Sportswear brand Puma India has adopted a unique strategy to expand its presence into the smaller towns of the country. The brand has launched several co-branded stores in association with lifestyle brands such as Levi’s, U.S. Polo Assn, Pepe Jeans, United Colors of Benneton, Wildcraft, Spykar, and Mufti, in a bid to tap the Tier-II and beyond towns of the country.
Co-branded store or bi-brand store is a concept where two complementing brands share equal floor space, exclusively operated by a franchisee partner through a corporate tie-up.
According to Atul Bajaj, Executive Director – Sales and Operations, Puma India, the company already has about 76 co-branded stores in the country and plans to launch 40-50 more within a year. The company also plans to open 80-100 exclusive brand outlets in a year and refurbish several of its existing stores.
A co-branded store by Puma is about 700-1,000 square feet in size and is equally divided between the two brands. The company currently operates such stores in Ahmedabad, Surat, Jhansi, Panipat, Hisar, Bhuj, Haridwar, and Rohtak, among others.
The company started launching co-branded stores in 2018 in order to create awareness about its brand amongst the consumers. However, given the low exposure to Puma in these small towns, the company came up with the idea of launching co-branded stores, to make its presence more commercially viable in these towns.
“Several companies look at factory outlets as a way to expand into smaller towns thinking that they are not ready for a full-price store and sales might not be up to the mark,” said Bajaj.
However, he added, they have realised that thanks to social media and e-commerce, consumers in these cities are aware of the latest trends and might not like to wear products launched in the previous season. “There is a cohort of consumers in these towns, which like to own and wear the latest trends,” said Bajaj.
Puma started launching co-branded stores in small towns to tap this target group, while at the same time also creating awareness for its brand. The fact that the store space is shared by two brands also makes the cost of expansion to these small towns a lot lesser than launching exclusive brand outlets (EBOs), shared Bajaj.
The stores have witnessed a great response. The rent-to-total-sales ratio in these stores is 20-25 percent better than in larger cities. Following a good response in some cities, the company is now launching EBOs after building brand awareness. These stores are cost-efficient in terms of sales per square foot, which is ideal to drive brand sales in Tier-II and Tier-III cities, he added.
Also, opening a store with a lifestyle brand helps the company offer more products from different categories to the customer.
The Indian unit of the German company reported revenue of Rs 2,044 crore in the year gone by, a jump of 68 percent from Rs 1,215 crore in 2020, according to data from the Registrar of Companies. The company follows a January-December financial year.
The company draws about 43 percent of its business from online channels compared to 25 percent in pre-pandemic 2019. It also claims to have witnessed growth on its website Puma.com, which grew 175 percent in 2021 over 2020, and now contributes 8 percent to overall revenue. Athleisure and sportswear contributed equally to the company’s business in India. In 2021, Puma India drew 55 percent of its sales from footwear, 39 percent from apparel, and the remaining from accessories.
Puma India operates about 411 EBOs, of which 51 were opened in 2021. To boost sales in offline channels, the company has opened experiential stores with an F1 simulator, introduced personalisation counters, and launched limited-edition products, including designer collaborations at its top stores.
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