MAX to introduce special cross functional initiative, Easy Kiosk

Vasanth Kumar, Executive Director, MAX Fashion India joined the Landmark Group in February 2005 as President, Max Retail Division—Lifestyle International.
Vasanth is a M. Tech from IIT Madras and a PGDBM from XLRI. Before joining the Landmark Group he spent a decade with the core Peter England team and before that, he was with Hindustan Lever Ltd. Combining a lethal blend of Fashion, Retail and FMCG learnings, Vasanth has taken MAX, which was a new entrant in the Indian fashion retail space in 2006, to the very top of the ranking charts. MAX is, today, the single largest mono-brand fashion retailer in India.
Vasanth Kumar, Executive Director, Max Fashion India, shares the secret mantras of the mammoth success of MAX Fashion India in an exclusive interview with IMAGES Business of Fashion’s Managing Editor Rajan Varma.
MAX is now clocking about Rs 2,400 crore of sales annually and grows at a rate of 32-33 per cent per annum. How do you manage to grow at a pace which is almost thrice the industry average?
If I were to put it in one sentence, I would say that we believed in the ‘power of one’ from the very beginning. One soul—one brand—one format—one consumer—one proposition; that has always been the core strength of MAX. It hasn’t been an easy journey and there have been three phases of the MAX story in India. But it is nice to feel vindicated and I am very proud of my team that has ardourously toiled to help us reach where we are today.
Can you run us through the phases that you mention from the very beginning?
Our first phase, which spanned the years from the launch of our first store in Indore in 2006 to 2010, were our formative years. At MAX in India, we consciously chose to go into a 100 per cent private label format. The challenge at the beginning was that for a start-up, with a single mono-brand private label, it was extremely difficult to convince customers as to why we were superior to others, because others already had recognised brands in their stores whereas we didn’t. To build credibility, what we did is that we vigorously took back the unsold stock, replaced it with new stock and never ever went into price discounting. What resulted is that MAX stores always looked fresh. Freshness was the key. And this convinced our customers that we were a fresh fashion store and that with us they could always expect quality. So, the consumers found faith in the brand name MAX.
The second thing we did is that we took up only one size – 10,000 sq.ft. So, whichever MAX store the customer visited they got a similar and a familiar experience. And for every single department, whether it was men’s wear, women’s wear, accessories, etc., we chose to target just one customer segment, which was the middle to upper middle class family.
Did you also take some strong tactical decisions to imbibe certain competitive advantages?
Oh yes, absolutely! Our real estate strategy was unique. We didn’t try the conventional. We never sought ground floor locations. In fact, even today, MAX is not present on the ground floor of any mall. By making this conscious choice, we reduced our occupancy cost and we also became meaningful to the developers as we were saying that we will drive the footfalls in your basements or first floors.
About 98 per cent of our stores are profitable, and very few of them had to fall out. The closure of a store impacts a brands stature or perception. Since, our stores never shut down, customers perceived us as a successful brand, and so did the vendors.
Sounds like MAX got it right in its first phase itself?
No, it wasn’t so easy. In the first phase, even though we had clarity and we had opened around 40 stores we were still running in loss. Retailing is a learning business and so in our second phase over the years 2010 to 2014 we analysed customer preferences and behaviour in each of our first 40 stores and the new ones were opened. We understood their profiles, we customized, we tweaked the ranges – the ratios and the types of product within our portfolio to suit the customers coming in. For instance, we had started with a home range but we removed it.
We also invested heavily in the backend. We invested in training people to connect with the customers, along with the planning, the process, ERP and visual merchandising. We also simultaneously and meaningfully expanded into Tier I and II cities and expanded the number of stores in our first phase cities.
What would you say was the core of your shift from the first to the second phase?
In essence, the change that happened in the second phase is that we evolved as a fashion retail organisation. From, a value fashion retailer that delivered products we morphed into one that crafted and curated fashion looks. We started focusing on combos—tops and bottoms together. We don’t do basics like plain t-shirts at all.
In this phase, we also started improving our analytics, started understanding the behaviour of our customers better, and we started cross promotions. For example, we had observed that many customers came in and bought only kidswear. They did not buy anything for themselves. We reached out to these customers and told them we also have collections for you. Another key goal that emerged in the second phase was to make MAX a pan-India brand.
Apart from developing structural and fashion excellence; and creating interesting looks we also started investing in properties that connect with the youth in the second phase. We have tied up and launched the Elite Model Look. Similarly, we initiated MAX Emerging Star and the MAX Design Awards wherein we go to 70 colleges and host design and talent competitions.
These were initiated because we saw that a lot of college students were coming to us, and so we thought why don’t we extend into their lifestyle aspirations and support certain career opportunities for them. After all, a fashion brand is part of a broader fashion lifestyle. There are young models and designers who want to make it big or maybe get into the Fashion, Film and Design circuits and MAX offers these platforms for them. Even today, MAX doesn’t have a celebrity brand ambassador. We believe that MAX is not the brand for celebrities, but rather it should help people become celebrities. We are a catalyst that empowers the lifestyle aspirations of the dynamic modern Indian middle-class families and youth.
We invested in these properties where we built a superior experience for the customer, and thereby ameliorating their connect with MAX. These initiatives were communicated by PR and digital. Once these were disseminated, we were also able to get more customers into our stores.
What new is happening now at MAX in the third phase now?
The third phase began after 2014. And, today I can proudly say we are present pan-India with 200 stores over 85 cities. Last financial year we opened 40 new stores as per our target. For this fiscal, we have planned 50 new stores and they are opening at a rate of one per week even as we speak. Even our regional skew has balanced out now. Our strongest market is south India, with 42 per cent of our stores, followed by 28 per cent in North, 20 per cent in West and expanding fast in East with currently 10 per cent of stores. I consider this a good development.
What is the advantage of being pan India and does it empower some other initiatives?
Finally, MAX is also into mass media and into mainline television because now we are present in most cities. We launched our first TV advertising campaign last season which was received very well. Mass media has its own impact and goes hand-in-hand with distribution and supply chain development. If you don’t advertise you will not be able to build brand awareness in smaller cities. I’m talking about the penetration, and this has gone up a level definitely.
We used a FMCG type route with our advertisement campaign which is framed in humorous slice of life situations and offers solutions in ‘Endless Ways’ to ‘Win Her Back’ and for ‘Damage Control’. It reinforces the brand’s key motto ‘Fashion for the entire family at great prices’ via a promise of many new collections and styles in store. The real-life simplicity of the creative establishes an instant emotional connect with consumers.
A phased TV campaigns across GEC, movies, kids, infotainment and music channels was backed by radio spots, and print ads in top regional and English publications in top markets. #EndlessWays was also integrated in popular TV serials and radio innovations; and by digital outreach and google display banners on popular websites. We also initiated on ground activations at malls. The highlight of the digital campaign was a collaboration with ‘Terribly Tiny Tales’ to increase brand conversations through user generated content – people were invited to write their own #EndlessWays stories and post on Facebook, Twitter and Instagram. This integrated campaign drove footfall growth by 43 per cent, incremental sales grew 53.9 per cent over the previous promotion period, and in all, 44 per cent new customer enrolments over the first 42-day promotion period.
Tell us a bit about MAX’s initiatives on the Omnichannel front?
MAX currently gets 1 per cent of its sales digitally and through maxfashion.com and expects to achieve incremental turnover in high single digit percentage over the next 5-6 years. MAX will digitally engage with its reach of 9 million customers at www.maxfashion.com and an additional 12 million customers of www.lifestylestores.com.
We at MAX will be launching a special cross functional initiative called Easy Kiosk as a pilot in Bengaluru in the first half of June 2017. This will begin at 5 stores and will be a world class intranet enabled consumer experience connected to the real-time inventory warehouse. It will deliver looks apart from sizes. We are trying to make it more experiential and are training a few department managers besides the last-mile staff. Together, we will have curated looks loaded onto the technology and will be available then-and-there. We are also going to implement Wi-Fi in our stores as a part of enabling customers to simultaneously sync their physical and digital experience with us.
Among MAX customers, aren’t there some that want something more special and more premium? How do you serve these aspirations or you don’t? And which categories perform the best at MAX?
Our core positioning is value fashion and we don’t want to dilute that but during the festive season MAX does introduce a premium range called the MAX Limited Edition, but again with fully justified value. We will, in fact, add a little extra and try out more this year. We have successfully done such fashion inventions. We have also launched ‘Tavish’ and ‘Tavisha’ which are premium fusion lines and they have received great response.
As regards categories, while the brand performs very well in kidswear, with 23 per cent of its sales comes from the segment.
MAX is a well-balanced family shopping destination. All departments — men’s wear, women’s wear, ethnic contribute between 20-25 per cent of sales and footwear and accessories do about 10 per cent. MAX does indeed run on all its legs.
And which is the best performing MAX store in India?
The MAX store on Commercial Street in Bengaluru pulls home sales of Rs 80 crore in a year.
While your growth in India is phenomenal, how big is it in context of the MAX brand globally?
The turnover of MAX India is already 25 per cent of the total MAX global turnover. There are 250 MAX stores outside India. However, considering that the international stores are double the size of the Indian stores, and they retail many more categories like home, maternity, plus sizes, etc., MAX has performed exceptionally well in India.
What are your future growth targets for India? Do you feel there are some factors that may limit the MAX growth at some stage?
We want to continue the growth, and break the Rs 5,000 crore annual turnover mark within the next 4 years. We will also launch new lines. In fact, we will soon be launching maternity wear in India. We do have a limitation, MAX cannot go beyond 100-110 cities. We launched MAX in a couple of Tier III towns but MAX didn’t click as they are still very conservative so the catchment doesn’t connect with us. We stopped our expansion in Tier III, and we have launched a new brand called EasyBuy. The pricing at EasyBuy is 30 per cent lower than MAX, and it has been conceptualised on a FMCG kind of a thought.
Tell us a bit more about the EasyBuy format. What stage is it at in India?
The average size of EasyBuy stores is about 5,000 sq.ft. and it is also a 100 per cent private label format. The stores are 100 per cent franchised and it is a perfect format for Tier -III and beyond. Currently, 22 stores have already opened across 15 cities and the format will expand at a rate of 1 new store every three weeks. EasyBuy has been accepted well. It is doing about Rs150 crore of business and is growing at about 45-50 per cent per annum. While EasyBuy comes under the same division of Landmark Group as MAX, it is a new vertical, wherein both the back-end and front-end are separate and the only thing shared in common are support functions like IT, HR, etc. We are in the build up stage and the current focus is on developing a robust supply chain for EasyBuy and region-wise we are focusing on South because to get the correct pricing and quality network it will take time just like MAX took initially. Next year the east zone will be a thrust area for EasyBuy. East will obviously be a very big opportunity for us, since even MAX has not entered many cities in the east.
How does it feel to receive the award for IMAGES Most Admired Fashion Retailer of The Year: Large Format Store Chain for the second year in a row?
IMAGES is a very discerning organisation focused on the well-being of the industry. It very meaningfully caters to the aspirations of the varied industry stakeholders be it retailers, brand, vendors or developers, through its many initiatives. Further, it is an organization built from scratch and how Amitabh started it and the stature it has reached now is commendable. I always admire and deeply respect both focus and enterprise. Me as an individual and a professional and MAX as an organization both feel deeply honoured in receiving this award.