Decoding Westside Business Model from the AR of Trent
Overview
Westside accounts for around 90 percent of the Company’s revenues. Aspirational exclusive brands are the key differentiators of the business. As of March 2019, Westside had presence with 150 stores across more than 70 cities and online reach across India exclusively through Tatacliq.
Differentiated business model
Own brands contribute over 97 percent of total revenues. Westside’s “own-brand-led” business model allows active control across the value chain with respect to key aspects of design, branding, sourcing, logistics, pricing, display, promotion and selling. We deliver latest fashion trends through a portfolio of differentiated in-house brands. This business approach has been more robust and sustainable than the department store models that predominantly retail third party brands including from a ‘return on capital employed’ perspective. Empirical evidence also seems to suggest that globally, retailers who control the entire value chain are relatively more successful.
During FY19, Westside continued to focus on key initiatives such as:
- Delivering latest fashion trends at sharp prices
- Strengthening additional differentiator categories such as lingerie (Wunderlove), cosmetics (Studiowest) and athleisure (StudioFit) with trendy offerings.
- Focus on latest fashion each week through a “fastfashion” anchored supply chain.
- Accelerated store expansion program to scale up reach.
- Active management of store portfolio through multiple initiatives.
- Progressing omni-channel proposition through integration between stores and online.
Aided by the approach, Westside registered 9% percent like-for-like growth in sales in FY19.
Exciting fashion brands
Westside owns a portfolio of exclusive and differentiated fashion brands. Our team from designers to customer service work each day to understand the customer’s unique fashion tastes and provide products in a fast and agile manner. We also continue to reinvent/ scale up existing brand portfolio as market and fashion trends keep evolving.
Encouraging performance across brands reflects the ability to connect with audience across segments. This also allowed a rapid exit from residual pool of third-party brands that were previously retailed from Westside. These brands were successfully replaced by own brands without impact on customer experience.
Exciting campaigns through brand videos and social media engagement further support these brands in communicating their unique identity.
Some of our key brands are listed below:
As depicted in the chart below, the share of Wunderlove in the lingerie segment has consistently increased and has afforded exit of third party brands.
Highly prominent stores & differentiated store experience
Exciting shopping experience coupled with superior visual merchandising, both online and in-store, are the key drivers for reinforcing brand credentials. Westside emphasizes on delivering “fashion theatre” experience through statement making stores, presence in marquee locations, striking windows & in-store displays, exciting store ambience and convenience of shopping.
During the year under review, we pursued the following key initiatives on this front:
- Progressive upgrade of existing stores to the latest visual scheme
- “See it buy it” synchronization of offer, hotspots and open window presentation
These initiatives continue to deliver encouraging results including growth in walk-ins.
Active management of store portfolio
a) Sustainable store expansion
In FY19, Westside added 27 new stores- the highest ever in a year. Numerous micro-markets with significant growth potential are emerging across India. Westside continues to monitor opportunities in these micro-markets and pursue disciplined expansion across regions and tier 1, 2 & 3 cities with strong focus on store economics.
Property selection happens through a rigorous set of reviews, which utilize multiple key criteria to identify promising locations with strong economics. The in-house property team is supported by a well-defined set of processes for analyzing the potential market & catchment to pursue expansion opportunities.
An average Westside store has a footprint of around 18,000 sq. ft. Total investment in a new Westside store leased and operated by the Company is in the region of ₹ 6-7 Crores across capex, deposits and inventory. A new store requires fit-out investment of around ₹ 2,000-2,500 per sq. ft.
b) Accelerated store modernization
As an ongoing initiative to emphasize contemporary look & feel and improve consistency of brand experience across the store portfolio, Westside has accelerated the modernization program. In the year under review, 9 Westside stores were modernized and the customer response has been postive and encouraging.
c) Absorptions
We also engage in active store optimization program, which involves identifying brand diluting stores and replacing them with newer stores in the micro-markets.
The exercise has delivered encouraging results and the Company is committed to manage the store portfolio actively by taking steps as required. In the year under review, 2 stores, which were seen to be in unviable locations/schemes and lacking a sustainable growth outlook were closed.
d) Space management
Efficient utilization of retail space is one of the key initiatives. Westside continues to assess stores in terms of revenues and revisit space allocated to brands with differentiated performance. Sales per square feet is one of the key measures which assesses retail efficiency in terms of space utilization and the measure has shown a growing trend for Westside.
Customer communication
Customer listening and engagement is an integral part of shopping experience. Westside engages with its customers in following ways:
a) In-store and social media
In-store activities and social media are deployed increasingly as mechanisms for customer engagement. Geo-targeted digital campaigns around the catchment areas of our stores and on relevant social media channels are being leveraged to connect with the target audience.
Separately, digital video campaigns promoting our power brands is an initiative, which has been actively pursued and has received very encouraging traction with highest number of views- 46 lakhs in FY19.
We also engaged with our customers through associations with fashion bloggers, vloggers, influencers, popular fashion events and youth events. The innovative usage of targeted communication methods enables us in connecting with our customers better and enhancing customer satisfaction. During FY19, followers on social media including Facebook, Instagram, Twitter crossed 9 lakhs.
b) Customer listening
Westside ramped up its customer response management and reduced its FTR (first time response) to 1-hour average.
We also implemented online reputation management through 360 degree customer listening and response system, which captures 100% of complaints, queries, appreciation and feedback from multiple channels on a real time basis.
Aided by multiple initiatives including the ones mentioned above, the average bill size registered an encouraging growth of 6 percent in FY19. Bill size represents the average amount spent by each customer on their purchase. The following chart depicts the trend of this measure for Westside in recent years.
c) ClubWest
ClubWest membership allows customers to make purchases and avail offers in all our stores. Power targeting and customized campaigns have helped us in improving contribution of the active members to over 80% and increasing shopping frequency of less active members. In FY19, our Clubwest base grew by 14% to more than 50 lakh memberships.
Operating Standards
Westside seeks to actively refresh its offerings on an ongoing basis to synchronize with the latest fashion trends. This is made possible through an on-going emphasis on leveraging our supply chain model coupled with rigorous reviews. As we emphasize speed across the value chain, shrinkage cost is one of the bellwether measures with respect to operating efficiency at stores and distribution centers.
Integrated value chain
Given the competitive marketplace and an audience with significant real-time exposure to global fashion trends, Westside is increasingly focusing on rapid delivery of latest fashion by sharply reducing the “concept to customer” time.
Sourcing
We closely engage with the suppliers to deliver quality fashion offering at fast pace. This is achieved through multiple initiatives such as driving unit efficiency, optimization of sourcing geographies, sharper fabric choices, defined supplier base, rigorous social compliance and deployment of technology to monitor production & quality milestones.
Supply chain
A sustainable supply chain with strong inventory disciplines is the backbone of the business. Pune and Vapi warehouse ecosystems together service the growing requirements of the business. Use of technology and strong inventory management system enable delivery of fresh fashion every week and faster replenishment on an ongoing basis ensuring over 99 percent efficiency.
The Company is committed to invest in scaling up and upgrading the supply chain network to support sustainable business growth.
Integrated stores and online
Westside has exclusive online presence through Tatacliq- a Tata Group marketplace initiative.
Significant progress was made on omni-channel initiative during the year under review. The online and in-store offering of the concept are now closely aligned.
During the year under review, multiple initiatives were taken to strengthen the online offer as a “convenience” proposition including centralized inventory management and leveraging the existing store network in various omni-channel respects.
A customer can enter a store, have a look at the latest fashion offer, touch and feel the products, try and buy it using their smartphones and receive it at home/office.
Owing to the integrated model of stores and online, our customers can relate to our brands at the most convenient moment, place and way for them.
Notwithstanding, the small share of overall revenue base, it is encouraging that online revenues continue to witness traction.
Going Forward
Westside is seeking to leverage the opportunity afforded by the Indian fashion retailing space with the following guideposts.
