Value retailer V-Mart is looking to double down on the Rs 1,000 apparel range, buoyed by the cut in the goods and services tax (GST), which has boosted demand, chief financial officer Anand Agarwal has told Moneycontrol.
The GST 2.0 regime, which came into effect on September 22, slashes the tax on apparels priced below Rs 2,500 to 5 percent from 12 percent.
“The real savings are in this price bracket. For instance, if a customer bought denim for Rs 1,000 earlier, they paid around Rs 120 in taxes. Now that’s down to Rs 50, which means a saving of Rs 70. That’s a big differentiator. Earlier, retailers largely ignored this segment because it attracted fewer customers, but with the tax cut we can now draw more shoppers by offering greater variety," Agarwal said.
The segment is seeing a higher traction in the Rs 1,000 price band after the new rates, he said.
V-Mart primarily serves customers in Tier 2 and 3 cities, where shoppers are highly price-sensitive.
The retailer plans to increase its inventory priced below Rs 1,000, from the current 15 percent to 20 percent and experiment with more variety, depending on the customer response.
"There is an opportunity for me to now play in that price bracket," Agarwal said.
"In the value retail segment, where the average selling price is around Rs 300 to Rs 400, it really does not make a too much of a dent in terms of the price change but yes for Rs 1,000 rupees or Rs 2,500 price point, that is the area where we can see more substantial reductions," he said.
With close to 500 stores, the retailer has a presence in more than 300 cities, with focus on the aspirational Indians in smaller towns.
In its early years, V-Mart positioned itself as a discount retailer catering to India’s growing middle class. By 2010, it had begun expanding rapidly across the country and its focus on smaller cities helped it tap into a market segment often overlooked by larger brands.
Other value retailers in India include Trent's Zudio, Reliance Retail's Yousta, and Aditya Birla Fashion & Retail's Style Up. Avenue Supermarts (DMart) and Vishal Megamart are also prominent players in this segment
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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