In this presentation we share approaches to store-in-store, models and their advantages, best practices for local brands to pursue store-in-store for national expansion.

1. Browne & Mohan
Store-in-store
strategy to expand
into national
markets
All photographs used in the presentation are
owned by their respective copyright holders.
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2. Regional brands and their growth
 Regional brands command a significant part of markets in many sectors such as
fashion, food, aerated drinks, wines, etc
 Their USP
1. Strong local reputation
2. Childhood association
3. Familiarity
4. Ethnic association
5. Meet unique needs (for example, sophisticated clothing in smaller sizes)
 Foxon Park, Vernor’s or Maxie (all regional soda brands in USA), or Campa and Kali
soda (local brands of India), Bateel or Just Falafel (local brands of UAE) Potato
Corner or Max (brands from Philippines) they have all been expanding into closer
markets at home and then to international markets.
 All regional brands have five major challenges: Expansion, Control costs, Customer
experience, Prices and sales
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3. Major factors underlying locals going national go bust!!
35%
31%
30%
25%
20% 18%
15%
15% 14% 12%
10%
10%
5%
0%
Capital related Inadequate Lack of systems Promotion Brand launches Others
management management
structure
 Judy’s Inc, Bakemans Industries, Laura Ashley, Wickey Furniture and many local
brands that were quite profitable and competed with the big box stores or MNC
failed for management related and operational control reasons.
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4. Growth Channels for local brands: Supplier to large retailer
 Advantages: Quickly widen user base, improve market presence, ride on the market
pull of retailer
 Disadvantages: low bargaining power , receivables cycles, inventory management
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5. Growth Channels for local brands: Direct retail presence
 Advantages: Total control of expansion, customer experience, prices, sales
 Disadvantages: high investments and risk, coordination issues
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6. Growth Channels for local brands: Store-in-store (large retail)
 Advantages: Increase user base, expand with control over brand and sales
 Disadvantages: training & attrition, receivables management, inventory
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7. Growth Channels for local brands: Store-in-store (independent)
 Advantages: low cost expansion, complete control of product to consumption cycle
 Disadvantages:: Trust building with partners, IT investment, revenue sharing conflicts
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8. Why retailers prefer Store-in-Store
 Large retail formats and aggregators recognize that allowing partners to directly
manage their offering, inventory, price and customer services, they would be pursue
asset light market making activities. For example, $47 Billion of Amazon revenues
comes from other vendors who directly manage their products, inventory, prices
and customer order management.
 Retailers and aggregators realize by allowing partners to invest in highly specialized
or trained manpower to educate and influence customers, they benefit from right
pull to get shoppers to their marketplaces. Macy store-in-stores of Sunglass Hut,
Lush or Destination Maternity bring the targeted customers and their families to
spend time and shop. Edwin Watts Golf, Work N Gear and Whole food stores at
Sears or Jimmy Chao and Reiss stores at Bloomingdale for attracting the right mix of
customers.
 Retailers also realize they could benefit from extended presence of specialized skill
sets of the partners (for example, Target benefits from mobile technology
experience of Radio-shack store-in-store)
 Stand alone retailers find this is an asset light model to offer comprehensive
product experience and maximize their space rentals as they can earn predictable
rents than seek profits from sales. (Kemp Fort or Saks stores).
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9. Expansion economics of local brands going direct
10%
5%
11%
58%
16%
cost of finished goods Property store labor transport & distribution Others
 Based on a national expansion in 6 cities of India, property and store labor are the
two major costs the smaller local brands need to consider when choosing between
the large format retailer lead model or smaller independent store led models.
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10. Store-in-store models and product fit
12
10
8
6
4
2
0
Large retail Independent
 Consumer preferences indicate Shoes, Children apparels, organic food, men and
women apparels can be explored in independent store models.
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11. Taking local to National: Key Store-in-Store principles
 Adopt Evolutionary growth: whether large retail format or independent route expose yourself
to manageable growth. Learn from the experience, fine tune your engagement model and
invest in required controls.
 Control costs: managing inventory and receivables is a big challenge. Adopt IT solutions to
benefit from higher visibility, better SKU management and payments. S M apparels, which
pursues a independent store-in-store has invested in reliable IT backbone to completely
manage the independent store-in-store expansion.
 Focus on Product quality : whether large format or independent model, invest in product
standards and quality process.
 Measure & Control TCE: customer connect is important to stay “non-commodity”, invest in
CRM tools and approaches.
 Protect your uniqueness: Protect uniqueness and stay closer to Home! In product and
experience, that is where the growth is.
 Learn to say no: Local brands loose advantage by diversifying into unrelated expansions or
unrelated alliances. Learn to say no to large retail partners.
 Promote and invest in communities: The biggest advantage you have is the loyal community.
Invest in communities, use both social media and other PR approaches.
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12. Thank You
For any queries, please contact :
Srinivas Sawkar
157/A, II floor, 10th A Main
Jayanagar, 1st Block
Bangalore. 560011
PH: 91-80-2656 5164, 40951170
ssawkar@browneandmohan.com
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