MUMBAI: Planet Retail has forged a 10-year master franchise agreement with the UK-based retailer, Debenhams, as it believes there will be less chances of the latter trying to independently set up operations once FDI in retail is finally allowed.
Speaking to Business Line, Mr Aditya Nadkarni, Debenhams-Business Head, said, “Since Debenhams already has a partner in India it can exercise a long-term option. There are going to be less chances of it breaking away once FDI is allowed. It is better to either have a joint venture or a long-term agreement and in our case we have a 10-year franchise deal with Debenhams.”
Master franchise agreements can vary between 5 and 20 years. With FDI in retail coming in, short-term agreements are likely to end. As Mr Nadkarni says, “There will be a big shuffle once FDI comes in and new positions will be formed as some brands would like to do business on their own.’’ As a master franchise, Planet Retail imports, markets and operates stores on behalf of Debenhams in India.
Having completed four years in the Indian market, Debenhams has been positioned as a woman-centric premium brand catering to women between 35 and 45 years of age.
“Our stores have an international feel and we are spending Rs 5,000 per sq ft which is a huge premium compared to other departmental stores. Having changed our positioning, we intend to open 3 to 4 stores smaller stores at 30,000 sq ft every year. There is still no premium woman-centric store in the country and we believe we will be differentiating ourselves from the typical department store which mainly caters to men’s clothing,’’ said Mr. Nadkarni.
Currently, Debenhams has three stores and its first store in Gurgaon’s Ambience mall has broken even at the store level while the new ones in Mumbai and Bangalore will take another year-and-a-half to do so.
The product mix at the stores has also undergone a change. Almost 50 per cent of the garments will comprise Debenham’s private labels such as Betty Jackson and Julien Mc Donald. Indian brands such as US Polo and designers such as Anita Dongre will form another 20 per cent while international cosmetic brands will complete the balance 30 per cent of the offerings within each Debenham store.