Litestore provides “Retail as a service”, enabling consumer brands to strategically set up and expand retail stores. With new brands increasingly being born online and then moving offline to build scale and profitability, there is a large gap in the market to help these brands make the transition successfully.  

Increasing importance of offline retail

The $60B e-commerce sales represent ~6% of the retail market in India. These figures will continue to grow over the foreseeable future, potentially mimicking developed market structures. With the emergence of platforms like Shopify to develop storefronts and social media to digital target consumers, the barrier to launch new brands has come down considerably. We are seeing a renaissance of new brands which are catering to the new customer needs and preferences, with India’s D2C market expected to cross over $60 Bn by 2027.    

As these brands grow online, they often find a ceiling on growth and profitability. Selling online through own website can be expensive, due to the high digital marketing costs while the marketplaces could end up selling products on discount, thus impacting the brand image. Growth also becomes a challenge as majority of the market continues to be offline. Following this, brands have started following an omnichannel approach, which is most effective in balancing customer acquisition costs and brand equity creation.

Challenges for new brands in offline retail

As these brands are exploring offline sales channels to build scale, there are faced with a number of challenges:-

1. Limited Access to Quality Real Estate – Typically mall owners and large retail establishments are wary of giving space to new brands, due to their limited trading history. Given the long tenure of retail leases, the cost and time implications of making a wrong decision are considerable

2. Lack of Resources to Build a Real Estate team/Inhouse capability – Large brands have full time dedicated teams, which are involved in keeping track of market intelligence, finding good real estate locations and franchise partners. For brands having less than 50 stores, it is generally not feasible to have a team inhouse, which results in lack of market intelligence and inability to move fast if momentary opportunities crop up  

3. Complexity of Offline Retail Operations – Typically these brands have no experience in offline operations and hence there is a significant learning curve involved for them. Understanding and perfecting store conversions, inventory selection/mix and visual merchandising takes time and effort  

4. High Capex/Sunk Cost – For new brands, the capex involved in building each location is a deterrent as typically it is a sunk cost, which cannot be recovered if the location turns out to be poor  

Generally, international brands which are looking to enter India face similar challenges as they do not teams have on the ground, are exposed to a new market where their market intelligence is limited and face the same operation challenges/capex tradeoffs as new brands do.  

Typically for the real estate owners also, dealing with new brands is a challenge, as their ability to spot high potential brands among the plethora of new brands is limited. With an inherently lower risk-taking ability due to the financial leverage, these asset owners as a result often end up avoiding these brands.        

Simplified Solution:

Litestore bridges these gaps in the market, acting as offline growth catalyst for brands:

Litestore works with brands to develop offline expansion strategy, identify and obtain access to the most relevant retail spaces and manages in-store operations for them. Through Litestore, brands can experiment with various store formats (EBOs, MBOs) and different locations in a capital efficient way. It works as a one stop shop providing brands with all the elements required for executing their offline journey.  

The company is already managing significant sq ft of space for a number of D2C, established and international brands across 4 cities.

Litestore’s position in the value chain leads to a virtuous cycle of retail specialization that benefits the entire ecosystem in a big way:

The company is a led by a stellar team which brings deep expertise in real estate, operations and contract negotiations. Raghu, the co-founder and CEO of the company, has spent over three decades in large real estate conglomerates, developing and running large retail assets like malls. He brings with him a deep network of relationship with all large asset owners in India. Puneet and Tarun, the other two co-founders, are lawyers and bring expertise in securing both supply and demand. They are supported by a strong team which builds expertise in real estate leasing, store operations, projects (i.e. setting up of stores) and business development (on the brand side).    

We believe that Litestore is poised to benefit from the massive tail winds of expanding organized retail, success of new brands and their increasing willingness to work with specialized operators in deploying omnichannel sales strategies.

For further details on Litestore, visit https://www.litestore.in/

To speak with our Sorin team, contact harshita@sorininvestments.com and anshul@sorininvestments.com.