Last week, Pantaloons, the fashion retail store of the Future Group, launched its new concept store in Chennai's Chandra Metro Mall. Covering 27,930 sq. ft over three levels, it's the fifth “NextGen” store that Pantaloons has launched in the last five months.

The clothes are not just stacked, they are spread out wide so that their features are immediately visible. And the mannequins wear footwear and other accessories so that customers get an idea of how to coordinate their clothes.

Pankaj Tibrewal, Chief Operating Officer, Pantaloons, who spoke to BrandLine on the new-look stores, says the earlier priority was to work on prices; now it's taking customer experience to another level. Pantaloons contributes 10-15 per cent to the Future group's revenues, which are expected to touch Rs 11,000 crore by June 2011.

The group has earmarked Rs 2,100 crore to invest in stores across various formats (and not just Pantaloons) for the next 3-4 years. Excerpts from the interview:

What are the new concept stores all about?

In the last two or three years, we've done a lot of work on the product. Earlier, we were focused on offering the best prices. Even international brands are sold 20-30 per cent cheaper in Pantaloons. The next focus is to take customer experience to another level. We've employed Blocher & Blocher to design the stores.

Typically, clothes are stacked in racks. But if you see our walls, we've tried to project a co-ordinated look with accessories. The clothes are opened out, the features are visible, it's a lot more experiential. Operationally, it's very challenging. We need to employ a lot more people, to sort, display, fold the clothes and so on.

Will all the new stores look like this in the future? Even in the smaller cities?

Yes, they will. Even the old stores, when the time comes round for their renovation, will be done up this way. So far, we've opened five such stores, the others are in New Delhi, Bhopal, Bangalore and Nagpur.

What prompted the design change?

It's been in the works for about two years. It comes from the realisation that we're in a unique position. Unique because only we can offer international fashion/quality at these prices. We've developed great buying and sourcing capability. We have a strong design team and we control the buying part.

Even though our vendors do it for us, we have pre-negotiated rates with the mills and we point our vendors there, which is why our prices are better. Even our store brands are not typical private labels, we've invested in them, they're true brands but 20-25 per cent cheaper than other national and international brands. We don't just place them next to the national brands and hope people will buy them because they are cheaper.

Even our new Green Card loyalty programme is a trailblazer. Usually the customer's asked to pay Rs 100 or Rs 200 to enrol. Ours is unconditional, and some of the benefits include home delivery after alteration, parking fees reimbursement and shipping gifts bought in the stores.

How have customers evolved over the years?

The heterogeneity in customers is increasing and that's why we have so many brands. Specific segments are becoming sharp. And they are not willing to accept any compromise on customer service. People want to be different and we need to have a larger spread of brands so that they have a lot of choice.

Pantaloons has adapted. We've reduced the clutter. We create the assortment rather than pile the clothes up and leave the customer to choose. Also, customers are no longer willing to wait at cash counters so we have more cash counters now.

How will the imposition of 10 per cent excise duty affect prices?

Customers will have to pay 17 per cent more for readymade apparel at Pantaloons from July.

Input prices are high, there is a shortage of raw material and the Budget stipulations add to the problem.

Operational challenges have gone up too – we have to maintain a lot of excise paperwork at the warehouse, it has to be done at the vendor's end, it's a big deal for the small vendor.

Are you finding ways to reduce the prices?

We do that anyway. Wherever we can reduce, we're reducing – in logistics, warehouse, store operation costs …

Do you see a dip in revenue because of the price hike?

We don't see a dip in revenue. Growth may slow down a bit. Maybe we'll be less affected than the competition. Someone who buys a pair of Levi's might now buy a Bare. There will be some downgrading to less expensive brands and that will help us.

How is customer demand? Is it growing?

Demand is growing at a robust 20-25 per cent and same-store sales are growing 30-35 per cent overall. By June 2012, we expect to open another 10-15 stores, and plan to double in size in 3-4 years, have over a 100 stores in operation.

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