Actor Naseeruddin Shah probably has not noticed this, but one of the few mentions that Barabanki, the small Uttar Pradesh town where he was born, finds on Facebook is in connection with Promart. The discount fashion retailer’s outlet in Barabanki has its own Facebook page – apart from the ‘mother’ brand, that is – and even has around 40 fans. Who are, going by the comments posted on the page, clearly thrilled that ‘known’ brands are now available at their doorstep in their hometown.

“Barabanki always used to be under the shadow of Lucknow,” says Mumbai-based lawyer Anshika Misra, a Barabanki native. “It was definitely a small town when I was growing up. I could wear jeans in Delhi, for instance, but when I went back home for holidays, it was back to the salwar-kameez.”

But that was then. “Connectivity has changed everything,” says Misra, “my mother has an iPad. And all the kids know what’s the latest.”

This is what Ashish Garg, the 37-year-old promoter and managing director of Promart Retail, is banking on. “I am not interested in the big cities,” says Garg, “for me, the market lies in small towns.” And he is putting his money where his mouth is. Into its 45th store and aiming to cross the 50-store mark by February and 100 stores by the end of this year, Promart has just opened its first store in Delhi – in suburban Dwarka.

Instead, he has focused on pushing his stores, which retail major youth apparel brands such as Levis, Wrangler, Pepe, Spykar and Arrow, as well as footwear and sporting wear from Nike, Adidas, Puma, Rebook and the like, into new markets opened up by India’s explosive growth. His stores are in Tier II and Tier III towns – like Barabanki – in Maharashtra, Himachal Pradesh, Jammu and Kashmir, Punjab, Haryana and Rajasthan. This year, he plans to open more stores in Goa, Karnataka and Andhra Pradesh. His logic for seeking out these markets is simple: a highly aspirational customer base in these towns, coupled with low cost of entry and overheads – critical for the survival of value format retail.

“There are maybe 50 lakh stores in India,” points out Garg, “and if you look carefully, I don’t think more than 100,000 of them are making losses. The rest of them – and in retailers, I am counting even the paanwalla and the vegetable store – are making some profits, creating assets, ensuring a better future for their families.”

He believes the high cost of entry in big cities, driven mainly by sky-high real estate prices, is going to make it a challenging task for organised, big box retail to make profits in India. “The kind of infrastructure we are looking at is European or American standard. That kind of infrastructure’s cost is too high. The cost of land is too high.”

There is also the question of availability. “I cannot dream of 50,000 sq. ft. in high street areas in Delhi or Mumbai,” says Garg, “even if I had the money.”

His solution is to scale down. His stores can start as small as 750 sq. ft., and a franchisee has to invest only around Rs 10 lakh. “You need to look at the units,” insists Garg. “If every individual unit is profitable, then the whole chain is profitable. And you cannot make profits if you are paying the kind of rentals a retailer has to pay in an upmarket mall in a metro city.”

There is another reason why Garg prefers a more compact format for his stores. “A retailer only makes money if he manages to turn over his entire inventory,” he says, “not just sell a part of it.” Smaller stores, he argues, make it possible for customers to see the entire range of inventory available and make choices. “If you enter a 50,000 sq. ft. store, the inventory runs into millions. It is simply not possible to check it out,” he says.

And rapid turnaround of inventory is critical for Promart to retain its key selling proposition – discounted prices. “Discounts are in fashion” is the chain’s tagline, and one which it sticks to religiously. It promises its customers “big brands at big discounts”, which range from 30-65 per cent of the tagged MRP. The actual retail price of products ranges from under Rs 50 to under Rs 2,000, which gives Promat relatively little elbow room to operate.

“Inventory management is critical to our process, and we have invested heavily in technology for it,” says Garg. This enables relatively fast turnaround and restocking times, even in small towns with longer lead distances from stocking points.

Speed is also essential given the nature of the business. “In my view,” he says, “garments or fashion apparel are perishables like food. What is in today is gone tomorrow. You have to be available when the customer wants it.”

This clear focus on affordability and accessibility, apart from the efforts to ensure that every store – whether owned or franchised – turns a profit, is what has scripted Promart’s success story, Garg believes, after his Apple Group, along with Vemb Lifestyle, promoted by “old friend” Punit Agarwal, acquired the chain from apparel maker Provogue two years ago.

(This article was published on February 7, 2013)
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