With GST favouring organised retail trade, Max Fashion, which is into affordable/value format apparels, has charted out an aggressive expansion strategy.
The company is investing ₹300 crore to set up 50 large format stores (of nearly 12,000 sq ft each) across the country this fiscal.
While 30 of them have already come up, another 20-odd at an expected cost of ₹120 crore are expected by the end of this fiscal. A similar number – 50 stores – will also be added next fiscal (FY-19).
Max Fashion is a part of the Dubai-based Landmark Group.
GST a differentiator
“GST has come as a level playing field between unorganised and organised players, especially for value format ones like us,” Vasanth Kumar, Executive Director, Max Fashion, told BusinessLine.
According to him, GST has helped bridge the price difference.
Previously, offering by unorganised players were at least 30 per cent lower priced compared to their organised counterparts.
But post GST roll-out and with compliances increasing for the unorganised segment, the price difference in offerings is down to 15 per cent.
“People find it easier to opt for Max-branded offerings compared to unbranded ones,” Kumar said.
Hence, in its bid to remain competitive, the company has made it a point to initiate price hikes of as low as 2 per cent a year.
Good demand
Incidentally, Kumar points out that GST roll out has minimum disruptive effect, especially in terms of demand.
“GST did not disrupt demand. Whatever little disruption that came was at the supply side with our smaller vendors having some issues with the tax structure,” he said.
However, with supplies normalising now, Max expects to keep clocking a near 30 per cent growth in demand this fiscal.
This comes against the 25 per cent growth in turnover (over FY-17 ) to ₹3,000 crore that the company is expecting. It closed FY-17 with a revenue of ₹2,400 crore.
In fact, Max is also working on bringing its omni-channel strategy on stream by next year.
Called ‘click-and-collect’, it will allow customers to order online and later pick up the item from the stores.