Royal Enfield will focus on smaller towns to help power its next growth story. The Chennai-based motorcycle manufacturer will be opening anywhere between 200 to 300 Studio Stores in rural areas till March 2020, Eicher Motors’ MD Siddhartha Lal confirmed to analysts recently.
Royal Enfield has so far focused mainly on large format stores and has 932 such stores in the country. Now, it's giving a stronger focus to even small outlets for rural locations, and it's working. Speaking to analysts last month, below is what Royal Enfield CEO Mr. Vinod Dasari said:
Our stores, large-format stores, we have 932 of them, and we had added about 4 this last quarter. But since -- we said that we need to get into a lot more into the rural areas also. And we came up with this unique concept called the Studio Store, and we piloted it early in April or so. It was so successful in 2 areas that we did, that by August we added 250 of them. And by October, we launched another 250 and we have now 500 of them.
The current slowdown in the Indian automotive market has led to a significant reduction in sales at Royal Enfield. Between April-October 2019, the sales dropped by over 20% to 3,94,760 motorcycles in the domestic market. During the same months last year, the company had sold 4,94,849 units. To boost sales, it launched more affordable versions of the Royal Enfield Bullet 350 and Royal Enfield Classic 350.
Regular Royal Enfield stores have a size ranging between 2,000-4,000 square feet and need an investment in the range of INR 50 lakh to INR 3 crore. However, these new Studio Stores, have a size ranging between 500 to 600 square feet and need an investment of only INR 5-6 lakh per store.
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Royal Enfield claims to have received ‘fantastic response’ from the new mini stores. In fact, the company claims to sell anywhere between 8 to 10 motorcycles a month from these outlets. The company is also palling to boost up its exports and may even open a manufacturing facility in Latin America.