Pop culture merchandise and casualwear retailer The Souled Store is looking to raise up to Rs 2,000 crore through an initial public offering (IPO) in the next 18 months. The capital will be used to fund its international expansion plans as well as to increase its physical store footprint locally.
The finance team at the Mumbai-headquartered startup has started scouting bankers to decide on the details, Vedang Patel, co-founder, The Souled Store, told FE.
The firm, which started a decade ago with the proposition of pop-culture merchandise for the youth, will also increase store keeping units (SKUs) to include more trinkets like floor rugs, and decorative apparel patches.
“We have identified three levers of expansion — physical footprint in India, go international starting with Dubai, and the range of products available across platforms,” Patel said.
The Souled Store will start its international expansion with Dubai as it is a lucrative destination for retail and is also close to India. .
“Apart from figuring out the local supply chain mechanics, we will also need to make changes to the SKU strategy since there are some strict rules regarding the text and images that can be used for apparel,” Patel said.
For the India store footprint, the firm will ramp up the current number of around 40 to 60 by April. The brand, which started its offline retail journey from Mumbai, is currently present across metros, mini-metros, and a few tier-2 cities.
“For our offline presence, we want to be in cities which have a thriving local market. There has to be the tendency to go to a destination and shop. It could be a local market like Linking Road or Colaba Causeway in Mumbai, or a particular mall, which may be the case in smaller cities,” Patel said.
The company spends up to Rs 3 crore to launch a new store, especially in metros. While lease and rental is a portion of this cost, the interiors make up the most, Patel said.
According to Patel, the high cost of investment does not significantly impact margins since the stores, especially those in the metros, have a high revenue per square foot. Patel did not, however, give details.
The Souled Store expects to end this fiscal with a revenue of Rs 500 crore. In FY24, the company clocked revenue of Rs 360 crore.
The third lever of expansion will be adding to the product portfolio offered by the brand. Currently, it offers apparel, footwear, fragrances, and accessories like bags.
“We want to be the port of call for all things pop culture in as many aspects of our customers’ lives as possible. We will invest in developing new SKUs and launch them as and when ready. We will, however, refrain from categories where the trend changes too fast to be able to deliver quality,” Patel said.
He gave the example of mobile phone covers which the company has discontinued since new mobile phone models launch frequently.
The Souled Stores has 80% of its revenue coming from repeat customers which has given the company confidence to expand SKUs. The addition of the physical stores allows for the SKUs to be sampled in person as well. This improves chances of getting a larger share of the wallet of existing customers, while adding customers as well.
While the company started with pop culture merchandise, now the category accounts for 50% of the sales, while the remaining comes from casual wear across prints, and solids. Additionally, the platform’s online and offline stores combined contribute to around 80% of the total sales, while marketplaces account for the rest.