V-Mart planning to expand small town business online

V-Mart Retail Ltd., India’s most-profitable department store chain, is planning to sell apparel and other goods online in a bid to attract youth in villages and small towns.

The retail store, which runs medium-sized stores that sell clothes, accessories, footwear and everyday staples, is also planning to add 30 to 40 stores every year to its current 177 stores, Samir Misra, the Harvard University-educated chief operating officer of the retailer, said in an interview. About 80% of V-Mart’s stores are located in cities with a population below one million.

“We are in the process of an omni-channel strategy,” Misra said, referring to integrating both online and physical shops. “We will be finalising our e-commerce strategy and omni-channel model in a year.”

Tractor makers to department store chains are wooing residents of India’s villages, where about 70% of the nation’s population resides, on expectations that normal monsoon rains for a third-straight year will increase farm output and boost disposable income. V-Mart doesn’t plan to expand in larger cities because of the demand from smaller cities, said Misra.

“Metro market is also big indeed. But we have no intention to head there at this point of time,” Misra said. “We would continue to proliferate stores” in smaller towns, he said.

Return on equity, a measure of how well shareholder money is reinvested, was 25% at the company, the highest among its peers, while another measure of profitability, return on capital was at 24% in the year ended March, according to data compiled by Bloomberg. The company’s shares have risen 60% this year and closed last week at Rs 2,392.75.

India has very few apparel retailers and brands who have rightly understood middle class consumers, Wazir Advisors, a consultancy said in a June 2017 report. Two-thirds of consumers reside in smaller cities, which are emerging as attractive apparel markets.