E-GUERRA Venditio

CASE DESCRIPTION

Shivam Nathan, the CEO of Venditio, was sitting in his office, stirring a freshly brewed cup of coffee. After
successfully launching the new fashion brand, Venditio, in 2010 he was at crossroads and was pondering about
the future direction the brand should take in order to grow into a fashion giant in India. He had to make a few
decisions in order to maintain its success. Should the brand add more categories to its line of products or
should it focus on a few best-selling categories in order to grow? What should he do to keep the brand relevant,
given large number of international players such as Gapa, Dassimo Mutti and H&H had entered the apparel
and footwear specialist channel in 2015? How could Venditio’s marketing strategy keep the growth momentum
going and consolidate the company’s hold onto the Menswear market in India?

History of Venditio

Venditio Inc. was the brainchild of Shivam Nathan and was launched in 2010, along with his college friends,
Amit Arora and Shaili Gupta, as an unlisted private company with paid-up capital of Rs.10 million. During his
college days, Shivam used to design custom made apparels, accessories and footwear for himself. “I could never
find the uniqueness I desired in mass merchandise. Used to go out to shop for clothes and come back empty
handed. The ones I liked were too expensive and the others were just too mainstream and low on quality.”
Shivam was a fashion enthusiast since his school days. He had walked the ramp in his college and knew abou t
the latest industry trends. “I used to keep up with everything in fashion, from Promostyl to WGSN to Vogue”.
His friends in college really loved his style and requested him to help them out in designing custom made
apparels, shoes and clothes for them. “One day, I came across an article on Tory Burch and how she had
created affordable luxury label for women’s wear in the US. This inspired me to create a similar set of
affordable designer wear for men in India.” Thus Venditio was born with the principle of affordable designer
wear. Shivam opened a small retailer outlet on the outskirts of Navi Mumbai. He started his business with 1500
unique products, which included shoes, apparel, watches and other men’s accessories. However, after a month
of operations, things started looking bleak. He was making barely any sales. It was then he realized that people
were buying his ideas because they knew him personally and trusted his fashion knowledge. That’s where
Shaili’s excellent marketing skills helped and the brand’s presence grew. She started networking in other
colleges and building a customer base for the brand. They had to invest substantial amount of money initially
on the marketing campaign (Exhibit 1), sponsor events in colleges, and give students free custom made clothes.
The idea paid off. Students fell in love with the brand and the business started getting traction. Within a year,
retailers started coming to Venditio to ask for their products to store in their shops.
Menswear Market in India

The retail sector in India is emerging as one of the largest sectors in the economy (Exhibits 2 & 3). By 2015, the
total market size is estimated to be around Rs 40 trillion, thereby registering a CAGR of 7.45% since 2000.
Though globally, womenswear is a bigger market than menswear, in India, womenswear constitutes only 41%
of the market versus 48% share of menswear. Menswear is one of the fastest growing sectors in the Indian
retail market and is expected to sustain its growth in the coming years. According to market watch firm
Euromonitor International Ltd., the Menswear market in India stood at Rs1.3 trillion in 2015 and value sales of
apparel and footwear specialist retailers is pegged to grow at CAGR of 6% at constant 2015 prices over the
2015-2020 forecast period. The reason is the evolution of the menswear market in Indian metros and even in
the rural areas and increasing brand awareness among the consumers in terms of quality and up-gradation of
service standards. While domestic brands are strong on their own, international brands are raising the bar with
higher prices. They are creating a new segment called the super-premium and giving more choices to the
consumer. The men's apparel segment clocked an annual growth rate of 10% over 2010-2015 and is estimated
to post 8% by 2020, growing from $13 billion currently to $19 billion. While the women's apparel segment
clocked a 9.5% CAGR over 2010-2015 and is expected to post an 8.5% CAGR by 2020.

Venditio’s Strategy

Venditio was built on the concept of “affordable designerwear”. They successfully tapped into the preferences
of the working men aged 25- 35 and living in metro and tier 1 cities. They adopted a low decibel marketing
strategy for Venditio and decided to price the products about the same as that of mid-range menswear brands
(Exhibit 4). Initially they relied on word of mouth promotion, and eventually they tied up with major multi
brand outlets and expanded the number of standalone stores. They also expanded their presence online by
partnering with major e-commerce players but the response was luke warm. In 2014 they launched their own
e-commerce website www.venditio.com. The company’s integrated approach to manufacturing and
omnichannel retailing gave them competence is managing demand, leftover products, and sales volumes. Their
business model was characterized by tremendous diversity across distribution channels and merchandise
categories (Exhibit 5). The company’s key competitive advantages were concentrated in inspiration and design;
product development; product merchandising; supply chain and logistics; advertising and marketing; and
unparalleled in-store customer experiences. These many areas of leadership were complemented by a
disciplined operational management that has supported strong financial results over the long term. Strategic
growth objectives were centered on allocating our strong cash flows to high ROI activities, including expanding
their national presence, principally across all metros, extending their direct-to-customer reach via Venditio
stores and e-commerce, innovating and expanding new and emerging merchandise categories, particularly
accessories; investing in infrastructure to support their growing national reach and developing and expanding
their talent pool.
Current Problems at hand

Venditio was founded on the principles of providing unique designs to mean based on their unique
personalities. However, its strategy responsible for its fast growth in the early phases of its growth has become
a major obstacle for the organization today. Since it is focused on providing unique designs to its customers,
the fashion brand is unable to achieve economies of scale. “As other brands are moving to e-commerce and
reducing prices, we are finding it harder to push our products into online platforms” says the COO, Amit Arora.
As they sell only limited variants of the products, it costs the company much more than its competitors to put a
product on a third party site. Having a wide variety and low depth increases costs of photoshoots and returns.
Amit further continues, “As we have to continuously add new products and replace them with old ones, we find
that e-commerce sites block our inventory. Also returns are a big problem for us as we have limited quantities
in different sizes available.” As a small business in its growth stage, we find selling to wholesalers much easier
and inventory turnover is faster. However Amit’s opinion is countered by Shaili, the CMO of Venditio, who
believes that e-commerce is the way forward. She says, “We do realize that not being online means losing out
on brand value and lot of revenue. The dilemma is that being on online platforms hurts our profits and not
being there would make us lose out on the brand value and in future, the growth opportunities. We know the
world is moving to web. We don’t want to be left behind. Even the footfalls in our exclusive brand outlets have
stagnated”.

As Shivam was finishing his coffee, Amit and Shaili entered his office. They had chalked out a strategy for
Venditio. What would the strategy be? Will Amit and Shaili suggest increasing the numbers of unique SKUs
(stock keeping units) to achieve economies of scale and threaten the point of difference of the brand? Or will
they suggest removing the products from online platforms? Or will they come up with a new strategy and find a
solution to Venditio’s problems? Shivam was looking forward to hearing their plans for the organization.
Exhibit 1: Images of Marketing Campaign of Veniditio
Exhibit 2 : Growth of Online Retail Sales In India

Exhibit 3: Category Wise Distribution in Retail

Exhibit 4: Veniditio’s Products and their Price range

Subcategory Price Range (Rs.)

Men’s Formal Shirts 899 - 1799

Men’s Casual Shirts 699 - 1599

Men’s T-Shirts 299 - 999

Men’s Formal Trousers 1599 - 2899

Men’s Casual Trousers and Khakis 1299 - 2699

Denim 999 - 2499

Men’s Footwear (Formals, Casuals, Sports) 799 - 2999

Accessories- Bags 899 - 1999

Accessories- Belts and Wallets 499 - 1499

Accessories- Caps & Hats 799 - 1299

Accessories- Ties 599 - 999

Accessories- Socks 199 - 599

Watches 2999 - 9999

Exhibit 5: Vedditio’s Category wise performance for 2015-16

Menswear Annual Units Sold Gross Average Unit Average

Category Revenue (Rs) Margin Selling Price Cost per
(Rs) unit (Rs)

22,770,000,000 9,900,000 48% 2300 1200

Apparel

4,117,500,000 2,745,000 50% 1500 750

Footwear

950,000,000 190,000 60% 5000 2000

Watches

935,000,000 1,100,000 65% 850 300

Accessories

28,772,500,000 13,935,000
Total
PROBLEM STATEMENT

1. What do you think of Venditio’s current and growth strategy? What are its competitive advantages? Any
weaknesses?

2. What strategies would you implement for the future growth of Venditio Inc.? Should it add more
categories to its line of products or should it focus on a few best-selling categories in order to grow?
3. How do they increase footfalls in their exclusive brand outlets?

GUIDELINES

1. Submit details in Power Point Presentation. Number of slides is less than 8 including executive
summary and cover page.
2. File name has to be <Team Name>_<School Name>_<Competition Name>_<Round>.
3. Send your entries to Eguerra@isb.edu
4. Last day for Case Submission is 5rd September, 2016 11:59:59 PM.

CRITERION STRONG WEAK

Identifying main issues
while answering the
specific problems asked.
Recommendations on
effective Solutions/
Strategies. Ability to defend
the Strategy.
Usage of appropriate
frameworks in explaining
the issues/solutions and
how they will be
implemented
Writing Mechanics and
Formatting Guidelines
Identifies and demonstrates a
sophisticated understanding of
the main issues/problems in
the case study.
Supports diagnosis and
opinions with strong
arguments and well-­­
documented evidence;
presents a balanced and
critical view; interpretation is
both reasonable and objective.
Makes appropriate and
powerful connections between
identified issues/ problems
and the strategic concepts
studied in Marketing and
other courses information.
Demonstrates clarity,
conciseness and correctness;
formatting is appropriate and
writing is free of grammar and
spelling errors.
Identifies and demonstrates
acceptable understanding of
some of the issues/problems in
the case study.
Little or no action suggested
and/or inappropriate solutions
proposed to the issues in the
case study.
Makes inappropriate or little
connections between identified
issues/ problems and the
strategic concepts studied in
Marketing and other courses
information. Not able to
implement the applied
frameworks at all.
Writing is unfocused, rambling,
or contains serious errors;
poorly organized and does not
follow specified guidelines.