Despite the economic slowdown, leading lifestyle / specialty Indian retailers managed to stay competitive in the last 2 years. Their continued investments in branding and innovation, distribution network and supply chain have given them a significant competitive edge to mitigate any disruptive challenges.
How can you Drive Growth Through Innovation in Retail ?
Titan has been focusing on intensive category development efforts despite the sharp slowdown in jewellery sales. The company has launched several new jewellery collections such as Inara, IVA, Mia and Zyra. These new collections are aimed at making diamond jewellery more affordable, both from wedding and work wear perspectives. We believe this initiative should improve Titan’s share in the diamond jewellery category to about 40% (from about 30% currently), which, in turn, would improve the division’s operating margins by about 100bps. Given the affordable price points, Titan believes this will support network expansion into several new Tier 2/3 towns. The company is considering using more of the franchisee model for this expansion.
Jubilant Foodworks, master franchisee of Domino’s and Dunkin Donuts in India has focused on three key aspects – Product innovation, Delivery Satisfaction and Internet Order Bookings. In terms of product innovation, the company’s Pizza Mania (an entry level product) and side orders have helped it maintain footfalls, albeit at the expense of transaction size. Jubilant Foodworks recently introduced a much expanded pizza menu range, which it believes will attract new customers and, more importantly, prompt existing customers to increase their consumption occasions. The company has consistently been expanding its network and is now targeting customer delivery time of eight minutes, vs 12 minutes previously. To raise delivery and accessibility standards Jubilant Foodworks has launched an online ordering platform, which is currently unmatched in the industry.
In our opinion, all these efforts have helped the company achieve positive same-store growth, while most of its peers delivered negative growth. These efforts, along with investment in supply chain, will help almost double its store network to >1,300 stores and increase town footprint to about 250.
Lifestyle / Specialty retailing companies have seen slowdown in their same-store sales growth, they continue to strongly focus on innovation and category development to stay ahead of competition and when the market picks-up they will definitely be able to cash-in on these in-tangible investments.