Bestseller India Chief Executive Officer (CEO) Vineet Gautam said the company’s retail business saw headwinds post-pandemic but, he believes that Open Network for Digital Commerce (ONDC) holds the potential to revolutionise the retail industry — and like UPI’s impact on payments — it has the power to bring significant benefits and customers to retail businesses.

Speaking at the PwC CEO Dialogues hosted by CNBC-TV18 on Wednesday, May 24, Gautam said the company is seeing headwinds as the shift of people to tier 2 and 3 cities during the pandemic was expected to drive growth. However, he said, "once the pandemic third wave got over, a lot of people moved back to the metros. So unlike what happened to Pepperfry, we are seeing the other side, we are seeing a slowdown in tier 2, tier 3… the metros continue to grow, so there are challenges there."

Despite this challenge, Gautam believes that tier 2 and 3 cities, referred to as ‘Bharat,’ hold the future of the business. Bestseller India currently operates in 130 cities and aims to expand its presence to over 300 cities in the next 3-5 years.

"And the good part is 40 percent of our business comes from women's wear, and that's the segment that is growing very rapidly. Forty percent of our workforce are also women. We focus on that a lot," Gautam said.

He further acknowledged that achieving high double-digit growth in India over the next five years is possible, but it comes at a cost. "It comes at a cost… because our business is investment business... it not distribution business, it requires continuous investment in terms of capital and also building the brand, building the cult behind it."

Also Read: Pepperfry's Ambareesh Murty says demand from tier 2 cities continues to surge

"There is wide (cross-section) of consumers available in the country in many segments, and the good part is segmentation is really sharp and people start to look at you from that perspective, so you can easily target them because of the digital (tools). 5G is going to be the next game changer," he added.

"ONDC is something we are looking at very closely, it will mature over time but what UPI has done to payments I think ONDC can do for retail businesses, and that will bring a lot more consumers to brands inclusive like us." Gautam said.

Echoing him, CEO of Celio Future Fashion Private Limited Satyen Momaya said the apparel business is seeing a huge shift from unorganised to organised and digitisation is helping to spread that. He sees India as one of the fastest-growing markets for Celio globally.

"So when we actually look at growth, with high growth comes volatility, and the thumb rule which we have been using, is as a company, if you are able to grow 2x the market industry growth rate and if you are able to grow 2.5x the GDP growth rate, you are a better performing company," he said.

"Profitability is something which you really want to continue to invest in, as Vineet said apparel needs lot of investment. Hence if you are not really going to be profitable, you are not going to reinvest back, to be able to put capex,” Momaya added.

“We are seeing a slight headwinds currently, maybe because of the inflationary pressure which we had on prices and hence some amount of discounting would be higher than last year, but we also have to remember, last year was one of our best years in some time. Hence on back of that, the growth could look a little muted, but we are very positive about profitable growth and we continue to look at seeing India as a market which will be one of Celio’s fastest-growing markets globally," Momaya added.

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(Edited by : Shoma Bhattacharjee)