Dabur India Ltd will now follow the franchise route for its retail stores, newu, and explore smaller format stores in order to expedite expansion. The company's subsidiary, H&B Stores Ltd, currently operates 27 newu stores, primarily in north India. Parikshit Sharma, COO, Dabur India Ltd tells us what led them to opt for franchising.
Ramanjit Kaur (RK): Shed some light on Dabur’s entry into the Indian health and beauty arena with H&B Store Ltd.
Parikshit Sharma (PS): Dabur India, with its in-depth understanding of the Indian consumer behaviour and capability to deliver a great experience at affordable prices, is uniquely placed to enter the Indian retail sector with a venture focused on health and beauty. Dabur’s H&B Store Ltd’s brand, newu, operates primarily in the beauty products retail market in India.
RK: What is newu all about?
PS: newu is a focused beauty retail venture, offering customers the widest product selection in the beauty products bazaar with a host of exclusive international brands like SEN from Turkey and Beauty Formulas from the UK. The stores also offer the latest in branded colour cosmetics, fragrances, skin and face care, in addition to fashion accessories and jewellery.
RK: Dabur had been operating through its company-owned outlets till now. What has inspired the company to adopt the franchise model?
PS: All our newu stores are company-leased. As we look at expanding our retail footprint in north India, we are now planning to foray into franchising. However, before taking up the franchise route, we have to ensure that we have a sizable presence in the market, which will be achieved by the end of the current fiscal.
RK: The company is looking at offering franchises only at high streets whereas the outlets in malls will be company-owned. What is the reason behind this strategy?
PS: Just to clarify, the outlets in malls are company-leased. As high streets are exceedingly expensive and have high rentals, it is an easier route to franchise the brand to existing shop-owners. This is because they already owe good options in high streets and have a family lineage. Further, we also envisage a paradigm shift in shopping destinations moving from high street locales to malls.
RK: What is your franchise requirement?
PS: Essentially, prime store location in important and well-established markets. The franchisee should have an astute sense of business and be financially stable. The initial investment would be in the realm of Rs 25-30 lakh.
RK: What kind of training and support will a franchisee get?
PS: We will be completely supportive in terms of providing training material on product knowledge, merchandising, visual merchandising, promotion support, operational efficiencies, etc.
RK: What was the biggest challenge you faced while establishing the business?
PS: The surge in retail rentals was the biggest challenge faced by newu during its initial period.
RK: Any advice for young entrepreneurs?
PS: Always keep your ears to the ground and understand what is happening in the market and what the consumer needs. That apart, business ethics and fundamental discipline is what I feel are the key to success in any business venture.
RK: What are the company’s future plans in terms of franchise expansion?
PS: The franchise route would be adopted for expanding newu’s retail footprint in north India. Our idea is to look at adding around 50 more stores in north India alone through franchise within the 2011-12 fiscal.
