With consumers freeing their purse-strings once again, ITC is betting on opening more John Players exclusive stores. The brand is increasing the number of stores to 300 by this month-end from 225 earlier. But once bitten by overzealous expansion, ITC is now careful about where it sets foot. It does not want to shut shop as it had to do with 30 stores in the last two years.
Strategy behind rapid expansion-
John Player is a mid price brand and according to me "Churn Rate" is very high for mid price brand because of competition from local players and unorganized players.
mid priced segment has strong regional players like Madura garments ,Peter England and private levels of different retailers across geography. And since John Player is a mid price brand, not a destination for customer like Wills Lifestyle or any other premium brand and hence wouldn't be able to make customer to travel far for brand..
ITC want their presence at every potential corner so that customer can be reached effectively and efficiently and that is why they are taking route of rapid expansion and increasing number of stores.
With existing retail store John Player is growing at a slow relatively slow pace of 12% a year which is expected to reach 25% a year once expansion is underway.
To achieve this projected growth rate, ITC has attractive and smart plan to implement.The new stores that are set to open would be smaller but numerous.For an area which needs a 5,000 square feet store to cater to it, we will have five 1,000 square feet stores. The profitability also improves with smaller stores. The brand is also available in 1,000-1,100 multi-brand outlets across India. The idea behind opening small outlets in numerous number is to increase foot print and reach to various places(because for mid priced garments nobody want to travel much). So the focus is on high traffic streets rather than Malls, because volume can be generated through these high traffic streets rather than Malls who accounts more for premium brands.
Also, more than 60% sale of John Player come from it's own stores rather than multi-brand stores.Exclusive stores also let the brand display its range of denims, jackets, apart from shirts. That is also a reason company is eying to have more and more exclusive outlet for JP, which will lead the way to position it as a youth iconic brand.
Brands have been introducing youth-centric sub-brands under their flagship. John Players gets 50 per cent of its volumes from its casualwear range including T-shirts, shirts and denimwear. Its denim range launched in 2009, has been growing faster than the others at 20 per cent and accounts for 15 per cent of John Players’ sale. The brand is obviously banking on its new star endorser heavily. Ranbir Kapoor’s selection is justified by saying that JP needed a strong connection with the youth. At this leg of the brand's journey, Ranbir personifies the changes in the youth’s attitude.
John Players had been repositioned in 2004 as a semi-formal brand across India, a year after its launch as a formal menswear brand.When John Players repositioned, the brand needed a fashion icon like Hrithik Roshan. John Players is now ready for the next stage of moving closer to the youth.
Slotting 10-12 per cent of the brand turnover (market estimates put John Player's annual sales at Rs 200-250 crore), the brand will make Kapoor the epicentre of its brand communication. “We have lined up on-ground promotion, tying up with his films for promotions and also contests in the social media.” While the mass media campaign is slated to release in April, the Internet already has the making of the ad onYouTube.
The next few months will show if Kapoor can give wings to the brand’s designs on the consumer.
Key Facts-
The demand for ready-made garments in rural India will surge at a CAGR of 16.50% to reach Rs. 42918 Crore by 2010.
Increasing at a CAGR of 24%, branded apparel industry for men will cross Rs. 25,000 Crore by 2010.
Per capita GDP spending on apparel increased to 5.8% in 2006 from 4.9% in 2003.
In 2007, men’s apparel industry was mainly dominated by shirts (in value terms) accounting for 36.5% of total men’s segment.
The Indian fashion industry is expected to rise at a stupendous pace of 22.67% through 2012 from 2007.
Mid priced brands have been estimated Rs 4000 crores and dominated by several local players private brands.
Talking about ITC group, i have never seen anyone working the way they are. If one has to learn diversification, learn it from ITC Ltd. take company's recent forays-school bag, cigar, opening new hotels and now expanding their existing network of mid priced apparel. Till now they have successfully completed every planned work. hope for the best. soon result will be opened whether JP will be able to position itself as Youth Iconic Brand or not?
