00:00 Welcome, Mr. Agarwal. Thanks for joining us. So, you have reported a 56% YOY growth in
00:07 the year ago period, which was backed by around 47% same sales store growth. Now, the question
00:14 to you is how do you expect the FY24 to close for V2 retail? And what are you expecting
00:21 of the next fiscal in terms of growth?
00:23 Yeah, so we have seen a similar kind of growth that we saw in the first nine months of the
00:30 year coming into the fourth quarter. So, we've seen the footfalls increasing and the customers
00:36 coming back into the stores. So, we've seen similar trends going on to Q4. And we're going
00:41 to close this year very strongly, just the way we did the first nine months of the year.
00:46 And looking forward for next year, our target is 10% SSG. Even with the 10% SSG, we would
00:54 get a per square feet sales for a month of about Rs. 1000 per square feet, which is our
00:59 internal first target for next year FY25.
01:02 Okay. And so, several industry peers have reported a weaker LFL in recent quarters.
01:10 But V2 retail has posted a stronger growth. And also strategies such as offer, you also
01:16 mentioned in your previous interviews that strategies such as offering discounts have
01:20 been a part of your strategy to attract more customers. Can you elaborate more on what
01:25 led to this much growth? And what strategies exactly played out really well for you?
01:32 So I would say the growth is, you know, constituted like the factors would be about 18 to 20 factors
01:39 that constituted to this amazing growth. But if I have to point out the four or five
01:43 main factors, the number one factor would be product development. So currently we are
01:48 selling about 35% of our designs are developed in-house by our own designers. That number
01:53 used to be just 10% one year back. The second biggest factor is now we are selling more
01:59 and more goods at full price. So for example, if we were selling about 80% of goods at full
02:05 price one year back, now that number is almost 87%. So that means less goods are slow movers
02:12 and we are churning out the inventory faster at the store level. And the third factor is
02:19 also because we have three manufacturing units and we get a costing benefit of about 10 to
02:25 15%. So we are passing on that benefit to the consumer. So that gives us a price advantage
02:30 compared to our competitors. So I think these three factors would be the most important
02:35 factors, but combined I think it's a cocktail of 18 to 20 factors that have contributed
02:42 to the growth. Okay, that's really interesting. But as per
02:46 industry reports, LFL is expected to remain weak at least in the near term due to factors
02:53 such as customers spending, shifting towards experiences and products, post COVID revenge
02:59 shopping, peaking and also the headroom for growth in certain key geographies is sort
03:05 of very narrow. So how do you plan to buck this trend of a sluggish LFL and sustain growth
03:12 in FY25 considering the factors that you just mentioned that acted really well for you?
03:19 I think it will depend on the strength of the execution and the efficiency of the company.
03:24 We don't foresee any slowdown in LFL growth. Like I said, even for next year, we are forecasting
03:30 at least a 10% LFL growth. So it depends how strong your brand is, how strong the assortment
03:36 is. So if we feel that, if we continue doing the good things that we've been doing consistently,
03:42 I don't think we have to worry about LFL degrowth or slowing down.
03:46 Okay. And so as of December, you opened around 14 stores and expect to take the count to
03:54 a fresh stores to 30 by the end of the fiscal. Are we on track to meet that target?
03:59 So we said we would open about 25 to 30 stores in the next one year. So we have already opened
04:06 seven stores out of that and we are on track. So we will be able to open 25 to 30 stores
04:11 in the next 12 months. Okay. And so going forward,
04:15 are you planning towards more store expansions or in FY25, would you also like to focus on some
04:22 sort of consolidation or improvement in store efficiency? And also like what is your target
04:28 for store expansion, not just in the near term, but in the next two, three years?
04:32 So I would say the last three years were a consolidation period for us. So now is the
04:38 time for expansion because we have established a model and we are posting strong numbers.
04:44 And going forward, we want to at least open 25, 30 stores every year, but we do not want
04:50 to compromise on profitability. So once we open one batch of stores, if we feel that we are still
04:55 meeting the metrics in terms of EBITDA percentage, in terms of post-prep sales, we will open 25,
05:01 30 stores every year because even with our internal accruals, we can easily grow at 30 to 35% every
05:08 year in terms of revenue. That's great. And also another aspect is about
05:15 online shopping and the e-commerce that is very significant. So how is V2 doing on that front
05:23 and how much contribution to sales are you expecting from this segment going forward?
05:27 So currently we are not doing any e-commerce. We don't have any online sales because our ASP is
05:34 only 240 rupees, which is very low for, you know, to be profitable and sustainable online.
05:40 So we will launch our Omnichannel model in a couple of months where the customer can pick
05:46 up the goods from the store or return the goods at the store where we can save a lot of logistic
05:51 costs. So it can be an additional channel to our existing customers. So we are already working on
05:55 that and we hope to be live in the next quarter. Can you elaborate a little more on this Omnichannel
06:01 model? Will it be your own model or will you be collaborating with other e-commerce platforms for
06:07 your sales of products? It would be our own website. So we will be using our stores as
06:12 mini warehouses and we will be leveraging the same inventory that we have at the store level
06:17 and delivering from the store itself. Okay, great. And another aspect that I was
06:24 reading about a few, reading a few reports and as per an RAI report, the southern and the western
06:32 part of India has seen sort of better growth in the retail segment, especially in the food and
06:37 apparel space and the clothing space as well. So you have also built a significant presence
06:43 in the northern part of the country. And are you also planning to increase your presence in the
06:50 southern markets? Yes. So Karnataka has been a good market for us. We just opened another store
06:55 in Karnataka. So we are looking for 5-6 stores in the same cluster because it has been a good state
07:02 and a good market for us. So we are open to expanding in the south as well. Okay. And also
07:08 talking about specific segments, what are you expecting of the major fashion and apparel space,
07:15 not just for FY24, but also for FY25? And apart from this segment, what are the other segments
07:22 that are likely to shine or remain weak on the contrary going forward for you?
07:26 So one biggest trend that we have seen is the growth of fashion products and fast fashion
07:32 products. So high fashion, fast fashion products used to only constitute about 15% of our business.
07:38 Whereas now we have increased it to almost 30-35% of our business because the customers are
07:43 demanding fashion and because of social media penetration, everybody is aware of the latest
07:50 trends that are going on in the market. So that is one of the biggest changes that we have seen
07:54 in the value fashion space. So innovation and staying up to date with the latest fashion is
07:59 very important to be successful as a brand. And I think because of ballooning middle class
08:06 and everyone having access to social media, this is the perfect space to be in. And people now
08:13 want to wear one, you know, they want to, the frequency of purchases have increased,
08:19 whereas the value of one product has decreased. So we have seen people coming back to our stores
08:25 more frequently. And that is the biggest trend change that we've seen.
08:30 Okay, so this is definitely a key trend. And there are other industry experts that have been talking
08:37 about how fast fashion is gaining pace, but at the same time, the kind of interest, consumer
08:44 interest that should be increasing in consumer interest that should be towards the fashion space
08:50 and not just in fashion, but also in the beauty and personal care space. Some people are of the
08:53 view that it is not still at par as it should be if we compare it with the per capita increase in
08:58 per capita income. So any other key trends that you see not just in the apparel and fashion space,
09:04 but other spaces like grocery and gifts, what are the segments and what are the strategies
09:11 around that do you have? No, like I have, the last four, five years,
09:16 we've seen the data where the rural spending is increasing. And even especially in tier two,
09:22 tier three towns, even if you look at the e commerce space, like most of their sales are
09:26 now coming from smaller towns. So obviously, the Indian middle class has more money to spend more
09:31 disposable income. So the spending is increasing across categories. And if you talk about groceries,
09:38 cosmetics, beauty products, and value fashion, I would say these are commodities and now it's not
09:43 luxury. So it's not very price elastic or inelastic. So like, even a lot of inflation doesn't
09:51 reduce demand, because it is an essential product for the customer. So I think it is a very safe
09:57 space to be in and the CAGR expected to you know, this sector, this space is expected to grow at a
10:04 double digit number for the next five years. So I think this trend is going to continue and whoever
10:10 comes out the strongest will become one of the biggest companies in India in terms of value
10:14 fashion retail. That's really positive of you. And you had also come up with a number of marketing
10:23 offers and also discounts, especially in the last quarter. And, and also, so what are your plans
10:30 around that? Will you continue with that or any, any strategies that you have around price cuts
10:36 going forward? So two strategies that we've undertaken, one is the freshness index at the
10:42 store level. So we want the freshness level at the store to be maximum. So we identify slow movers
10:48 after just 45 days, and then we start putting discounts, because we don't want to miss on the
10:54 fast mover that can take the space that the slow mover is taking at the store level. So the
10:59 opportunity loss is huge. That is why one of the biggest changes that we have made is even at an
11:05 early stage, we identify the slow mover and put discounts at the store level. And the second,
11:09 we are always giving our customers billbuster discounts and marketing discounts if they spend
11:15 more. So those strategies are in order to increase the average order value, average bill value,
11:20 so that the customer purchases more, so we can get more revenue for the same customer.
11:24 Okay, and around that, because so many strategies playing out for the next years and your store
11:33 expansion. So what are your CapEx plans for FY25? So if you open 30 to 35 stores in the next 12
11:42 months, so we would need about 80 crores of CapEx and inventory, working capital needs.
11:48 So it's broken down like about 35 crores is needed for CapEx and about 40 to 45 crores is needed for
11:54 working capital that is for inventory, which can be financed through our internal accruals.
11:59 Okay, and also there is one last question that I would like to ask you on the what's happening
12:08 right now, as you know that elections are around the corner. So any significant growth and up or
12:15 uptick in sales likely for V2 retail and any perspective on that, that you can share with us?
12:23 We haven't seen any kind of trend so far. But historically, in some states, usually there is a
12:30 higher spending during the election year. So hopefully that's the case this year as well.
12:36 But there's a lack of marriage season in May and June. So that might set off the positive
12:41 impact of the elections this year. Okay, thank you so much for talking to us. It
12:46 was great having you here and all the best to you for all the future ventures. Thank you so much.
12:52 Thanks a lot for having me.
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