LuLu Group bets on India despite slowdown woes

After launching a slew of lifestyle, and food and beverage (F&B) brands in India in the last five years, Tablez, the brand retailing arm of the $7.4 billion Abu-Dhabi-based LuLu Group, has now brought China’s fast fashion brand YOYOSO to Bengaluru. Tablez holds the master franchise rights for YOYOSO in India and plans to open a 100 stores over the next three years, investing approximately ₹2 crore per store. YOYOSO, which already has 1,000 operational stores, most of which are in China, has a curated line of value products across categories like health and beauty, digital accessories, stationery and gifts, and fashion accessories.

“It is a one-stop destination for simple, fashionable and trendy additions to meet daily life needs,” said Adeeb Ahamed, managing director, Tablez, in a conversation with Fortune India. At present, Tablez, by holding various master franchise rights, operates 48 retail stores in India that include lifestyle and toy brands like Springfield, Women’secret, Toys’R’Us, Babies’R’Us, Build-A-Bear, GO Sport, and F&B brands like Cold Stone Creamery and Galito’s.

Thirty-nine year old Ahamed, who is based in Abu Dhabi, is the son-in-law of Yusuff Ali M.A., the billionaire-founder of LuLu Group International. Besides overlooking the operations of Tablez, Ahamed also heads the operations of LuLu Financial Group, which is into remittance and money exchange, and Twenty14 Holdings, which owns hotels across the world, including one in Kochi, India. “We are building two more [hotels] in Bengaluru and one in Hyderabad,” adds Ahamed, as he details his expansion plans for the Indian market, despite a looming threat of a prolonged economic slowdown. Edited excerpts of his interview:

What made you bring YOYOSO to India?

Fast fashion as a category is well accepted in the country. It is estimated to be a ₹10,000 crore market and is poised to swell up in the coming years. It’s a market that caters to the masses, in the price range of ₹65 to ₹2,000. And this does not include the clothing segment, which is much larger market. YOYOSO offers well curated, well priced, and durable products that cater to this market segment. While there are a lot of small domestic players in this market segment, I think we will have a clear distinction.

We are opening five stores over this month and by end of 2019 we look to open an additional five stores. From calendar 2020 onwards, over the next three years, we would like to take the store count to around 100 stores. Every store would require a capital of around Rs 2 crore, and this year we will be investing ₹20 crore.

What would be the growth pipeline for Tablez in India?

From our mix of F&B, toys, sports, lifestyle and apparel brands we operate 48 stores and by the end of this calendar year we will have about 70-odd stores. This month we launched two Toys’R’Us stores and will open two more. Tablez as an organisation has always believed in not going deep in one particular category, but spreading into multiple categories that touch the lives of consumers everyday.

The last three years saw us launch a new brand into the country every six months. Now, over the next couple of years we would like to focus on expanding our store presence. Because our base has been low we’ve been reporting a 100% year-on-year growth. This calendar year we look to close with around Rs 140 crore in revenue in India. Next year we should hit the ₹300 crore mark.

How big is Tablez outside of India?

Tablez is present only in the United Arab Emirates (UAE) and India. In UAE we are purely an F&B operator with around 40-odd restaurants—a mix of both homegrown and franchise brands.

When we launched Tablez in 2010 we felt that the GCC (Gulf Cooperation Council) market was over-saturated with retail brands and hence we didn’t want to get in to that space. But that wasn’t the case when we looked at India (in 2014), hence we decided to be a diversified retail player. In UAE, on the F&B business we do a turnover of over ₹250 crore.

In India, how big are the other businesses that you head, Lulu Financial Group and Twenty14 Holdings?

We operate around 30-odd Lulu Forex (money exchange) stores in the country. Besides that Twenty14 currently owns a 57-key boutique hotel property in Kochi, which is operated by hospitality firm Marriott. Its Marriott’s Tribute brand. We are building two hotels in Bengaluru — a 200-key hotel near the airport and a 120-key hotel in Electronics City — and another property in Hyderabad. The hotel near the Bengaluru airport will be operated by Marriott, while for the other properties we are yet to sign on an operator.

In India, we have committed to invest ₹2,000 crore in the hospitality space. We will play across all category segments. Having said that, large scale investments don’t pay back returns so we will be cautions where we put our money.

Globally, Twenty14 owns hospitality assets worth over $600 million. These include the Great Scotland Yard, in London, Waldorf Astoria Edinburgh, Steigenberger Hotel Business Bay in Dubai and Sheraton Oman in Muscat, among others.

Have you had to revise your investment plans given the slowdown of the Indian economy?

Not really, but we accept that there is a slowdown. While major sectors are under stress, it's not as if one solution would fix all problems. And even if the fixes happen today the impact will hit the market over the next couple of years. Besides, global sentiments have also dampened with the U.S.-China trade war being an obvious factor. In Europe, you have certain economies that are close to recession, and Brexit is not helping matters at all. In fact, given the US-China trade dispute we thought that a lot of manufacturing would come India’s way. But that has not happened. A lot of that manufacturing work is moving to Vietnam because the country offers better cost arbitrage and labour policies.