“We are focusing extensively on our private label brands. We have endorsements and digital activation to support these brands,” Srinivasa Rao, senior vice president, marketing, Lifestyle said. The company has exclusive rights over four international brands and six private labels at present. The focus is on Ginger, Melange, Kappa and Forca brands added Rao. However he made it clear that the focus on private labels is not at the expense of the global and Indian brands it stocks. Nor does its digital thrust signal moving away from the brick-and-mortar experience.
At present around 70 per cent of the space in a store is reserved for other brands, private labels get the rest. Their share will go up in the coming months, but the company is quick to point out that there is no change in the business model. All efforts are geared towards making Brand Lifestyle accessible and appealing to young and millennial shoppers in the metros and outside; to that end the retailer says it is pursuing a more aggressive digital marketing strategy and an omnichannel existence.
According to a recent report on digital spending by BCG-Google, digital transactions in India could triple from around $40 billion to $100 billion by 2020. “Online users will also accordingly grow 2-3x across sectors; significant part of new users will come from non-tier-1 cities, women and older consumers,” the report said.
For stores such as Lifestyle, these numbers are compelling. Owned by the Dubai-based Landmark Group, Lifestyle says that its branding activities have had more of a digital skew in the last 18 months and the trend will continue in the months to come. At the same time, it is also stocking its online stores with a wider assortment of fashion and lifestyle products, a category that has seen significant response from online shoppers.
There are 70 Lifestyle outlets across the country at present and plans are to expand to around 84 stores by the end of this year. Over the last two years, it added 8-10 stores a year, and this year it is expecting to open 12-14 stores. Lifestyle stores are large format and usually located inside malls, the average store size is around 40,000-42,000 square feet. Can large format stores survive, given the hike in property rates and the growing digital influence on the sector?
Given the vast portfolio of brands that Lifestyle is home to, there is not really a choice when it comes to store sizes. “We have around 250 brands across apparel, watches, fragrance, shoes, beauty products, footwear, handbags and accessories for women, men and kids at affordable prices. We pick the merchandise that we believe is good for our customers,” said Rao.
Despite the costs and digital dominators, Rao believes that multi-brand, affordable retail store brands have a chance. The key, he says, is to keep products and brands that are relevant and accessible to buyers across budgets. The target audience is the young consumer, he added, and the stores and the digital marketing initiatives are being designed to appeal to this segment. And in terms of the stocking policy, the focus is on value for money rather than luxury products.
At present the sales from its digital channels is around 1.5-2 per cent of its offline sales and Rao said that the numbers are set to grow hereon. In the next three to four years Lifestyle targets 10 per cent of total sales will come from online stores—its own as well as other marketplaces. For this, the company knows it has to build a stronger brand for the store and for the private labels. “Combining digital, currently we spend between 2.5-3.5 per cent of sales for branding. Before we launched our digital store, only about five per cent of total advertising budgets went to digital. Currently almost 30 per cent goes to digital and we see that going up,” said Rao.
Lifestyle’s growth in spends on digital advertising is in line with industry trends. Digital advertising is expected to continue at a CAGR (compound annual growth rate) of 30 per cent to touch Rs 12,046 crore by December 2018, according to latest findings of the ‘Digital Advertising in India 2017’ report, jointly published by the Internet and Mobile Association of India (IAMAI) and Kantar IMRB. According to the report, digital advertising spend is about 16 per cent of total advertising spends in the country.
The store is also going all out to create a uniform experience between its online and offline platforms. The aim is to create an endless aisle where buyers can select their purchases online, step into a store for a purchase and vice versa.