Manasvi Sharma

CLSA published a detailed research report on India quick commerce. Recommended reading. Who will be the first to create a $50-100Bn company in India internet? #Zepto #Zomato #IndiaInternet

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🎉 Unveiling Trent's Strategic Mastery: FY24's Retail Triumphs 🚀 Trent’s FY24 results have taken the #retail industry by storm, showcasing an impressive 11% net #profitmargin —a rarity among Indian retailers. Let’s dive into the four critical pillars that fueled this exceptional performance. 📈 1. Exceptional #RevenueGrowth Standalone Revenue: Trent’s revenue from operations skyrocketed from ₹7,715.19 crore in FY23 to ₹11,926.56 crore in FY24, marking a staggering 54.59% growth! The apparel segment alone contributed to 85.3% of the company’s turnover. Volume Surge: Total volume sold surged from 1,593 lakh units in FY23 to 2,770 lakh units in FY24 🚀 🏬 2. Explosive #StoreExpansion Store Count: Trent Ltd expanded from 600+ stores in FY23 to 850+ stores in FY24. Zudio alone grew by 203 stores, reaching a total of 545 stores across 164 cities. #Westside added 30 stores, totaling 232 stores in 91 cities, while Star had 66 stores in 10 cities. Like-for-Like Growth: Sustained growth rate of over 10% in existing stores reflects strong performance beyond new store openings. ⚙️ 3. #OperationalExcellence through Operating Leverage Sales Efficiency: #Salespersquarefoot increased from ₹10,841 in FY22 to ₹15,776 in FY24, demonstrating improved utilization of retail space. Operational Efficiency: Net Profit Margin: Improved from 4.0% in FY23 to 11.3% in FY24 Other Expenses: Improved from 41% in FY23 to 37% in FY24 These improvements reflect better cost management, effective pricing strategies, and a favorable product mix. 💎 4. #Zudio: A Runaway Success Rapid Expansion: Zudio's store count soared, reaching 413 outlets across 120 cities by 2023. Financial Performance: Revenue grew at a CAGR of 94%, from INR 478 crore in FY20 to INR 3,537 crore by FY23. Sales per store hit INR 12 crore with sales per square foot of INR 17,300. Customer Appeal: Trendy fashion under INR 600 attracted young shoppers, driving high footfalls and conversion rates. 🛠️ Scope for Improvement Cost of Sales: Currently 50-55%, ideally this should be in the range of 40-45% for a private label-led business model. Balancing the Portfolio: While Zudio grew impressively, Westside and other brands saw a CAGR of 13% compared to the overall 30.3% CAGR, indicating room for balanced growth. 🆚 How Does Trent Compare? Comparable Retailers: 🌐 Metro Inc.: Net profit margin of 4.5%, Cost of Sales: 40-42%, Gross Profit: ~60%, CAGR: ~53% Zara: Net profit margin of 15%, Cost of Sales: 42-43%, Gross Profit: ~58%, CAGR: ~21% Marks and Spencer: Net profit margin of 4.3%, Cost of Sales: 65-66%, Gross Profit: ~35%, CAGR: ~5% 🔮 Looking Ahead: The Future of Trent What’s next for Trent? As they enhance '#phygital' offerings and leverage analytics, the future is bright. Will they dominate non-apparel segments and revamp loyalty programs? 📊🎯 #TrentRetail #RetailInnovation #ConsumerInsights #StrategicLeadership #RetailTransformation #ZudioSuccess #Ecommerce #Fashion #Omnichannel

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An interesting set of perspectives in this report. I have been a backer of the QCommerce model though questions abound in terms of it making fiscal sense right away. And these doubts are based on the ABV that doesn't seem to be enough to shore up the bottomline. But over the past many months I have seen the merchandise mix change rapidly and with higher unit value merchandise to leverage, the ABV will definitely go up. The challenge I see with this evolution is the need for larger dark stores and hence higher expense pressure - not to mention the northward impact on the cost of fulfilment. So, will the way out be a variation of the older hyperfocal model? Possibly. Which is why I personally believe sounding the deathknell for kirana stores could be very premature. Thoughts, retail gurus? Thank you, Manu, for sharing this! Very exciting times ahead, indeed!! #retail #digital #qcommerce #hyperlocal #kirana

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1 Comment

Till 2018-19, most brands/marketers were obsessed with the gold mine at the 'bottom of the pyramid'. CK Prahlad and Sachetization were worshipped.  All of a sudden, we realised that this part of the pyramid was not monetizable and the narrative shifted to milking only the top of the pyramid. What changed? In my opinion, three things happened 1. New agents brands realized 'Distribution is hard'. Brands/VCs thought of doing the easier part first, infra was ready by then 2. brands were trying to hard sell existing products without product/packaging innovations which impacted KPIs  3. With electrification, digitization consumers awareness has increased and they've become solid bs detectors If traditional brands don't fall into the trap, they are better poised than new age brands to take advantage of the narrative shift. While they keep thinking of cocktail premixes, traditional brands will win it with the Stings. #RandomWeekendMusings

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