Pepperfry eyes Tier-2/3 cities for offline expansion

Online furniture platform Pepperfry is looking at Tier-2 and Tier-3 cities for expanding its offline presence. The company, which opened its first Studio Pepperfry in 2014, is now present across 60 offline studios in 26 cities.

It plans to expand its footprint across 35 cities by March by adding 20 more studios that will be mainly opened under its Franchisee Owned and Franchisee Operated (FOFO) model by March 2021, Ashish Shah, Co-founder, and COO, Pepperfry told DH.

"Considering the extremely successful revival of the businesses amidst the pandemic, the company aims to expand its FOFO studios by launching 20 more franchisee-owned and franchisee-operated studios across Tier-2 and Tier-3 cities like Guwahati, Patna, Agra, Dehradun, Vizag, Gwalior, Jamnagar and Shillong among others," Shah said.

Currently, Pepperfry operates 60 studios across the country, of which 18 are owned by and operated by franchisees. Of the 20 new studios planned, 13 are already underway.

Pepperfry has also revised the model to improve the commission structure by offering a 15% commission to its franchisees on every online transaction made at the studio. The franchise partners have to invest 50% of the CAPEX in order to establish a Pepperfry studio.

Meanwhile, the online marketplace has returned to pre-Covid business levels. From a low of 40% in May, it has touched 120% in comparison to pre-Covid levels. It has seen a sharp increase in the home office furniture category with study tables and ergonomic office chairs witnessing 250% and 400% growth respectively in comparison to the pre-lockdown levels. Currently, the work from home furniture category contributes to 25% of the total business from just 10% earlier, Shah said.

Despite the loss of business for about two months during the lockdown, the company hopes to maintain last year's sales level at Rs 1,500 crore. "We are witnessing 30-35% growth in festive season sales this year. We expect the sales in October-November to compensate for the loss seen at the beginning of the fiscal year," Shah added.

He said that the company is also on track to go for public listing with its maiden IPO in the early part of 2022.