YusuffAli MA put his stamp on the retail sector with the opening of his first hypermarket in the highly competitive Abu Dhabi market in the mid-1990s. The Indian billionaire businessman’s $7.4bn LuLu Hypermarket chain is today a household name, not only across the UAE and the larger GCC market, but in many parts of India as well.
About a quarter of a century later, Tablez, LuLu’s branded retail subsidiary, is busy implementing an ambitious plan to spread its chain of stores across the major cities of India. Leading the initiative is Adeeb Ahamed, the young and energetic managing director of Tablez, who hopes to script a similar success story in the $792bn retail industry in their country of origin.
“There is a lot more that can be done on the physical retail front in the Indian market,” a confident sounding Ahamed tells Arabian Business as he unveils a fresh $75m investment plan in the country.
The plans on the board are: Expand the number of Tablez retail outlets from 42 to 100 by the end of this year, and to 150 plus by 2021; launch five more international brands this year and more brands next year; and take Tablez’s outlets beyond India’s metro cities to Tier 2 and Tier 3 cities, to deepen the company’s market share in India in double quick time.
“We plan to expand outwards from metro cities to Tier 1 and Tier 3 cities to increase our market share and retail distribution across all our brands,” says Ahamed.
No doubt, Ahamed’s confidence is based on sound logic. Tablez is into brand retailing in segments such as fashion, lifestyle, toys and juvenile products and footwear, all fast growing segments within the organised retail sector in India.
According to a report on Indian retail industry by Technopak, a leading India retail advisory firm, apparel and accessories grew by over 27% in 2018, while footwear grew by 28% and home and living products segment (part of lifestyle) grew by about 11% last year. All these segments are projected to see robust growth rates over the next five-year period.
Tablez, which forayed into the Indian organised retail sector in early 2017, began its journey by marketing some of the world renowned toys, lifestyle, food and beverage (F&B) and apparel brands in the country. It is the master franchise of the famed US brand Toys ‘R’ Us and Babies ‘R’ Us. Tablez is also the master franchise of the Spanish company Grupo Cortefiel for its youth-oriented casual fashion apparel brand Springfield and Women’s Secret, an innerwear, swimwear and sleepwear brand in India. Late last year, the company signed up with the US-based customised toy brand Build-A-Bear to launch its products into the Indian market.
LuLu Group International has also launched two of its home-grown brands already successfully tested in the GCC market – Bloomsbury’s and Cold Stone Creamery – in India. All these launches happened within a short span of less than two years.
Will the Abu Dhabi-based firm be able to repeat its success in the Gulf market in India? “Tablez will have a much better chance of succeeding in the Indian market because of its decision to be present in the right categories – fashion and apparel, toys and F&B – the segments which have tremendous growth potential in the Indian market,” says Saloni Nangia, president of consultancy firm Technopak.
Nangia however, has a word of caution for Tablez to ensure its success: “The company has to focus on ‘value-propositioned’ pricing for its products in the Indian market.”
“One of the biggest advantages Tablez has is that the kind of brands it is marketing in India, especially the toys and juvenile brands, have products across various price points. This will tremendously help the company to target customers across various income groups,” she says.
Ahamed still seems to believe in the traditional bricks and mortar retail format, adding that Tablez wants to be present in large number of cities of India and plans to increase its store strength to 150 plus in the next two years.
“We are expanding across key cities in India and would have a presence in all the metros by end of this year. Besides leading cities, we are also selectively looking at expansion in some Tier 2 and Tier 3 markets such as Amritsar, Mohali, Mysore, Vijayawada, Coimbatore, Nashik, Nagpur, Baroda and Calicut, if the opportunities are right,” Ahamed says.
Retail industry analysts, however, caution on large-scale expansion of bricks and mortar stores, and instead point out that retail companies should go for a mix of physical and online stores for efficient use of capital, thereby increasing their chances of higher profitability and early break-evens.
“With e-tailing and e-commerce in India already reaching a respectable level and projected to see faster growth going forward, it would make better sense for retail companies to have limited offline stores and more online operations,” according to Harminder Sahni, managing director of Wazir Advisors, a business management consultancy.
Nangia supports this view. “Having a major online operation will help Tablez to efficiently use its capital and optimise its inventory management by locating large store houses at select locations in the country,” she says.
Will Tablez heed to this advice? Ahamed seems to be hinting at the company’s plans to get into e-commerce when he says, “We want to provide our customers with an omni-channel retail experience”.
Indian retail strategy has seen a paradigm shift in the last few years, with retailers discovering their sweet spot on store size and location. “Instead of the earlier trend of retailers chasing maximum retail space, they are now looking for smaller and efficient store size across formats due to availability and high rental issues. This has helped them to reduce store launch time and improve the various success factors of the store unit economics, such as sales per square feet per day (SSPD), operational cost, etc,” the Technopak report says.
The rise in disposable income and the young population in India have been the major drivers of growth in the organised retail sector in recent years. According to various studies on the country’s retail industry, the overall size of the industry is pegged at $792bn in 2018 and is projected to reach about $1.3 trillion by 2023. With organised retail at $81bn and e-commerce at $20bn last year, the share of organised retail in India’s overall retail market is only about 13% at present.
According to a recent World Economic Forum-Bain & Company report on the future of consumption in India, by 2030 about 140 million more households will move into the middle class bracket and another 20 million will move into the high-income bracket, and they will spend 2-2.5 times more on essential categories such as food and beverage, apparel, personal care and gadgets.
Ahamed is naturally excited about the projected growth figures for the Indian consumption story and the retail sector. “Our overall business is in an exponential growth phase currently and we expect it to break even at store operations level over the coming two years.”
Well, as they say in India, the show has just begun for Tablez.
Born in Nattika in the Thrissur district of Kerala in 1955, Yusuffali Musaliam Veettil Abdul Kader – or Yusuffali MA as he is widely known – is a highly respected businessman both in the Gulf and in India. LuLu Group International, the company he founded in 2000, has emerged as a diversified business conglomerate with interests in sectors ranging from retail, hypermarkets, hospitality, financial services, manufacturing and processing and real estate. The group, headquartered in Abu Dhabi, has presence in the retail, malls, hospitality and financial sectors in India.
Hospitality Twenty14Holdings, LuLu’s investment arm, has just opened Port Muziris, its first hotel project in Kochi. The hotel is managed by Marriot International’s Tribute Portfolio. Another four hotel projects across Kerala, Bangalore and Hyderabad are currently under implementation.
Malls The group already operates a LuLu Mall in Kochi and has another five projects coming up at Lucknow, Vishakapatanam, Thiruvananthapuram, Chennai and Bangalore.
Retail Tablez, the group’s brand retail arm, has 42 retail stores, mainly spread across the south of India. It markets eight international and home-grown brands across a number of sectors, including fashion and apparel, lifestyle, toys and F&B. The company is planning to expand its store network to Chennai, Hyderabad, Bangalore, Mumbai, Pune, Ahmedabad, Delhi, Chandigarh, Lucknow, Kochi and Trivandrum this year.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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