April 16-May 15

Dollarstore Comes To India                                                                

Welcome to Unit Price Shopping. Discount retailing, with its many forms and variations and deriving inspiration from Western markets is taking root in India. Dollarstore, the US retail chain with four MyDollarstore (company owned) stores and 400 Dollarstore outlets, where everything sells for a dollar, is now on course to set up an Indianised version of its retail concept. In an exclusive chat with IMAGES, Rex Mehta, Founder and President, Dollarstore Inc. lays out his vision and plans for India.

"India is next on our expansion map and we are in the process of appointing master franchisees for various regions in the country," begins Mehta. A master franchisee, who Mehta declines to name, has already been identified for South India and our first Dollarstore outlet will be coming up in Hyderabad in 2-3 months' time. South was the obvious choice to effect an entry, due to region's greater familiarity and maturity with organized retailing, he adds.

The Dollarstore concept is driven by what Mehta calls 'Deep Discount Retailing'. Which means that consumers benefit from the retailer's clipped supply chains and inventory management. Sourcing directly from manufacturers and buying in volumes - something all discount retailers do- Mehta has customized a price point package for India. Instead of traditional single point pricing, there will be four price points in the  Indian stores -Rs.50, Rs.100, Rs.150 & Rs.200. Indian stores will also be smaller than their Western counterparts, averaging around 1,000-2,000 Sq. Ft.

What would differentiate Dollarstore from the domestic discount
formats (a la Sabka Bazar, Big Bazar and Giant) would be the merchandise mix.
Encompassing food & beverage cleaning products, kitchenware & bath products, party supplies, stationery &office supplies, health & beauty aids, school supplies, toys and 

videos, paper products, hardware, the portfolio would comprises both Indian and foreign brands. "About 25 per cent of the items would be foreign made," informs Mehta.

"What I am doing is taking Branding out of Retailing," asserts Mehta. And how do you do that? "We are removing the aura associated with 'foreign-made' goods," responds Mehta. Indian and foreign made items would be  available at identical price points. For instance, in a Dollarstore, an Indian painkiller could be  priced equivalent to a US-Made Tylenol. Supply chains would be enabled through a Central Warehouse in Dubai {where the company recently opened office) and through satellite warehouses in major Indian cities.

"The minimum we would require is 1,000 Sq. Ft. All stores are to sport the standardized Dollarstore look. Our corporate colors of Red, White and Blue would form the theme, with store staff attired in the store uniforms.

How would the Indian model differ from the US stores?

"Apart from the merchandise mix, very little." An operations
manual would set the guidelines for sales staff in accordance with the company directives on customer relationship and business practices, Mehta asserts. The revenue model would hinge on about six to seven per cent gross margins for the franchisee. In the US, franchisees are charged an initial franchise fee of $30,000, which Dollarstore uses to invest on the store. Royalties are given based on slabs for monthly sales. In India, while Dollarstore would be installing POS systems and investing in supply chain management, franchisees would be pumping in funds for interiors and staff

With 50 outlets targeted for the next two years, Kolkata is next on the agenda, and master franchisees are currently being identified for East and West India. Dollarstore is also extremely gung ho on prospects in the Middle East and has tied up with a leading financier to open 100 stores in the Gulf in the next two years.

This article is reprinted from IMAGES ( http://www.imagesfashion.com/back/april/opportunity.htm ) New Delhi, India.