Mumbai: Tata-owned Trent managing director P Venkatesalu said the company was not perturbed by the growing competition in the retailing space and had no plan to change its strategy.
Chinese online fast fashion brand Shein re-entered the India market earlier this month almost five years after its ban through the country’s leading retailer Reliance Retail. Since then, Trent’s share has fallen by a fifth due to potential threat by Shein on its lower priced lifestyle brand Zudio.
“I don’t think it was an easy market in the past where the competition was light and suddenly there is more competition. I think it was always very competitive, very intense. We used to be very different from where we are today, and we need to be very different from where we are today again, in the future, to be relevant, I think we should focus on the consumer,” Venkatesalu told ET.
The retailer had one of the fastest expansion drives by any retailer in the country with value retail format Zudio, which has opened over 500 stores in the last five years. During its earnings announcement, Trent, which runs Westside and Zudio, said it will upgrade or consolidate smaller footprint stores with newer stores in more attractive micro markets.
Value retailing where Zudio operates has seen a flurry of new competition from Reliance and Shoppers Stop to Aditya Birla Fashion and Retail over the past few quarters. In addition, demand slowdown for clothing and lifestyle products has persisted for the past two years.
“In general, demand has been less strong in the consumer space, but it’s been always non-linear, non-smooth play out. If you take any five-year period, it’s been playing out with sometimes spiky positives and spiky negatives. What is more important is, if we were to look at this market 5-10 years from now, we would have seen a 10-15% CAGR, and that is something which we should be betting on as a country,” added Venkatesalu at the Retailers Association of India’s (RAI) Retail Leadership Summit.
Goldman Sachs said in a report it is re-iterating its thesis that online-only is not a scalable model in India value fashion and Zudio has the potential to gain market share with low competitive risk; Zudio has currently less than 1% overall market share that is well spread out across geographies and city tiers. “Scale-up of any new competitor is likely to be gradual and not disruptive. Any online-only apparel retail model will have to operate at higher order values to be able to meaningfully scale,” said the report.
