Taste the World?, says the line below the Spencer?s brand display, may be justifiably so, because fresh and packaged food (46 varieties of cheese alone) continues to bring in the biggest chunk of revenues for the RP Goenka-controlled retail major. Ready-to-wear, or fashion as ?food-first? Spencer?s prefers to call it, accounted for just 10% of the Rs 1,000-crore or so in sales that the chain reported in 2007-08.

As Samar Singh Sheikhawat, vice-president for marketing at Spencer?s, claims, the RPG outfit is already the largest in terms of area under food, and also the No 1 in terms of large format food and grocery stores. Perhaps that is why Spencer?s wants to drive its garments business to the top slot.

Over the next couple of years, Spencer?s plans to increase the share of ?fashion? to 25% even as it gives space to major domestic brands and develops its own clutch of private labels for the entire segment.

Cut to Kishore Biyani?s Big Bazaar, the Pantaloons Retail (India) Ltd format that is the market leader, having begun with apparel and general merchandise when the first outlet opened in May 2001 in Kolkata. The Food Bazaar brand came later and soon over took apparel in terms of sales volumes.

In May this year, Big Bazaar launched Fashion at Big Bazaar as a sub brand to energise what is the cash cow of the whole business. Fashion accounts for 30% of total turnover today at Big Bazaar, which is part of a group with total turnover of Rs 3,700 crore for its year to June 30, 2007.

For Big Bazaar, fashion has nothing to do with high prices or the catwalk. Fashion is an image sought by consumers; so a person buying a shirt for Rs 199 is also looking for fashion. Rajan Malhotra, CEO, Big Bazaar, points out that Big Bazaar began with apparel and general merchandise, with Food Bazaar coming later. At present, fashion accounts for around 30% of turnover, with 37% coming from food and the rest from general merchandise, electronics and so on.

According to a senior official of Big Bazaar, ?In India, fashion is unfortunately perceived to be a purview of Page 3 culture. We disagree with that view. Because we believe that each one of us has a desire to be seen as ?fashionable?. Thus, fashion exists at all price points. Even the person buying a Rs 300 shirt does so because he thinks he looks good in it.?

Spencer?s Sheikhawat clarifies that the term fashion embraces a larger world than ready to wear, and includes the experience factor.

Work in progress

?We are now focusing on fashion in a big way,? says Sheikhawat, listing the things he has been doing and plans to do?right from building a top-class sourcing team to holding ramp shows.

?We have taken several steps, starting with merchandise?there is brand new merchandise in all the stores,? he says. Among the brands Spencer?s has are Levi?s, Lee, Wrangler, Peter England, Turtle and so on, with the merchandise spanning all segments.

Spencer?s has brought in top talent for visual merchandising?the entire bells and whistles stuff from decoration and the mannequins to models and props. Spencer?s has put in place a brand new team of buyers, merchandisers, front-end, back-end people, based in Gurgaon, a Delhi suburb.

Lastly, Spencer?s is hiring a specialist to handle the brand marketing part?from ramp shows to end-of-season sales and brochures.

Big Bazaar is also strengthening its team and already has a design team of around 30 people and a category team of 60-odd people based in Mumbai.

Sourcing is done from all over the country. For example, with kidswear coming from Kolkata, bottomwear from Bangalore, ladies ethnic wear from Delhi and Ahmedabad, hosiery from Tiruppur, and some segments are even imported, from China.

The aim

Sheikhawat says Spencer?s does not want to become the biggest retailer, but the best. He hastens to add that Spencer?s is not expensively priced, and can match anybody on the KVIs or known value items. ?We are not pursuing size for itself, but want to offer the widest range, the best experience,? he says.

?We expect to break even in 2010-11. We are investing close to Rs 2,500-3,000 crore a year between this year and the next,? Sheikhawat says.

Over the last two years, since he joined in March 2006, Spencer?s has grown from 17 cities to 66 cities, from 52 stores to 400 stores, from 993 employees to 12,600 employees and from Rs 12 crore a month turnover to Rs 100 crore a month today.

So when will Spencer?s drop the food first tag? May be when fashion accounts for 25% of turnover, says an insider.

New initiatives

Both are betting big on private labels and private brands. Just as Spencer?s is building up a clutch of strong private labels, Big Bazaar is relaunching some of its private labels as private brands. ?The first youth brand we launched was Buffalo, and it has shown some very good results,? says Malhotra. The private labels were never advertised, because they were always based on product and prices.

The Fashion at Big Bazaar ad campaign aims to increase sales of the fashion products in the sales mix by six percentage points, says a company executive. ?We have already achieved close to four percentage points. Once we get to six percentage points, our profit margins would increase by two percentage points,? he adds.

Big Bazaar has always been present in the apparel segment with private labels like DJ&C and Knighthood, among others. Today, DJ&C is already a Rs 250-crore brand, and is gunning for a target of Rs 1,000 crore by 2009-10. Knighthood, now a Rs 100-crore brand, should go up to Rs 150 crore within a few years.

At Spencer?s, the floor space given to fashion within each large format store will be increased to at least 25% of the total. ?We will be looking at a quarter of the store coming under fashion,? says Sheikhawat pointing out that the change has already taken place at its large format stores in Gurgaon, and Ghaziabad (another Delhi suburb) and Baroda, where the share is 35%.

Differentiating the future

Fashion will be one of the key differentiators in the retails business, says Big Bazaar?s Malhotra. ?Apart from fashion all the other products are things that can be replicated by anyone. So fashion will be the core competency,? he says.

So what will be the differentiator for Spencer?s? Pat comes the barbed reply: ?We are not high fashion, at the same time we are not sab se sasta or is se sasta. We are affordable fashion,? he says.

Internally, Big Bazaar does not see any clash with sister format Pantaloons as it moves up the value chain. ?We do not see a cannibalisation between Big Bazaar and Pantaloons, since they cater to different audiences at different price points, with different brands available in the respective formats. Also, Big Bazaar has over 90 stores today and Pantaloons has 35,? says a Pantaloons official.

The key, as Big Bazaar?s Malhotra says, is to get the consumer to allocate a larger chunk of his wallet for fashion. ?If you look at the total consumption of apparel in the consumer shopping wallet, its actually very low, even for a growing economy like India,? says Malhotra.

People in India, he says, are not changing their clothes as often as their counterparts in similar markets. ?So we want to ensure that they are more aware of the design possibilities of what they are wearing, and become more up to date with current trends,? says Malhotra. ?And we thought Big Bazaar was very well positioned to do this.?

Enter cricket star Mahinder Singh Dhoni in Big Bazaar?s new campaign. Together with this, Big Bazaar is spending a lot on upgrading its labels into brands. At the same time, it is not giving up its pricing edge, even though there may be some overlap between Big Bazaar?s higher end with Pantaloons? low end.

For Sheikhawat, at the bottom of the pyramid are the kirana stores. Above that is the entry level modern trade, basically the likes of Big Bazaar, Subhiksha and Reliance, all discounters. At the top end are the luxury retailers.

?In between, there is a space which no one is utilising, where, it is not just about price, but about product range, assortment, quality, differentiation, customer satisfaction, the d?cor, music and everything,? he says.

A stray incident gave Spencer?s a chance to stress its move up the value chain in fashion at least?when hawkers in Kolkata?s busy Gariahat area protested the opening of Spencer?s second large-format store last week, their main demand was that big players should not be allowed to sell cut-price stuff.

Spencer?s fashioned its reply carefully: ??our merchandise, range and assortment and price point are distinctly different from theirs. So is our target segment which is SEC-A, upper middle class and affluent?.?

Precisely.