Retail News Update

MUMBAI – Arvind Ltd’s retail chain Megamart has entered into a licensing pact with U.S.-based Cherokee Inc, under which the Indian firm will market Cherokee’s family lifestyle brand across the country, officials said.

“Arvind has been a specialist in men’s brand in India, through this agreement we are planning to tap the women and children’s apparel market in a big way,” Megamart’s chief operating officer K.E. Venkatachalapathy said at a press meet.

Megamart, which sells multiple brands at discount prices, will sell the products at a variety of prices points across Tier 1, 2 and 3 cities, he added.

Megamart is expected to contribute about 3 billion rupees in sales, or roughly 15 percent of Arvind’s total turnover, in 2008/09, Venkatachalapathy said.

Cherokee will occupy 20-25 percent area of a typical small-format Megamart store, which has an average area of around 3,000 square feet.

For its large-format stores which occupies between 40,000 to 60,000 square feet in area, Cherokee will take up about 5 percent of space, Venkatachalapathy said.

Megamart currently has 110 stores across India, which the company plans to raise to around 250 by March 2010, he said.

“We hope to hit 500 stores in the next 4 years,” he added.

Arvind is investing an additional 3 billion rupees on store expansion over the next three years, Suresh J, Chief Executive Officer of Arvind’s Brands and Retail Division said. It has already spent 1 billion on its retail expansion.

The entire amount would be raised through internal accruals.

Arvind had seen a softening in property rentals in the past three months and was expecting a further drop in prices, he said.

“Being a value for money model we do not go to any developer who sells beyond 35 rupees a square feet because if the rentals are higher than that we may not be able to give full value to the consumers,” Suresh said.