V Bazaar Retail is targeting Rs 2,000 crore in revenue by the financial year 2029, backed by a calibrated store expansion and disciplined unit economics. The value retailer, with over 100 stores, plans to add 25 to 30 outlets this year and scale up by another 100 stores over the next three years, largely funded through internal accruals. With an average investment of Rs 2 to 2.5 crore per store and a sub-two-year payback period, the company is ensuring growth remains profitable as it scales, a top official said.
In an interview with BW Businessworld, Hemant Agarwal, Chairman and Managing Director and Raghav Agarwal, Director of V Bazaar Retail, highlighted that the idea is to grow in a structured way, where expansion and performance go hand in hand, rather than focusing only on topline numbers.
The growth strategy hinges on a cluster-led expansion in northern markets, anchored in affordable pricing, in-house designs and tighter cost control. As demand strengthens, the company is also scaling private labels, targeting 35 to 40 per cent contribution to sales, to improve margins and sharpen differentiation.
Disciplined Expansion To Drive Scale
The CMD emphasised that V Bazaar’s expansion will remain “cluster-led,” with a clear focus on deepening presence in existing markets before entering new ones. This approach, he noted, helps manage “operations, logistics and demand more efficiently,” ensuring growth stays sustainable. Store additions will be “consistent” and calibrated, with the company prioritising “the right locations” and long-term profitability over aggressive, unchecked expansion.
Building on this, the Director outlined the near-term roadmap, with the company “operating at above 100 stores” and planning to add “25 to 30 stores” this year. Over the next three years, the target is to scale up by “100 more stores,” largely funded through “internal accruals,” reflecting a strong focus on self-sustained growth and financial discipline.
He added that the foundation of this expansion lies in V Bazaar’s core playbook of “bringing the organised retail experience to the unorganised sector” across tier 2, 3 and 4 markets. By offering a “mall format” experience with “affordable fashion,” the brand has been able to tap into aspirational demand in smaller towns, driving both scale and consumer traction, he added.
Profit Focus Backed by Strong Unit Economics
The Director stressed that growth is anchored in profitability, noting that “the market is big enough to have more players,” with V Bazaar staying focused on its own “designs” and a lower, “honest pricing model.” While competition is intensifying, he said the expanding market continues to support growth, with differentiation coming from value-led offerings rather than aggressive pricing or expansion alone.
On capital allocation, the company is sticking to a disciplined, standardised model, with a total investment of “Rs 2 to 2.5 crore” per store, including around “Rs 1 crore” in capex and the rest in inventory. He clarified that there are “no plans of going asset light,” as physical retail requires investment in fixtures and infrastructure, though larger store formats could push capex higher.
This disciplined approach reflects in store-level profitability as well. With an average store size of around “7,700 square feet,” the company is now exploring 8,500 square feet formats. Director added that V Bazaar is targeting a payback period of “1.5 to 2 years,” depending on sales intensity. The model, he indicated, is built to ensure consistent returns, balancing expansion with tight control over costs and store performance.
On geographic expansion, the company remains firmly focused on northern markets, with no immediate plans to enter the south “in the next three to four years.” The Director highlighted that the “cluster focus model” or “hub spoke model” is central to operations, enabling better logistics and demand understanding through a “chain of stores operating nearby.” Expansion into western and southern markets will be considered only after fully capitalising on existing regions.
Consumers, Private Labels And Grocery
The Director highlighted a clear shift in consumer behaviour post-Covid, noting that demand has “surpassed the pre-Covid levels,” with consumers now more willing to “spend and live.” He pointed to a sharp rise in demand for “trendy fashion, high quality, better quality fashion,” reflecting growing aspirations across tier 2 and 3 markets. This shift is visible across categories, with “very good positive” demand spanning apparel, home products and across all consumer segments.
Despite this premiumisation in preferences, both the Director and CMD emphasised that “price will always be the driver” in value retail. The CMD noted that while expectations have evolved, it is “not really a trade-up in terms of higher spending,” but rather delivering “better design and improved quality at the same price point.” The company is addressing this through tighter sourcing and manufacturing control, ensuring value without increasing costs.
On product strategy, private labels are emerging as a key lever. The Director said the company is targeting “35 to 40 per cent of sales” from private labels this year, while the CMD added that this could move “closer to about half of the overall mix” over time. These in-house brands enable “better design, consistent quality and faster refresh cycles,” strengthening both margins and consumer proposition.
Meanwhile, the company’s earlier experiment with an “impulse kirana model” continues at a small scale, contributing just “1 to 2 per cent” of revenue. Positioned as a footfall driver with “low cost, ready to go” items, it remains a limited but complementary part of the overall retail strategy.
“That is a model that we still have, but that is a very small percentage of our revenue contribution, which is like around 1 to 2 per cent. That is not the main focus or agenda,” the Director added.
Cost Pressures And AI
The Director flagged near-term cost pressures driven by geopolitical tensions, noting that raw material prices, including cotton and polyester yarn, have risen by “about 10 per cent.” This is likely to impact the upcoming festive quarter, with “a little increase in the costs” and some level of inflation expected in Q3. However, he emphasised that the company is working on a “tighter costing model” to ensure that the increase is not “passed on completely” to consumers, balancing absorption between the company and pricing adjustments.
He clarified that while “there will be an inflation in the pricing,” quality will not be compromised. “The quality is something that we never reduce,” he said, adding that any price increase will be selective, with some categories seeing a higher impact than others. Over the medium term, he pointed out that input costs are expected to stabilise once the situation eases, with inflation likely to “correct down in the couple of quarters” after a short lag.
The Director also described AI as a “game changer,” though still at an early stage of adoption in India. The company is beginning to leverage AI for forward planning, using it to “forecast and plan… six months… one to two years from now” as it scales. A key focus area is building a “data lake” to consolidate historical and real-time data, enabling “permutation combinations and algorithms” to improve decision-making across stores and product demand.
While these capabilities are not immediate, he indicated that AI integration is firmly on the roadmap for the “next one to two years,” positioning the company to enhance planning accuracy and operational efficiency as it grows. |
