Smaller cities to pep up Promart’s business

Promart Retail, a discounted retail chain which was acquired

by VEMP Lifestyle and Apple Group of companies last year from Provogue India, has announced plans to open 100 new stores by 2013. It has signed 50 franchisees to open its value format stores across India, and the focus will be Tier II, III, IV cities. It also plans to enter states like Maharashtra, Himachal Pradesh, Jammu and Kashmir, Punjab, Haryana and Rajasthan through the franchising route. At present, Promart has stores in Ahmedabad, Vadodara, Rajkot, Vapi, Aurangabad and Mumbai and there are more than 50 brands available at their stores.

The store chain that offers 25 to 60 per cent discount on apparels and accessories feels non metros are much better for their discount store format because labor costs are 25 per cent less and real estate is 50 to 70 per cent lower. It feels that this will help the company to compensate for the low margins in business. Promart is now focusing on cities like Bharuch, Bhavnagar, Vapi and Valsad for opening new stores. And the size of stores will be around 1,500-3,500 sq. ft. The retailer is aiming for a sales target of Rs 200 crores through these stores.

The company believes that smaller cities are as fashion conscious as metros but accessibility is the only problem. “The promoters have deep pockets. We have invested Rs 100 crores in the business and will further invest Rs 50 to Rs 100 crores. This will be funded by promoters themselves and will give us space and time to settle the operations,” said Puneet Agarwal, CEO, Promart Retail.

The company is focused on turning each store profitable. “In a small city, a store can break even in one to one-and-half years, while it takes more than two years in a metro. Though the walk-ins are dependent on a store’s location, most of them have been seeing 70 to 75 per cent conversion rates,” he added. It may be noted that with only five stores Promart managed to achieve sales turnover of Rs 70 crores in the initial five months of its operations. And now it’s relying on upcoming house brands -- Tramorp, Profussion and Protees – to help them get higher margins in an otherwise low-margin business.