay Raheja, Vice-Chairman, Globus Stores, says, “There are higher margins in private labels but at the same time it is a harder model for retailers. It is going to take additional effort to build the private label business but that is the new business strategy we have decided for our stores.” With designing as its USP, Globus would be relying on its design studio to create new fashions targeting youth between the ages 18 and 30.

Besides, it has decided to create smaller format stores, especially in the malls coming up across the country. Considering it started its first outlet in Chennai with an area of 20,000 sq ft, it has now decided to drop the idea of having larger stores. As Mr Raheja says, “We now plan to have smaller stores with an average of 10,000 sq ft.” Besides, Globus also wants to position itself as an ‘affordably priced fashion brand’.

Globus plans to invest Rs 800 crore in the opening of new stores and intends raising the money through internal accruals, along with a portion of debt and equity. Mr Raheja added, “We will not go for a public issue and we intend financing the stores through internal accruals mostly, but there will be some debt and equity as well.”

Allocating 6 per cent of its turnover towards advertising spends, Globus now has the onus of building its private label brand with the help of the new brand ambassador. Last year, it had roped in actor Soha Ali Khan as the face of its brand.

“Fashions keep changing and so do brand ambassadors,” claims Mr Raheja who plans to build the Globus brand on the fashion quotient. It has also appointed a Mumbai-based creative hot shop – Civilisation — to build its brand.

At present, the Rs 145-crore Globus Stores has 19 outlets and plans to ramp up to 152 stores with a presence across 70 cities and a turnover of Rs 1,800 crore by 2011-12.