Trent goes down the franchise path

Mumbai: With real estate costs taking wing, the Rs637-crore Tata Group retail arm Trent Ltd has decided to walk down the franchisee path as it plans to expand its Westside stores to tier two and three cities.

Trent appointed its first franchisee in Mysore last year, and is now planning to add around 30 additional stores over a five year period across smaller cities such as Allahabad, Patna, Guwahati, and Puducherry.

Addressing a press conference, Neeti Chopra, head of marketing for Trent said, ''We want to get over the property challenge and franchisees would help us in scaling up the business in the smaller cities. We expect each franchise to generate revenues between Rs6 to Rs10 crore for each store with an initial investment of Rs1.5 - Rs2 crore.''

Under the franchise model, Trent will own and provide the stock on a consignment basis to the franchisee, who will retail it at their outlets. Trent has 30 company-owned Westside stores in Mumbai, Delhi, Kolkata, Lucknow, and Baroda amongst other cities. Westside stores sell womenswear, menswear, kidswear, and cutlery, and are spread over 15,000 to 30,000 square feet.

Under a revenue-sharing arrangement, Trent is scouting for franchisees who can ''adhere to the Tata code of conduct'', or individuals will be able to give it local inputs and help leverage local business. Trent will also assist its franchisees in recruitment and training of staff, marketing and promotional support, replenishment of stock, and project assistance for the store fit out.

Chopra says that the 'test franchise' store in Mysore has been in operation for over a year, and has proved successful. Now, Trent intends to replicate this success in other tier two and three cities across India, targeting the young, upcoming families in these towns.

Industry analysts point out that Trent is a pioneer in adopting the franchise model, and given its strong private labels, it can ask for a larger slice of revenues and profits from a franchise partner than what other retailers can.

Trent's ideal candidates seem to be individuals who are already franchises for other brands, and have exceptional local knowledge of their cities. Trent's Mysore franchisee is also a franchisee for Honda Motors, and another Tata brand, Tata Indicom.

Trent is planning a total addition of around 90 Westside stores in five years, of which 25-30 would be franchisee stores. A typical francihse store would be spread across eight to 12 thousand square feet of space, calling for an investment of around Rs2 crore.

Chopra also said that Trent is looking at partnering foreign companies for their retail forays into India, and is already associated with Benetton for its Sisley brand of stores. The company is looking at similar partnerships, and claims to be in talks with ''several players''.

Other retail formats owned by Trent include Star Bazaar Hypermarket and Landmark Stores.