Published on April 02, 2023
Trent, the Group’s fashion & lifestyle company -- and the country’s leading retail chain -- is on a blazing growth trajectory. Doubling down with an aggressive expansion strategy after the pandemic, the company has added record number of stores across its brand portfolio in the past two years. Trent’s standalone revenue has more than doubled in the past two years – from under Rs.3500-crore pre-pandemic to Rs.8000-crore this fiscal, and the retail giant’s market cap is upwards of USD5-bn.
“The seemingly recent success is the result of years of strategic choices, building resilience and sustained focus on customer-centricity,” said P Venkatesalu, ED & CEO, Trent, while addressing the Leadership Series EDGE Webinar on Wednesday, March 29, 2023. Speaking on ‘Trent Growth Journey & Way Forward’, Mr Venkatesalu shared insights on building resilience with counter-intuitive trends and choices, creating differentiation with disciplines and building the lifestyle growth platform.
Organic growth
In its early years, Trent made a clear choice to build a resilient business before scaling up significantly. For the first 20 years, the growth rate was 15-20% CAGR – primarily a Westside business. Having built a solid foundation, in recent years, Trent expanded its portfolio – from value-fashion brand Zudio on one hand, to the food business with Tesco. From being under Rs1500-cr in FY15, Trent is now clocking a CAGR of around 25%. “We decided to double down on the value proposition to customers, while expanding our brand portfolio, to achieve the material shift in terms of absolute as well as percentage growth,” said Mr Venkatesalu.
One of the key triggers was the number of stores, with Trent adding 100+ stores in the last financial year and 150+ this year. “Beyond the story of adding stores and increasing online presence, there’s a lot happening behind the scenes - buying, warehousing, distribution, human resources, technology stack, everything has to be aligned for the frontend to have a smooth landing,” said Mr Venkatesalu, adding that Trent has developed an appetite for accelerating growth.
Consumer trends
Sharing his insights into consumer behaviour and trends, Mr Venkatesalu said that the Indian consumer’s aspirations have grown to new levels. Driven by mobile phones and social media, today’s consumer wants to live the good life, keep up with the latest trends, appear contemporary, look fit and travel around the world. “With aspirations growing much faster relative to affordability, value has become hugely important,” he said. On the other hand, every player wants to own the consumer; brands are opening stores and stores are launching brands to reach out to the consumer. “While brands are seeking to be retailers and retailers are seeking to be brands, we at Trent are focused on the three core consumer tenets of aspiration, accessibility and resilience of proposition as our guideposts for growth,” Mr Venkatesalu revealed.
Business of differentiation
Success in the consumer space has a lot to do with choices and disciplines - choices in terms of business model and behaviours within each of the brands. “Businesses that follow strong disciplines consistently, over time, build strong differentiators in the minds of customers,” said Mr Venkatesalu, adding that Trent’s choices for differentiation include factors like styling of product, price architecture, channel presence, store size, location, density of presence and category of presence.
Trent’s 100%-own-branded business model is the biggest differentiator. All of Westside and Zudio have own-branded merchandise inside the stores and across channels (stores and online). “Our other key differentiator is that we are 100% direct-to-customer through our own stores and online channels, with no intermediary or third-party who can dictate the service / access proposition,” he said. Some of Trent’s other differentiators are its focus on freshness of offer, and its consistent no-discount pricing for 10 months in a year, with just two end-of-season sales offering the special deals to its customers.
Platform at scale
Over the years, Trent has effected a huge cultural shift, from being a retailer to a brand platform. “We are today brands with significant retail presence rather than being a retailer of brands. The choices that we have made to offer a differentiated offering and our backend integration today allows us to conceive, incubate and scale up new brands,” he said. For instance, Zudio which started as an apparel brand inside Star stores and leveraged the Westside ecosystem for evolution, is today a far deeper value proposition in terms of reach, price, look and feel and overall experience. “We want to deliver an experience as opposed to just offering a product at a price point; a customer just doesn’t buy a product, but the entire experience. The moment of truth is when the customer chooses to act with her wallet,” said Mr Venkatesalu, adding that just upgrading the look & feel of a store can increase the traction significantly.
With India’s 1.4-bn population fuelling its Rs.600,000-crore apparel market, and with the market getting increasingly organized, branded and stratified, Trent is focused on straddling the entire fashion space with multiple brands and multiple pitches that compete with local as well as global players. “The vision is to build Trent as a platform with a growing portfolio, integrated at the back and differentiated in customer facing terms,” said Mr Venkatesalu, adding that the double-down themes are growth, product, value, reach, ecosystem, people, supply chain and digital. Trent’s philosophy is to deliver a channel-neutral experience with a consistent range and price architecture across channels, making the choice seamless for the customers. “The target is to build Westside and Zudio into billion dollar brands over time and the company growing at CAGR of over 25% with EBIDTA margin of more than 10%,” the CEO revealed.
Sustainable returns
Responding to a question on sustainability from one of the participants, Mr Venkatesalu said that there are two components to sustainability in Trent’s line of business. In terms of sustainable consumption, Trent is a company that fulfils an existing need unlike a fast fashion outfit that encourages incremental consumption. In terms of sustainable practices, Trent sources from compliant vendor partners & factories that pay fair wages and follow environmental regulations, while handling its logistics with minimum carbon footprint. “For instance, the high rate of returns in online sales – 30-40% globally – is painful from a carbon footprint point of view. We at Trent have worked consciously to incentivise first-time-right choices and disincentivise returns, with the result that our returns are down significantly on Westside.com” the hands-on leader said.
The leadership webinar concluded with a vote of thanks from S Padmanabhan, Chairman – Governing Council, TBExG. “The refreshing presentation revealed how important it is to make strategic choices and show resilient, long-term commitment to the business model,” Mr Padmanabhan remarked.