With over 60 stores across India dedicated to children, Toonz Retail India Pvt. Ltd. is expanding its canvas to also be a part of the online world by launching an online store. But what makes them different is that the online retail platform shall not eat into the business of their franchisees but rather compliment them as the franchise stores along with the company owned and company operated stores shall be used as fulfilment centres. Sharad Venkta, managing director and chief executive officer, Toonz Retail India Pvt. Ltd. tells us more about the company and strategies adopted to ensure an enviable growth in a niche category as that of children.
The Inception
The inception of Toonz Retail India Pvt. Ltd. has its root deep seeded in a fact that in India there is a dearth of retail stores dedicated for children. To hear it from Sharad Venkta, “Every parent wants to provide the best to their kids. As a parent, we started to realize that kid’s segment had not got its due attention. The market was and till date remains hugely underserved. We strongly saw an existing market gap and a huge opportunity to be tapped. Toonz started in October 2010 looking at the market scenario, capturing a gap of end-to-end solutions for parents, which is a one-stop shop for all the requirement of parenting from 0-12 years.” The initial focus for the venture was to retail merchandise, made up of cartoon character merchandising however the company later expanded to a branded kids retail play.
Toonz is promoted by Ankur Aggarwal, who also owns “Crystal Crop Protection Private Limited” one of top 5 Agri input company in India. The company is funded through internal accruals though according to Venkta, they are open for a strategic partner to take care of expansion. This can be well justified by the number of stores the company has managed to pen in a span of a little over four years. Our of the 62 stores, more than 40 are franchise owned and franchise operated thus accentuating the fact that the model is doing well and generating considerable interest.
Coming back to the formative years, Vekta shares, “We did extensive survey and market study for about 12 months before the launch of the brand and continued to do consumer survey to identify the need of parents for improvement in range and customer experience. In our surveys we found out that there is no national brand which parents could relate to for infants and young kids and that gave us an idea to launch our own brands in the name of “WOWMOM” for the age group of 0-3 years and “SuperYoung” for the age group of 3-12 years. We could get the merchandise of these brands within six months from the idea of the brand.”
Toonz offers everything from prams to puzzles, walkers to rockers, clothes to crayons, blocks to board games, rattles to remote cars and diapers to dolls. Venkta elaborates, “All our stores fulfill all requirements for a customer from being a fashion destination to toy store or be it shopping for stationary. We offer more than 3500+ SKUs for kids with a price range starting from Rs.99/- to Rs.24,999/-.”
As for the best performing stores; their Pune, Bangalore and Allahabad store seem to be doing well with approximately 400-500 footfalls per store weekly, with the average turnover of 1.5 crores+ per store.
Market Dynamics
The more disposable income, shopping for children has come out of the closet. From toys to video games and apparels, the shopping list for children is as exhaustive as that of an adult. Talking about the current dynamics and what the future holds for this category, Venkta shares, “We are expecting kids’ retail sector to grow healthy double digit, however, the organized retail sector is expected to grow at 1.5 to 2 times per annum for next 5 years. 31 per cent of India’s population is less than 14 years, with 2 Crore + births every year we think this segment has a huge potential. There is increased customer awareness more disposable money, more aspirations, which will drive consumption. Today, parents do not want to compromise on giving their best to the child. Anyone wishing to enter this segment, we welcome them.”
Operation Strategy
As Venkta shares, their entire chain is franchisee driven and to build up an ownership in the chain, the company ensures to team up with people who are on a similar wave length and have a passion to drive sale and dreams. He adds, “Our store size range from 1200 – 2500 sq ft and draw a capital investment of 35-50 lakhs. Our franchisee model is based on business partnership model where we invest in merchandise and franchisee invests in store set-up. We provide stocks to franchisee against certain security deposit. Similarly, the store operating cost is also shared to make sure involvement and commitment of both the business partners. We don’t prefer pure investors as our franchisee partners.”
The growing aspiration level being witnessed by people living in tier 2 and tier 3 cities and towns has given retail a breath of dresh air considering the metros seem to be more or less saturated. This holds true for Toonz Retail as well where the major thrust of their expansion is being seen in tier 2 and tier 3 cities / towns. Venkta shares, “We are more concentrated in II and III tier cities where the markets are open and the availability is restricted. There are two challenges to open stores in bigger cities. Bigger cities come with its own culture and costs. Hence it makes retail slightly less viable and the gestation period for breakeven is longer. Tier 2 and 3 markets have similar needs and aspirations in this new age of uniform media. We realized that there is a huge demand for complete kid’s solution retail store. Because of limited options in these markets it becomes easy to acquire first set of consumers. Also these town come with smaller cost in terms of rental. Since markets are small there are lesser avenues for the customer to spend on and hence disposable money also is generally higher in these markets in the hands of customers. So purely from demand supply point of view it makes lot of sense to put our money in smaller towns.”
No band today can afford to not have a loyalty programe in place. At Toonz too, there is a loyalty program in place with a decent enrolment rate of more than 50,000 members pan India. According to Venkta, this program will be replaced by more robust program wherein analytics would play a key role in understanding buying behavior, and help develop strategies. As Venkta aptly shares, “Loyalty program would be more on the customer lifecycle management.”
As part of bringing and building in more patron, apart from the loyalty program, they are in process of launching “Face of the Month” contest wherein one child from each city where Toonz is present will be made Brand Ambassador of Toonz for that particular city for a month. Venkta shares, “There will be a robust selection process considering not just looks of the kid but also his overall achievements in sports and studies. This will motivate kids in overall personality development.”
Online Space
By March 31, 2015, the brand shall be available online. According to Venkta, before 31st March beta version of Toonz e-commerce platform will be launched making Toonz omnipresent across channels, consumer can buy almost all SKU’s from Toonz platform.
Currently e-commerce is seen as competition to the traditional Brick and Mortar format of retailing but Toonz has developed a fantastic strategy for other retailers to imbibe and follow. Venkta explains, “The issue of competition between online and offline is something which we are set to change and make our franchisees partner in e-commerce sales as well. Toonz would be using all the stores as a fulfillment center to fulfill the orders placed by the customers online. This would help save the cost of fulfilling the orders and franchisees would be happily working closely with Toonz. Apart from this e-commerce platform will allow us to operate even smaller size stores as customers can experience the store and larger range can be showcased on e-commerce platform.”
Managing Manpower
No matter how good the brand, it is the manpower associated with the brand and specially the front end staff that carry the responsibility of ensuring that the brand is a favourite amongst its target audience. At Toonz, the total manpower at present would be 370 including the corporate offices and the outlets throughout India. Venkta adds, “Most of our people are based at stores directly serving customers. We are still hiring people at steady pace with every store expansion. Though we are looking at a small team to operate in back end, we are hiring people in design, merchandising and operations. At store level we continue to hire 5 people on an average for a new store.”
The company makes use of a lot of digital medium to communicate and train its staff. Most of the content of the training is linked to new products / customer service and company values.
With 62 stores across India and the soon to be launched online channel, the company has gone ahead to prove the potential a kids store has in the country. The fact that more than half of their stores are owned and operated by franchise also proves that the market is willing to invest money for a store dedicated for children. And to sum it up, at Toonz the company is eyeing store breakeven in the current financial year and are expecting YOY growth of 75 per cent this year under company level.
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