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Sunday, May 06, 2012

Not just jockeying

I happened to meet the owner of a Jockey exclusive store in Chennai. Since it was a recently opened store, I asked about the investments and ROI.

Below is what he said. I do not know if he is exaggerating, but I didn't have a reason to suspect him.

While my guess was that he would have invested about 10 lakhs in the store, he tells me that actual amount is 6 times that. 60 lakhs to open an inner wear store. 30 lakhs is the cost of inventory, 10 lakhs is the advance, 20 lakhs spent on interiors.

Store rent is 60k per month and for operational break even, he needs a revenue of about 6 lakhs per month. Assuming an average jockey unit costs Rs 300, he needs to sell over 70 pieces a day.

Almost all franchisee models are priced in similar range.

Now that is the mathematics it takes. All of us who though a savings of few lakhs is enough in case of distress, watchout.

4 comments :

Deepak Majipatil said...

Business is tough these days. Without enough financial background, sustainability is not possible and then the comes the profits. same brand dealers fight among over selves to survive and then comes the different brand dealers. These days the discounts are unmatched.Big brands give 50-60 percent discounts compared to lesser brand which is has a quality consciousness.

Shrinidhi Hande said...

True Deepak

Trails of a Traveler said...

Does it mean that if he runs it successfully, he can recover the investment in about 15 months?

Ram

Shrinidhi Hande said...

Ram,
What is the basis of your calculations?

If he can sell some 300+ units per day, I guess yes. But not everyday that target can be met