How Hitesh Vaswani Made it Big with Upcountry Markets
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As an avid shopaholic since his tender age, Hitesh was quite allured by global fashion trends and the bouquet of brands entering into India. This fascination turned into passion towards retail, which triggered a franchise partnership with Levi’s in September 1997. His association with the family business, which is one of the largest real estate developers in Ahmedabad, provided him the business acumen to expand his retail footprint. Shrugging off apprehensions about business viability in upcountry markets, Vaswani has grown his company to be among the largest franchisees of Levi’s, Nike and United Colors of Benetton in India with over 112 outlets across 28 cities.
When metro cities were at the center of fashion and retail growth, you started your retail footprint from tier-2 and -3 cities. What was the idea behind the approach?
In 1997, retail franchise business was at a very nascent stage as most of the international brands were planning to penetrate into the metro and large cities. That’s where we caught the pulse of opportunity in tier-2 and tier-3 markets. We approached brands with mass appeal and were sure that those brands will be well received by the customers in upcountry markets. We observed that many of discerning customers had to travel to metros for buying branded apparels. Hence, smaller cities always had the appetite for global brands like Levi’s and Nike.
In fact, most of the brands are focusing on upcountry locations over the last 4-5 years. Since we have been focusing on upcountry locations, we leveraged on lesser competition and overhead expenses to gain fast break-evens. We currently have over 112 outlets of brands including Levi’s, Nike, United Colors of Benetton, Paese Cosmetics, Heatwave Shoes, Selected Homme, The Danish Rack, Aeropostale, and Tommy Hilfiger.
What according to you are the two most crucial factors for retail success?
Besides excellent location, a successful retail outlet calls for two crucial factors: feasible rent and strict shrinkage control. We have a strict mechanism of quarterly inventory audits to control shrinkages. In addition, well-defined processes for each department enable us to control shrinkage. Further, we don’t sign property where rent is more than 15 per cent of the expected revenues.
In fact, working on these tenets we have grown as the second-largest franchisee for Levi’s and the third-largest for United Colors of Benetton and Nike in India.
How are you strategizing against the challenge from online retail?
The only way we can overcome the challenges from online retail is by building a deeper connect with the customer. The objective is to offer the right shopping experience whenever they visit the store, by offering them with the latest products and gratifying their shopping experience with rewards. Hence all the brands are focusing on their customer loyalty programs. Further, as a multi-unit franchisee we leverage on the cross-selling opportunities arising from unique strengths of each brand.
What are your expansion plans?
We aim to open 50-60 more outlets over the next 4-5 years. We are also focused on expanding the retail presence of Paese Cosmetics and Heatwave Shoes, for which we acquired master franchise in the last two years.
(This article was first published in the October 2019 issue of Entrepreneur Magazine. To subscribe, click here)