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Retail – A Barometer of Urban Health

During India ‘s misplaced years post-Independence, business and commercial activity was treated as a ‘necessary evil’. Businessmen were labelled as rapacious, self-interested people who needed to be kept under strict control. And shopkeepers were possibly among the lowest on the social ladder according to the economic and governance pundits.

In the last 20 or so years, fortunately, that tide has turned significantly – the role of business in economic and social growth is publicly acknowledged. Inspiring leaders such as Narayana Murthy of Infosys, Sunil Bharti Mittal of Bharti, and Ratan Tata of Tata Group offer aspirational models for a new generation of Indians.

Yet, retail, for all the zillions of column centimetres and hours of airtime that it gets, is still seen as a slightly dubious activity.

For most planners on the government side, it has been and remains an afterthought. Often, a few poorly developed square feet are allocated when a new community or urban development is being planned. On the other end, a number of massive glitzy shopping malls are being set up by real estate developers that have no correlation to their surroundings and catchment.

To my mind, retail developments need to be seen as part of urban infrastructure and also, more importantly, as part of the social fabric of a town or city. Government at all levels, especially state, district and municipal level, need to understand that the presence of successful retail developments in their population centres are an indication of the social and economic health of their localities.

A well-planned retail centre not only creates income for the local population and the local government, but also provides a very important socio-cultural platform for interaction between the different segments of a community. The presence of successful brands and retailers acts as an attractive beacon for other businesses, small or large.

Internationally several examples exist – especially in Europe – where after decades of suburban growth, town planners are focussing on re-developing ‘inner cities’ with a mix of large and small retailers, in environments that are shopper-friendly in every way. They are rethinking public transport connectivity, planning in pedestrian-only walkways, greening and sheltering, effective lighting, open spaces, and cultural centres. And yet, this mix would be incomplete without food and shopping.

Government bodies also need to realise that it is not productive to simply hand off large chunks of land to private developers to put up concrete-steel-and-glass blocks in the form of shopping centres. One should be able to look back 30-40 years hence, and say that the development added something positive and organic to the urban landscape in that town or city and was truly beneficial to the local population.

Visionary shopping malls like the Kapaliçarsi (“Covered Market” or Grand Bazaar) of Istanbul that was established in 1461, are obviously few and far between. Bluewater near London in the United Kingdom , and inner city developments on continental Europe offer more contemporary examples. However, India ‘s own traditional markets, at least until a few decades ago, also offer points of reference and inspiration.

I believe a rethink of the role of retail is highly overdue. If urban planners in the government and private developers can work together to plan and create more complete and ‘organic’ retail centres for the future, India ‘s urban centres will be far healthier and dynamic places to live in.

SPORT–ENOUGH TO WEAR?

What do you understand by sportswear? Is it casualwear? How different is it from activewear? Who are the main players in sportswear? Any desi brands here? What are the opportunities in this segment? Chhaya Chauhan answers these questions and more. (From "Images Business of Fashion", September 2007)

Sportswear – a term that normally brings to mind an image of an athlete or a sportsman dressed up to begin a game… a cricketer in full gear, a tennis champ in sport clothing.

However, it is interesting to note how during the last few decades the dimensions of sportswear have expanded to an extent that has brought forth a whole new face for this clothing category and what was traditionally sports clothing, is fast acquiring the nomen activewear.

To understand the shifting paradigms let’s take a look at how these categories are completely different…

Active sportswear: Active attire, performance sportswear, or active sportswear is clothing, including footwear and other accessories, worn for sport or exercise. These are meant to enhance the performance while playing the sport and use special fabrics and cuts specialised for each type of sport. Typical garments include shorts, tracksuits, t-shirts, polo shirts and trainers. Specialised garments include wet suits and salopettes. It also includes some underwear, such as the jockstrap. Most active sportswear brands have a lifestyle line of clothes which is inspired by the active sportswear range and these are often worn as casual fashion clothing.

Sportswear: A term widely used and well understood globally and more so in the United States, sportswear is anything more casual in approach than the rigid or traditional definitions. Modern classics, glam comfort… classic sporty look with modern feminine details for the woman who gives equal points to functionality, comfort factor and glamour.

Traditionally inspired by active sports, it is a collection for fast paced city life, and meets the demand for both fashion and function. From its sleek design lines to innovative construction, these versatile pieces help you more than just keep up – they let you set the pace – a perfect blend of trendy and sporty, rich fabrics, subtle prints and feminine lines..for you to relax, function and enjoy in.

Globally, with the growing market and demands of the customer, today sportswear has further fragmented. However, thanks to brand communication and product loyalty that global brands enjoy, even these fragments can be unmistakably understood.

For example, at most fashion stores in the US, there are many more segments under the sportswear category. Nieman Marcus offers you to shop even career sportswear along with casual sportswear. Ellen Tracy’s career sportswear and Nieman Marcus’ career sportswear do not ring a bell even close to ‘sporty’ in the Indian lay man’s context and so does not the casual sportswear attire by Anne Klein.

Further more, at Lord and Taylor, you can shop classic sportswear of the likes of Lauren Alpana along with contemporary sportswear by Lucky Jeans and Calvin Klein Jeans. There is a definition driving these. Sportswear career clothes are of a more relaxed mindset than the regular career clothes. Likewise, there is a difference between the classic and the contemporary sportswear as the classic version is more refined and chic than its contemporary counterpart, which has distinct trendy, younger and frolicsome elements, such that, even if a CK skirt has a handkerchief hem it will be neatly finished to give an overall refined look whereas a CK Jeans’ classic full sleeve shirt will have elements of frolic like raw edges or braid trims.

Clearly, sportswear exists under all major categories, albeit little undertoned in definition than the traditional ones, which is why you even have career sportswear (which is not as formal as regular careerwear) and sportswear evening which is not as dressy as regular formal eveningwear.

Surprising alright to us here, but again, it is fast acquiring recognition in its true essence. Ask a professional from the garment export industry, and pat comes the reply: “It is what you’d call casualwear”.

Even though this sounds confusing to the Indian end-consumer or even our leading brands and retailers, fact is the category exists globally and is the widest spread among all apparel, partly also owing to the fact that the term and category was born in the 1960s and nurtured rather well by the retailers and consumers in American grounds. The fact that the American lifestyle and social attitude has not been too rigid or definition confining unlike most of their global counterparts also lent a helping hand.

India story

Addressing the question if it is time to introduce the sportswear definition in the Indian context, Ashvinder Singh, managing director, USI, a domestic sportswear brand, says, “I think the youth is ready for the definition. The developments that have happened in the past four years in the domestic retail sector are equivalent to what has happened in the past 40 years. Thanks to the Internet, the youth in the relatively smaller cities is also aware of what brands are doing globally, be it fashion or the automobile industry. Many a times, the customer is aware of the products before it even reaches the stores. I do not feel that the customer will be any bit confused by the introduction of this definition, as he well understands the difference between sports and sporty. He is ready to accept provided that the brand imaging is done correctly and crisply and the products offered are in complete symphony with the brand imaging. For example, we have been running a t-shirt line called rugby t-shirts for the last 16 seasons, which is a very smart casual line, inspired by the performance rugby t-shirts. Now rugby t-shirts are very rough with their feel, but our line takes inspiration from the spirit of the game and with the help of very soft fabrics and graphics you have a collection which is appealing to someone who wants to dress up smartly and in some way identifies with the sport.

“The customer should know what the brand stands for and what its offerings are. The product and service needs to be consistent – no surprises. I am very inspired by Burberry, in how it has managed to retain a consistent image. I’ll say it is very easy to build an image, but it takes a lot to stick to it.”

Shailesh Chaturvedi, CEO, Tommy Hilfiger Apparel-India, on the question on measures required to make retailers and end consumers understand the globally accepted definition of sportswear, says: “Sportswear is a very American term because of its casual spirit. It denotes an in-between smarter alternative, a smart casual line for a smarter and sporty spirit fashionable clothing.

"Point is that it is an industry term, as in a very B2B phrase and not necessarily be taken to by consumers. Consumers just need to know how to dress, what piece to pair up with what bottom and accessory, and know the looks and styles which are in for a season. The past four to five years have been progressive as the evolved Indian consumer is actually driving the brand to offer better collections, season after season. Having said this, I do not think we need to follow the US and confuse the clearer definitions that the Indian market follows.”

“I feel that this is the right time to bring in the definition of sportswear to the already existing sportswear labels. Entry of global sportswear brands like Tommy Hilfiger and the likes have also helped broadening the minds of consumers to newer concepts”, says Dhruv Bogra, business head, Nautica-India.

According to him, awareness for sportswear category can be created by effective communication during product launch, conveying what sportswear means. One has to make the customers see that the definition fits into their lifestyle. Then, of course, brand value is critical. “We market Nautica as classic lifestyle clothing, which one can wear to work, or as smart casual attire, which has a soul of exploration and adventure.”

Manish Kelshikar, design head, Shoppers’ Stop feels that the penetration of the definition is very difficult in the Indian market to the end consumers as of now, as even in professional circuits the term is not understood as of yet. Entire branding comes through commitment to the product. However, most brands mix products based on the consumer needs.

“However”, he continues, “following a disciplined way of brand extensions till the brand is well known for a particular category, like sportswear, could help. Currently, most brands are clustered together. An excellent example is Allen Solly, a sportswear brand that has created an individualistic brand image, well dressed with a relaxed attitude. It brought in the concept of Friday dressing in the country, which appealed to the metrosexuals.

“Even though young professionals of today are aware of the sportswear definition as it exists, thanks to the Internet and travelling across the globe, brands still shy away from the definition as the Indian customer is still evolving. Thus, no brand forthrightly declares that it is a sportswear brand in the global definition context. The categories well understood by the Indian market remain as ethnic/festive wear, careerwear, Friday dressing, jeanswear, loungewear, casual or street wear and club/party wear”.

Says Devangshu Dutta, chief executive, Third Eyesight: “Sports-inspired casualwear in India has been around since the days of brands such as Proline, Active Sportswear, Bata, North Star and others. Other home grown brands such as USI have also grown organically along those lines and remain active in that market. However, in the last 10-12 years, the entry of global players such as Reebok and Adidas pushed sports-inspired casualwear into the forefront even more, supported also by the growth of sports telecasts and sponsorships.

“At the same time, globally, sports-inspiration has been creeping into casualwear, and the share of knits has also grown in the overall apparel market – a trend which is reflected now in India also, and supported by the growth of knitwear manufacturing capacity in the country.

"The term sports-inspired casualwear demonstrates a common trend where new product developments start off as being functional, distinctive and different (such as performance apparel, camouflage, cargo-pants, hiking boots), but then influence and blur into the mainstream products as well.

"As far as building awareness is concerned, the core merchandise, of course, rides on the back of sports – whether watching or playing. Television has a huge role to play in this, as is apparent from the growth of sales of team apparel for soccer, basketball, baseball and American football. As the phenomenon of sports (playing, telecasting and watching) increases, the sports-inspired casualwear segment is sure to grow.

"An interesting development recently, film showing the impact of media on consumption patterns and habits in this context is the recent Chak De…India, which has actually caused a small resurgence of interest in hockey, and will surely have a positive impact on sports equipment, sportswear and accessories related to hockey."

How sportswear evolved

The concept was seeded in the Sixties, when the influential Italian designer Emilio Pucci’s sportswear designs and prints inspired by Op art, psychedelia, and medieval heraldic banners earned him a reputation that extended far beyond the circles of high society. His sleek shift dresses, tunics, created a ‘Puccimania’ that was all part of a movement to liberate the female form. His designs, while being experimental, were also in tune with what modern adventurous young women wanted to wear.

The Seventies nurtured it. Nicknamed the ‘me’ decade, ‘please yourself’ was the catchword of the Seventies. In the United States, the general trend in fashion was towards simplification. Pants earned unanimous approval over skirts. Jeans profited most from becoming an accepted part of the American fashion scene, their new-found respectability deriving from their inclusion in collections under the heading of sportswear. Nike debuted in 1972 and running became a popular pastime, and running shoes were a functional necessity. The athletic craze was only just beginning.

Perry Ellis: Central to the success of a new wave of American sportswear was the Perry Ellis label, established in 1978, which used colour and natural fibres to great advantage in its elegant variations on the basics.

Ellis presented his first women’s sportswear line, Portfolio, in 1976. Although he could not sketch, he knew exactly how the industry worked and proved a master of innovative ideas creating new classics that American women longed for at the time. He was acclaimed by critics as the ideal American sportswear designer of the time and loved by female consumers for his clean-cut yet casual style.

Norma Kamali: With short skirts made of sweatshirting, leotards, headbands, and leg warmers, Norma Kamali made jogging look fashionable. She also created the popular rah-rah skirt.

Giorgio Armani: The most influential Italian fashion designer of the time was probably Giorgio Armani who produced his first collection for women in 1975. From the outset, the line was dynamic, urban, and understated, androgynous in inspiration. Armani offered a restrained style that greatly appealed to the increasing population of women who now had access to the world of work and occupied progressively more senior positions within it. This was only the beginning of a tremendous career, which came to fruition in 1981 when Emporio Armani was launched.

It finally arrives

Power suits, dress for success, and the conservative preppie look were everywhere. Fashionable brand names like Izod, Nike, and Adidas were the rage in street styles.

There was no guilt about being greedy in the Eighties. There was money to be made, money to be spent, and you had to look really, really good while you were spending it. You even had to look good while indulging in the new aerobics fad – never let ’em see you sweat. Appearance was related to performance, which was of supreme importance to a whole generation of young urban professionals, whose desire to look the part related to a craving for power. The way in which men and women associated with the latest styles was no more a matter of passive submission but one of active choice.

Women began demanding an alternative to high heels. The image of a power-suited woman in athletic shoes rushing off to work is quintessential Eighties. Quotes such as "It’s harder to climb the ladder of success in high heels" were taken seriously. Some women began dressing in mannish simplicity while attempting to shatter the glass ceiling. Flats and low-heeled shoes in muted colours and classic styles were popular.

Also notable is the extreme popularity of the Adidas sports label, which achieved an incredible level of street cred in the Eighties, even inciting the hip hop group Run DMC to release the single My Adidas in 1986. The legendary shoe designer Manolo Blahnik also rose to fame during the 1980s, with his fantastical divine mules, and majestic boots.

In contrast to the conservative business climate, the voice of colour became louder in casualwear. There were no shy colours, be they primary or fluorescent. New wave bands such as Culture Club featuring Boy George and mega stars such as Madonna and Michael Jackson encouraged in-your-face fashion. Moccasins, espadrilles, and other types of native shoes were reinvented using new colour palettes. Jellies, made of moulded plastic in a variety of colours, were also a huge fad. Even men’s shoes weren’t safe as bright-hued Converse All Stars and patterned became popular.

All the excess, however, was becoming a little too much.

Liz Claiborne: Frustrated at the failure of the companies that she worked for to provide clothes for working women, Liz Claiborne started her own design company, Liz Claiborne Inc, in 1976. It was an immediate success with sales of $2 million in 1976 and $23 million in 1978. By 1988 it had acquired one-third of the American women’s upscale sportswear market.

Ralph Lauren: His aristocratic style at prices the average American could afford created a sensation. For an elite faced with all kinds of avant-garde fashions, it represented a rallying point, endorsing, as it did, a classic look that had been adopted for an active life. The number one of American ready-to-wear, he was equally successful with his sportswear and jeans, which allowed him to reach the widest possible range of social classes and age groups.

Guy Paulin: One of the first French designers to promote a severe, plain, and uncluttered look, Paulin’s garments were classical in their proportions and made for comfort and simplicity.

The Nineties

In the Nineties it was no longer the done thing to follow fashion slavishly, a sharp contrast to the highly á la mode Seventies and Eighties. The phobia of being underdressed was finally completely displaced by the fear of overdressing. Fashion in the Nineties united around a new standard as styles of stark simplicity became the vogue. Clothes by ready-to-wear retailers such as The Gap, Banana Republic, and Eddie Bauer came to the forefront, managing to tap into the needs of women who simply wanted comfortable, wearable clothes.

Lacoste: Starting in 2000, with the hiring of a new fashion designer, Christopher Lemaire, Lacoste began to take control of its brand name and logo, reining in their branding arrangements. Now, Lacoste has once again returned to the elite status it held before a brand management crisis in the Seventies and Eighties.

Michael Kors: Renowned for his classic, chic, and luxurious but sensible aesthetic on American sportswear and other clothing styles, it was in 1981 that Kors launched the Michael Kors womenswear line. The menswear line includes sweaters, tailored pants, and peacoats. In 1997, Kors was named the first ever women’s ready-to-wear designer and creative director for the French fashion house Celine. In his tenure at Celine, Kors turned the fashion house around with blockbuster accessories and a critically acclaimed ready-to-wear line. Kors left in October 2003 to concentrate on his own brand. His knowledge and consciousness of trends enabled him to produce simple well cut garments, whose sophistication and elegance appealed to a whole new breed of wealthy American customers drawn to the new vogue for minimalist chic.

Calvin Klein: One of the first fashion designers to anticipate the globalisation of world markets, the already well-known designer, Calvin Klein, started to market his fashions, perfumes, and accessories not only across the US, but also in Europe and Asia, achieving an unequalled success. A brilliant artistic director, Klein used carefully constructed advertisements containing images tinted with eroticism to promote his sophisticatedly functional mass-produced designs, which won massive popularity among the urban youth of the Nineties.

Current scenario

Globally, the sportswear market is branching out more day by day as new areas emerge and the existing categories evolve further due to market demands, coupled with severe competition and customer needs. The bigger brands are forced to make additional sub segments within the broader definition to stay put at their current position or grow bigger.

Globally, with health consciousness and general well being getting embedded in our mind set more than ever, sports-inspired clothing, be it for work or casual, is gaining popularity world over. Sportswear version styles have begun to replace the traditionals, reflecting the spirit “ I am what I want to be.” There is a fashion statement even in dressing down, it’s just how fashionably you do it. In Europe, sportswear clothing has bloomed majorly because of the affluent aging population which is youthful in spirit; they lead an active lifestyle and to reflect their spirit they like to dress up in smart-casual when not at work.

PVH: Phillips-Van Heusen Corporation (PVH) is one of the largest apparel companies in the world. The portfolio of brands includes Van Heusen, Calvin Klein, Izod, GH Bass & Co, Bass, Arrow and Eagle which are owned, and Geoffrey Beene, Kenneth Cole New York, Reaction Kenneth Cole, BCBG Max Azria, BCBG Attitude, Michael Michael Kors, Donald J Trump Signature, Sean John and Chaps, which are licensed. Phillips-Van Heusen’s business comprises several major business groups.

Currently, its products are distributed through more than 15,000 doors in department, mid-tier, mass market and specialty stores in the United States. It also licenses its brands, to qualified business partners, domestically and around the world. This enhances brand awareness and strength, while increasing revenues and expanding operating margins.

Strategy

An insider from the company spoke on conditions of anonymity: “2006 marked a year of significant change in our industry as a result of department store consolidation and store closings. The associated effects were felt across markets, across brands, and by our retail partners. Our reaction to these changes was not one of uncertainty, but rather one of anticipation. We adapted our strategy and methodologies early, in preparation for the inevitable and often tumultuous shifts in the marketplace.

“We believe PVH is philosophically and structurally unique. We operate within two business models instead of one. We are organised by product-specific operating divisions for purposes of merchandising, design and sales, while organised across multiple divisions for purposes of logistics, sourcing and marketing. This dual model is, by design, both operationally efficient and brand-centric, providing a structure and platform to expand our portfolio with complementary new brands and product extensions, thus enabling us to seize opportunities.

“Reacting to and finding the opportunities presented by this changing retail environment was just one of the areas in which our company excelled in 2006. We also laid the foundation for future growth and expansion, taking steps to enhance and refine our business model:

a) Agreed to re-acquire from our licensee the operations for Izod women’s sportswear, so that it could build a business that will mirror its successful men’s sportswear operations.

b) Entered into a new license for Timberland men’s and women’s sportswear to expand branded product reach.

c) Committed to presenting the Calvin Klein brand directly to the US consumer through the opening of full-priced specialty stores that will showcase the Calvin Klein white label brand.

We benefit from what we believe is one of the strongest management teams in the industry, a portfolio of worldclass brands and an infrastructure that enables us to execute at consistently high levels across all facets of our business.”

Sportswear

“The performance of our Sportswear group exceeded expectations in 2006, as here too we were able to respond to the changes caused by consolidation in the department store channel. This was achieved through both the strength of our brands and by making additional inroads within the broader retail environment of an exclusive store presentation under the Izod LX label. Van Heusen sportswear broadened its presence in JC Penny as a lifestyle presentation. We worked with our retail customers to adjust their product mix in recognition of the new landscape.

“The Izod brand, whose consistent success speaks to the strength of the brand, will benefit this coming year by bringing the Izod women’s sportswear business in-house, allowing us to be the brand stewards for the totality of both the men’s and women’s businesses. This represents an opportunity to establish what we project could be a $200 million business within five years, while also developing in-house expertise in the women’s wholesale sportswear arena, which could provide us with a capability and platform that can be levered to grow additional women’s businesses.

The strength of the Calvin Klein brand exhibited itself in the performance of our men’s better sportswear business. Sales of the Calvin Klein sportswear business were up approximately 60 per cent in its second full year of operation and door count increased from 500 to 550.”

BCBG Maxazria

Founded in 1989 by founder, designer-chairman-CEO, Max Azria, the brand was named for the French phrase bon chic, bon genre, a Parisian slang meaning good style, good attitude. The company is a combination of European sophistication and American spirit. A retail giant, it owns and operates over 290 BCBG Maxazria boutiques throughout the world with over 210 in the US alone. The collection is also sold through specialty stores and in-store shops in major department stores across the globe including Saks Fifth Avenue, Nieman Marcus, Bloomingdales, Nordstrom. The company has a portfolio of 15 brands, making it one of the most diversified fashion houses. This fall season, the company will add a contemporary outerwear collection under its existing umbrella of clothes, accessories and fragrances.

The BCBG customer is modern, chic and fashion forward. She appreciates clothes that are elegant as well as wearable. The company caters not to an age group but to an attitude.

The BCBG Sportswear line truly pushes fashion to its limits and much more, even as it does not consciously follow predicted fashion forecasts, rather creates fashion looks of its own, so much so that most brands follow what the BCBG Maxazria Sportswear label sets.

In a telephonic interview with Ajitesh Bhatia, director-sportswear, BCBG Maxazria group said: “We are able to provide our clients what they just will not get elsewhere and we make continuous efforts to improve our understanding of the customers’ expectations from us. There is huge competition in this segment and we are considered market leaders of contemporary sportswear styling. The need to keep re-inventing to rise above expectations is the key. We launch about 200 styles per month to cater to the niche segment that the label is in and I am only talking about one of the labels under the company’s umbrella that is BCBG Maxazria Sportswear. We feel that designing is more than 50 per cent of technical knowledge and thus, have a stock of in-house technicians, patternmakers and designers right here in our Los Angeles office.

“We are successful as we capture the latest trend at all price points for all classes of clients. Our brand has an edge because we are ever changing, ever reinventing, trying something new blended with the classic fits. Customers get a complete deal when they are shopping with us. Plus, most of our sportswear pieces can multitask; sportswear has it advantages – the tops can be worn to office as well as a party with little change.”

Nike

In 2006, Nike wrested the rights to become the official kit sponsor for the Indian cricket team for five years. Beating arch rivals Reebok and Adidas, it paid Rs 196 crore to the Board of Control for Cricket in India.

The first ‘Just Do It’ cricket ad also made its appearance during the Champions Trophy last year since Nike aimed to connect emotionally with Indian customers, and connecting through cricket passion is truly the best way.

Sanjay Mehra, general manager, Nike-India:

Q. How is this segment evolving in India?

A. Established in June 2004, Nike India aims to lead innovation in footwear, apparel and equipment and introduce to consumers its vast range of specialised products. It aims to raise the bar in terms of choice to the consumer, customer service standards, and stimulate competition in the industry.

In addition to performance products, Nike aims to bring inspiring and innovative sportswear solutions to style-conscious youth throughout the world. Nike aims to energise the street through collections grounded in Nike’s DNA with its sports-inspired line of products called Nike Sportswear. We introduced the premium line of Nike Sportswear in India this summer and the response we’ve received is encouraging.

Q. Please elaborate on your lifestyle line, inspired by the sports line?

A. Nike has a range of footwear that is inspired by sport. Nike has always enjoyed a healthy degree of popularity beyond hardcore athletes. For example, the Air Force 1 franchise, is a shoe inspired by basket ball. A basketball fan would wear Air Force 1 on the streets, whether he plays basketball or not.

At Nike, innovation is foremost and will remain the core of our brand. With our sportswear line, what’s hip and what’s in fashion still blends in with performance. For example, unlike sports shoes, which might get used for a 45-minute game before being tossed back into a locker, the Sportswear line may be used all day. That’s a different mindset, but a chance to explore a different side of product innovation. This range also gives us a chance to integrate innovation across categories, from sports to fashion.

Adidas

Adidas is a major German sports apparel manufacturer, part of the Adidas Group, consisting of Reebok sportswear company, Taylormade golf company, Maxfli golf balls, and Adidas Golf and is the second largest sportswear manufacturer in the world. The company was named after its founder, Adolf (Adi) Dassler in 1948. In 2006, Adidas acquired Reebok for $8 billion. The deal overshadowed Nike’s purchase of Converse in 2003. The acquisition increased Adidas’ market share in North America and allowed it to further compete with the world’s biggest maker of sports apparel, Nike. Adidas revenue for 2006 was listed at or about 13.625 billion US dollars. “Impossible is nothing" is the current mainstream marketing slogan for Adidas. Today, the brand is also popular in hip-hop fashion. In the video to his new single Rudebox, singer Robbie Williams wears an Adidas jacket with the classical logo and concert and Juggy D, a British Asian singer, wears Adidas branded clothing in his music videos.

Since 2000, instead of the traditional divisional structure of footwear and apparel/accessories, Adidas now has three divisions: Forever Sport, Original and Equipment. (As of 2002, the divisions are called Adidas Sport Performance, Adidas Sport Heritage, ASport Style.)

Adidas’ presence in India is 11-years-old and it has approximately 235 exclusive retail showrooms across the country, informed John Thangaraj, manager-trend & lifestyle marketing, Adidas India. Globally, the company has three brands dedicated to distinct product categories:

a) Adidas Sport Performance, the only collection available in India, comprises technically sound clothes for playing a sport like tennis or golf and competes with brands of the likes of Nike and Reebok.

b) Adidas Original is a sports-inspired lifestyle brand and competes with the likes of Tommy Hilfiger and Guess internationally.

c) Global premium style brand called Y-3, is in collaboration with the Japanese designer Yohji Yamamoto. This is a super premium brand and is in the league of the likes of Prada and Gucci. The latter two brands are not available here as of now.

“We feel that the Indian consumer is ready for a lifestyle brand like Adidas Original and we are coming up with our first store of this label in Delhi. Premium lifestyle brands like Fcuk are helping the Indian youth keep in touch with global trends. The evolving sports culture is influencing lifestyle like never before. Sports fitness lifestyle is catching up.”

Reebok

Reebok was founded in 1895 in Britain by Joseph William Foster. In 1958 two of the founder’s grandsons Jeffrey and Joseph left the family business and started a rival company that came to be known as Reebok. The firm was sold to a group of investors in 1984, led by R Stephen Rubin of Pentland Industries and Paul Fireman, who established a holding company based in theUK, Limelight Limited, renamed Reebok International Limited

Reebok is now owned by the German footwear giant Adidas, which completed its acquisition in early 2006.

Reebok surged in popularity in 1982 after the introduction of the Freestyle athletic shoe, which was specifically designed for women and came out when the aerobics fitness craze started. Not only was the Reebok Freestyle popular as athleticwear, but also on the streets as casualwear because of its comfort and styling.

Reebok started its operations in India in 1995. Headed by managing director Subhinder Singh Prem, Reebok India has a pan-India presence. It claims to enjoy 51 per cent market share of the total sportswear market the country. It has over 500 standalone stores and is the largest sportswear brand with sale turnover of Rs 900 crore on MRP and with 40 per cent of the turnover attributed to apparel clothing range, which works out to Rs 360 crore.

The apparel line, says Singh, is an athletic leisure line, that is a casualwear line with inspiration coming from various sports. “We have stuck to the sports pedigree, and sponsor and design collections for various sport events. I’ll attribute the brand building to women’s fitness as they make most of the calls when buying. We had started a programme called Reebok University Programme, aimed at training women for fitness. Now, 97 per cent of these women have ventured out as either gym trainers or personal trainers and sport our clothes. These are our brand ambassadors.”

Lifestyle fit is getting global like never before. Until four years back, Reebok would launch a product probably six months later in India. Today, India is aligned globally for every launch, be it a product or a marketing campaign.

Among several other associations like the one with Manish Arora or the Hutch Marathon, Reebok has done a full collection around Mahinder Singh Dhoni’s favourite number 7, which is a stylised line. “In fact, Dhoni spent two days with us designing the range. He is very passionate about clothes too and this aspect of his personality is reflected in the lifestyle range. “

The Scarlett ‘Hearts’ Rbk collection is a fashion-forward, athletic-inspired footwear and apparel. meant for the elite, brand-conscious fashion lover. It consists of bright, summer-friendly colours in shoes, track pants, tees and tops in which one can exercise and wear to casual occasions like going out for coffee, movies.”

Reebok has also launched its campaign ‘I Am More’ featuring Scarlett Johansson with a focus on celebration of individuality. Reebok is the only brand to acknowledge that a sports star also has a life beyond sports and has taken this stance in this lifestyle campaign wherein Reebok will talk not just about on field performance, but off field interests as well.

Reebok has also launched a campaign called “2 people in 1” which has a collection of sports as well as lifestyle shoes. Sport need not be boring in terms of style. Reebok is looking at 40 lifestyles stores by the end of this year.

Lotto

A 34-year-old Italian brand, Lotto was launched in India in 2005. Operated by the New Delhi-based licensee, Sports Lifestyle Pvt Ltd, it has been growing at an average rate of 20 per cent. For the next five years its goal is to accelerate this growth and establish Lotto’s positioning as an Italian sports fashion brand offering great product at great prices; as also, achieve top-of-mind recall among the target group as a true sports fashion brand.

Lotto operates through exclusive stores and around 500 MBOs. The plan is to double this number in the coming years.

On one among the many learnings that Lotto derived from the Indian market is that the way to growth “was not to focus on what percentage of an existing market the brand can achieve, but to work towards building a category which will create a significant market on its own. Hence, there is a sustained endeavour to develop such winners,” a Sports Lifestyle spokesperson said.

The initial Lotto offering was focused primarily on sports. However, a significant increase in the contribution of active lifestyle was noticed and the Lotto range was supplemented with sports lifestyle category to cater to this need.

Tommy Hilfiger

The brand combines American style with design elements to deliver a sportswear look with a designer’s edge under the following labels: Tommy Hilfiger, Hilfiger Denim, Tommy Jeans, and Hilfiger Sport.

Tommy Hilfiger provides casual sportswear and accessories for men and women, prominently under the classic sportswear sub segment; Hilfiger Denim is a comtemporary sportswear line, which is a more fashion forward sportswear collection, with focus on premium denim related separates for men and women and finished with a modern edge and fresh spirit. Hilfiger Sport, is of course, an activewear label for men and women. The designs are performance based and inspired by American heritage.

USI

USI, a home grown label, popular as a casualwear brand inspired by sports, has a presence through 19 standalone stores and 130 shop-in-shops in large retail format chains, boutiquess and family stores. Its managing director, Ashvinder Singh, describes his brand philosophy as “clothing and accessories meant for when you want to be yourself, relaxed and yet smart. We use fits and styling to make a trendy, smart collection for relaxed and youth-spirited collections. Youthwear has a strong connection with sports and our collections draw inspiration from various sports.”

Wills Lifestyle

ITC’s Wills Lifestyle’s label, Wills Sport, is another domestic brand which is as close as it gets to the global definition of sportswear, a relaxedwear line with vibrant designs in breezy cottons and linens. The label is one of the four apparel labels under the Wills Lifestyle umbrella.

One can see brands like these making a statement and bringing about the definition of sportswear, which its label Wills Sports already stands for, because of the image the brand enjoys. Considering that the brand is less than a decade old, it can emerge as the mascot of sportswear in the country in the manner it exists globally.

Guess?

Guess has been known as a contemporary sportswear brand internationally. However, it is moving into a fashionable eveningwear line with a young spirit, informs Sukanya Dutta Roy, general manager, Guess-India. “Our latest denimwear line not only consists of denims but the look that we relate to as denimwear starts at Rs 5,000. Thus, we are working on an image change to a clubwear line.”

Guess came to India in May 2005 and currently has 17 standalone stores. “We will be opening three more by the end of this year”, said Roy. “ We are known in India as a high-end fashion brand and we have a great appeal with youths who clamour for sexy and adventurous fashion.”

Nautica

An American brand, inspired by active lifestyle, Nautica is globally known as a lifestyle brand inspired by sports, offering smart casual and semiformal clothing and accessories.

It entered India in May 2006 and currently has 6 standalone stores, with plans to touch the 15 mark by this December along with five shop-in-shops through Central, which is a lifestyle store of Pantaloon, and Shoppers’ Stop. Says Dhruv Bogra, business head for Nautica-India: “Nautica is popular as an active lifestyle brand. We use elements from every sport like sailing, tennis, golf or any other as graphics or embellishments. Our target consumer indulges in the sports spirit through our clothing. The sports-inspired smart casual line has been evolving rapidly in the last 2-3 years. For example, Nike and Reebok are also moving beyond performance lines on multi dimensions.

“Today’s Indian consumer is aware of these brands. Typically, our consumers are well travelled and above 30 years of age and relate to our brand since they are either indulging into these sports actively or aspire to play these sports. The concept of ‘feeling’ old is fast fading out, young needs to be the mindset and not the age; health consciousness has increased manifold and fitness is a big thing. This breed of consumer is the fastest growing and we are providing them with what they need – design or style coupled with comfort.”

“The Indian consumer is closer to his European counterpart rather than the American. Most Europeans lead an active lifestyle and though like to dress formal at work, they go the sporty way for casualwear. The affluent aging population which is youthful in spirit, appreciates sportswear. We import a lot of styles from Europe since they suit the needs of Indian consumers rather perfectly. We use a lot of performace fabrics in our collections. For example, there is one called Coolmax which is popular in Europe. In India, our X 1000, X 2000 series of hi-performance jackets are quite sought after by consumers.”

Lifestyle

Lifestyle is a part of the 1.5 billion USD Landmark Group (Dubai). A leading chain of large format department stores, Lifestyle has been in the retail business since 1998 and today it is present through 18 stores across eight cities, housing more than 250 national and international brands and five product categories

Shankar Suryanarayan, vice president- marketing, Lifestyle International (P) Ltd, says: “Sportswear is an important category at Lifestyle where we house brands such as Kappa, Nike and Adidas. Today, India is a fast growing market for sportswear. In fact, the market for sports footwear is growing more than the normal footwear segment. The emergence of fashion sportswear is a new trend among today’s youth who dress sportily not only for the gym but also for college or a casual meeting with friends. Such opportunities will contribute to the growth of this category in India.”

Commenting on the growing pace of sportswear clothing, he says,“The category is growing in a promising manner thanks to established international brands who have adopted a more lifestyle-led positioning to appeal to a wider audience. This is just the beginning of a category that is here to stay”.

“In a multibranded outlet, competing brands are constantly vying for the consumer’s mind space. The retail environment provides dedicated space within the store backed by worldclass promotions and consumer franchise activities.”

Accessories

Like any other clothing category , sportswear is also flanked by well meaning footwear and accessories that complete the look for sportswear apparel .

Talk of CK Jeans shirtdresses, and you would find in the same stores matching watches, sunglasses and footwear. Similarly, Armani, Lucky, DKNY, BCBG offer a complete look with accessories to choose from and this includes footwear as well.

Closer home, the new age malls have a lot of the “total solutions stores” offering coordinated shoes and accessories. Further, stores like Madame or Bizzare mix and match the accessories and footwear with the apparel, offering a complete look.

BGs, Mia, Aswera The Bangle Store, and Impulse are some of the stores that offer accessories in every category of sportswear apparel. There are also stores like Clarie’s in the US that again offer sporstwear accessories for young consumers.

As far as statistics go, on an average, a Nupscale household in India spends Rs 20,500 on apparel and fashion accessories , which constitutes about 6 per cent of their total income.

Accessories, which include footwear, consume 30 per cent or Rs 6,150 of this. (Based on a study conducted by IMAGES Business of Fashion in September last). The study notes that various products of general use yet low involvement like footwear or innerwear, fail to elicit from consumers the required response and so the number or percentage of people spending on these specific categories may appear much lower than what it actually is.

Most brands offer products for every occasion. Even though none of the brands have marketing lines mentioning sportswear like the apparel brands, many brands are promoting their products as smart chic casualwear, very close to the global definitions.

The sportswear market is the only sector in India that has the presence of all top international brands. The year 1996 witnessed the entry of Nike, Reebok and Adidas that gave a new dimension to footwear and fashion retailing in the country. Then there are brands like Puma and Tommy Hilfiger that are determined to present a whole new experience in fashionable activewear and sportswear. All these brands are today targeting a nationwide expansion and this market segment is suddenly beginning to look a lot bigger than what it was initially perceived to be.

India majors like Bata and Liberty have also responded positively to the challenges in a bid to retain the market leadership. They have significantly transformed their retail formats to become more lifestyle-oriented and are positioning themselves as vibrant and contemporary Indian brands. A look at how some of these brands fare:

Quo Vadis fashion industry?

By Sharmila Katre


Indian fashion has true potential to grow exponentially in the next decade. But before that, argues Sharmila Katre, there are many issues that the creators and producers of fashion need to address.

Students of fashion design are taught the definition of fashion as ‘a reflection of lifestyles’, and truly the growth of the fashion industry in India in the past decade substantiates this. Fashion as a lucrative business proposition came to pass in the late 1980s with the advent of ‘salon’ stores like Ravissant and Vichitra Sarees that were the natural progression of the ‘boutique’ culture of the late 1960s and 70s. What caused this fast forward demand for ‘designerwear’ labels and home-grown couture apparel could be attributed to the liberalisation of the economy in the last decade of the previous millenium.

Fashion is a reflection of lifestyle. It is a reflection of the growing affluence of urban India – the upwardly mobile middle class, more so, the upper middle class The growth and progress of the fashion industry in the last ten years has even warranted the institution of the bi-annual fashion industry event known as the WIFW, the Wills Lifestyle India Fashion Week, which is eagerly awaited both by the producers and buyers of fashion in India. And, every year the fashion fraternity, glitterati and media await this event with much excitement and impatience. For weeks leading up to the event one reads of the who’s who of the international fashion scene, the top of-the-line buyers expected to attend the event. And yet, Indian fashion is yet to truly make its mark on the international scene. The Indian fashion fraternity is still waiting for its Issey Miyake to make his triumphant appearance on the international fashion arena and put India on the global map of the fashion world and make Delhi an international fashion destination.

What is it that ails our industry that we are not able to bridge that last gap? Are we so overwhelmed by our traditional crafts and cultural heritage that we cannot break free of its shackles and come up with innovative design? For India to have a true design identity, do we have to link it to its ‘craft’ design past? Is there not a designer amongst its design fraternity that can create modern Indian design sans chikankari, dabka, kasab et al, or give these traditional techniques a modern international identity and acceptability to create global fashion? Where is the innovation in form, use of textiles, textures, finishes, print designs and value-added techniques? Where is the spirit of entrepreneurship, a sense of business purpose?

Internationally, the Indian apparel industry is better known as a supplier of competitively priced, mass produced, ‘fashion basic’ apparel merchandise sold by various retail chains and discount stores. In design terms however, the merchandise in no way can be distinguished from any of the other merchandise on sale in the same outlets that have been produced in other Asian, Caribbean or east European countries. So where is the uniqueness of Indian fashion/design visible globally? And yet, when India forayed into the global clothing business in the late Sixties, it was its design identity of unique silhouettes, textiles and value-addition techniques that gave it international acceptance and demand. What sold very happily and profitably at that juncture was ‘Brand India’ through its cotton crepe kurtis and ‘drawstring pants’, and its handblock printed wrap skirts. Indian fashion laid the foundation of an industry that today employs over 35 million people and contributes 14 per cent to the GDP of the nation. Indian fashion has true potential to grow exponentially in the next decade but before that there are many issues that the creators and producers of fashion need to address.

“To grow, the fashion business fashion merchandise has to reach out to market segments beyond the fashion leaders and innovators and consumers of bespoke fashion or couture apparel. Product design through design discipline should enable a product to be scalloped and extend the product’s life span to justify the cost of design development. The product line has to evolve beyond the all-encompassing design technique perspective.”

Most importantly what comes to mind is design discipline combined with business discipline, understanding the commercial viability of design and realising that the business of fashion is like any business enterprise. To grow, the fashion business/ fashion merchandise has to reach out to market segments beyond the fashion leaders and innovators and consumers of bespoke fashion or couture apparel. Product design through design discipline should enable a product to be scalloped and extend the product’s life span to justify the cost of design development. The product line has to evolve beyond the all-encompassing design technique perspective. It has to have an individual signature that has a sense of permanence and identity of ‘unique’ design like an Hermes scarf, a Chanel jacket, a Bill Blass sheath dress, or a Louis Vuitton handbag. The signature design element itself becomes the product’s brand identity.

“The business of fashion needs to be pre-emptive, and proactive rather than reactive. Product design needs to be clever and production-friendly to ensure timely deliveries without taking away from the design innovation factor. Market potential needs to be studied vis-à-vis the adaptability of the design/fashion content of the product to enable growth in the market share and business, by straddling consumer segments.”

The business of fashion requires business strategies, planning, organised marketing and selling, promotion and positioning. Design research based on market and consumer feedback, lifestyle trends, market economics, raw material resources, colour palettes, textile trends and other factors need to be done in depth and in all seriousness. Fashion merchandise is highly perishable and dynamic. Product research and development needs to become an ongoing and continuous process, very much like the R&D processes, that are the norm for all other lifestyle products. The business of fashion too, therefore, needs to be pre-emptive, and proactive rather than reactive. Product design needs to be clever and production-friendly to ensure timely deliveries without taking away from the design innovation factor. Market potential needs to be studied vis-à-vis the adaptability of the design/fashion content of the product to enable growth in the market share and business, by straddling consumer segments.

International fashion designers have to realize that for fashion to last and be profitable, and businesses to grow, designs have to move down several market segments, evolving as it moves down, but holding true to the design concept/signature. And rather than have an original and innovative design idea copied and morphed into a product that would shorten its life cycle with the fashion leaders and fashion followers, it is better to give the original design idea to the followers of fashion in the form of a prêt collection. Prêt-a-porter collections allow designers to expand their market reach, give the much required production quantity volumes and also contribute to a healthy bottom line to grow the business. The success of Giorgio Armani’s business model of Emporio Armani and Armani Exchange is a good case in point. Roberto Cavalli is another successful business model of a fashion designer’s label straddling several market segments. Roberto Cavalli: the premier couture line featuring women’s clothing, sunglasses, men’s clothing, women’s and men’s shoes, handbags, timepieces, underwear, beachwear, and eyewear; Just Cavalli – a more affordable Cavalli line, well-known for its denim, featuring men’s and women’s apparel (mostly sold in upscale department stores) and men’s and women’s accessories; Roberto Cavalli Angels – the childrenswear line.

The fashion industry in India most certainly needs to wake up and smell the coffee. It needs to grow out of the ‘fashion boutique’ business mould of designing wedding trousseaus and ‘diffusion’ collections, and think ‘fashion corporate’ business. International brands, both the prêt collections of well known design brands, and the lesser known ones, have started entering the domestic market. If the fashion industry is not quick to react, the fashion followers and the large upwardly mobile middle class segments would gladly convert for the want of innovative and exciting home-grown design merchandise. And then we could be witnessing a unique ‘trickle up’ situation in the fashion scene where the fashion leaders may follow the fashion followers and shift loyalty to the better known international design labels!

MOBILE MARKETING

THE GROWING BLIP ON SMALL SCREENS


It is just about taking off in India, but mobile marketing is getting a lot of attention. A special report on how marketers are planning to invade your mobile phones – and why.

The soft taps of thumbs on mobile phone number pads are getting louder for Rajiv Hiranandani, co-founder, Mobile2Win, a digital and mobile entertainment company. "Clicks in this medium are 5-8 per cent and outperform clicks in the internet," he says. He is talking about the short message service (SMS), the most widely-used messaging vehicle in mobile marketing. Mobile2win provides information and entertainment ranging from news, jokes and horoscopes to sports scores, stock info and mobile games through the ubiquitous headphone. Hiranandani is not the only one who can hear opportunity knocking. Telecom service providers too are hungrily looking at a market that can only explode – just 23 per cent of India’s 1.1 billion-population owns a cell phone. Marketers and advertisers are equally excited. So are media companies. But what exactly is mobile marketing?

As a generally-accepted definition, mobile marketing is the process of sending spam free, personalised, permission-based marketing messages to receptive consumers through their cell phones. Mobile marketing can be either push-based which refers to communication such as SMS and alerts sent to mobile phones. But to send pushbased messages, firms should have the consumer’s permission. The pull-type refers to information a user requests from a service provider or advertiser. While mobile marketing today is almost totally SMS-based, the increase in the number of large-screen phones and MMS enabled phones will shape the industry soon.
Mobile technology is witnessing new applications and services. This combined with the rapid integration of the internet, mobility and communications at the device, service and transport levels has created a new set of business opportunities. For consumers, mobile phones have become much more than entertainment handsets. Already experiencing a high-end electronics experience from state-of-the-art digital cameras, camcorders and game consoles, they are beginning to expect the same on their mobile phones – a broad range of compelling, interactive content. Therein lay the opportunity for marketers and advertisers. As a medium, the mobile phone screen has the potential to support brand building and strengthen consumer relationships. And marketers have been quick to cash in. One of the early selling points was the possibility of generating immediate responses from consumers at any time and from any location. But marketers and advertisers have proceeded with caution because nothing puts a consumer off than indiscriminate spam.
Operators are increasingly looking for applications that attract users to avail of the services offered. Value added services (VAS) have begun to add significantly to the bottom line of most telecom operators. Almost 10 per cent of an operator’s revenues come from VAS services and this figure is all set to grow. Business generated from VAS rose from Rs 2,851 crore in 2006 to Rs 3,700 crore in 2007 – up by 30 per cent. Marketers, agencies and media companies, especially mobile telephone service providers are facing a new environment. The mix of media channel has shifted from the one-way broadcast channel to two-way communication. Consumers, today, not only want to talk back to marketers and interact with marketing messages, they also want to share this message amongst like-minded communities.

This shift brings in more direct dialogue between marketers and consumers and is being facilitated by telecom companies. In the past, marketers could never get real-time feedback from end-users. Firms are developing powerful branding in the mobile arena. They are working out ways to clearly state how their business is relevant to the mobile world and how they can reach their customers, partners and suppliers, whether through clever messages or advertising. So far, most of the advertising on cell phones has been from phone companies themselves. That is changing. Car-makers, movie studios, financial service providers, FMCG companies and others are testing the waters vigorously. Research firms estimate the mobile advertising market at Rs 35 crore (not including revenues of media companies from SMS contests and the like) for 2007 and grow at 40 per cent over the next few years. That revenue is going to have to come from more areas other than the highly popular SMS, ringtones or wallpapers.

For now, mobile marketing – everything from ads to text-message voting campaigns seen on shows such as Indian Idol – remains limited in its appeal to advertisers. Mobile marketing is the best option for brands which wish to connect to the youth. "But currently all the major advertisers just allocate, say, 1 per cent of their marketing budgets to mobile marketing because of the limited options within the medium," says Viren Popli, senior vice president, STAR India. But he thinks it will get better. "As a medium, mobile is powerful. I can reach you wherever you are because the mobile is with you all the time," says Chaitanya Nallan, CEO, Gingersoft Media. The company owns mGinger, a service that provides advertisements on mobile phones. These are targeted at consumers who have opted for the service. When it comes to communicating with consumers on the move, the mobile phone is the most ubiquitous outlet. The different ways that mobile marketing can be used includes direct response, media interactivity, content downloads, sales promotions and coupons, advertising, customer service, and customer relationship management. So, what works best in a country like India?

IT MAKES GREAT BUSINESS SENSE

India has 267 million mobile phones. And the market is growing at the rate of five million phones per month. As a result, companies are quite busy leveraging the medium.

This dynamic platform has paved the way for the new credo: from massmedia push to mass-customization pull – pull in anyone, anytime, anywhere. Therefore, it has the potential to grow rapidly, providing brands, agencies and marketers the opportunity to connect with consumers beyond traditional and digital media. Onground reality could be different. And many questions arise. What are the mobile media channels or formats available to advertisers? How does a marketer optimise the effectiveness of a campaign and strengthen consumer satisfaction?

There are many sectors which are using the advantages a mobile phone offers, to good effect. The financial sector is one. Says Vishal Gupta, associate director, marketing, Aviva Life Insurance: "We have a database of policyholders to whom we send SMSes to remind them of due dates, initiatives and offerings." Just recently, makaan.com, the People Group’s online property site announced the launch of Makaan Mobile. According to the company, it is the country’s first pure SMS-based real estate mobile application. Developed by Mauj Mobile, the application is aimed at enhancing the overall consumer experience for property sellers who currently need to log on to the internet either to list their property or to view responses from interested buyers. Now, they can do it on their hand phones. Events like the IPL cricket series are heavensent opportunities for players in this arena. Indiatimes, one of the oldest in the field, used its short-code and asked people to predict the winner of the day by calling 58888 or sending an SMS on 58888 for the chance to win Rs 58,888 everyday. Indiatimes has in its portfolio, multimedia messaging, dating, chatting and email – all on mobile. Others are getting into the mood. Take Pizza Hut. For the first time, the pizza maker launched a mobile campaign in Delhi, Mumbai, Bangalore, Chennai, Hyderabad and Pune. Executed by mobile2win, the campaign includes promotions on both SMS and the mobile web (works on sets which are GPRS-enabled). The objective was to get people to register for the VIP Club, a virtual club, either on their mobiles or its WAP site. It entitles members to free coupons and a chance to win prizes and discounts. There are legal issues connected with SMS marketing. Only a few marketers follow the concept of permission-based messaging, whereby the customers register themselves with the advertiser pointing out their areas of interests.

The Telecom Regulatory Authority of India (TRAI) has issued stringent norms on tele and SMS marketing to avoid companies from spamming consumers indiscriminately. It has set up a national level registry where customers who do not want to be disturbed can register their numbers. All marketers need to adhere to this request. But if a mobile user is not registered on TRAI’s Do-not-disturb list, s/he is likely to be bombarded on the phone. The danger? It could put them off any kind of message from any marketer or brand.
Many firms are coming around and are taking care not to alienate consumer as they realise the value of the mobile as a direct medium. Especially because it is well-suited for a vital role in fully integrated cross-media campaign plans, including TV, print, radio, outdoor, cinema, online and direct mail.

One reason why the effectiveness of mobile marketing is pegged so high is because of its ability to reach the target demographics throughout the day instead of a particular time or when they are engaged in a specific activity – like watching TV. The other reason is that mobile marketing can leverage other media such as including a SMS short code on any other type of campaign (for instance, a TV ad could say, ‘SMS 12345 to get free information’). SMS has proved to be a boon to telecom operators since they get to take away a chunk in the revenue sharing. The deluge of responses – or voting, as the industry calls it – from viewers to shows such as Voice of India or STAR Parivaar Award are proof. "But I am afraid that if newer shows or new formats have to work, they have to put in more energy or think of innovative methods to seek higher consumer engagement," cautions Popli of STAR because the excitement or buzz around the SMS voting is sure to die down. The biggest reason for this mobile marketing push is that it is cost effective – the message reaches the audience directly. However, despite the growth potential, most brands don’t have a specific marketing strategy for mobile – it is yet, to be considered a serious supplement to conventional media plans. The most effective forms of messaging will be those that revolve around activities that build relationships with customers and deliver something of value to them, based on their interests and demographics. The marketing techniques in this scenario will depend on the software and device infrastructure, definition of the customer profile, data acquisition and customer segmentation. There are formats like WAP (wireless application protocol) – by which the user can access the internet – developing with the availability of new-age phones. But the biggest impediment is that the advertiser has to partner with mobile operators to deliver the message.

THE HOW AND THE WHY

The universe of mobile phone subscribers is the newest mass media platform. But techniques which succeed on television or the internet can’t simply be transferred to the phone. On TV as well as the internet, advertising grew alongside – and with – the genre. In this case, the marketer has to hit the ground running. The budding channel carries outsized expectations. "There will be more event and community specific campaign initiation," says Harish Bijoor, a brand consultant. "There will be more direct targeting of the consumer through various channels – age, demographics, individual statistics and preferences," he adds. One of the big boys in this space is mKhoj. It calls itself a ‘mobile advertising marketplace’ that gives advertisers a targeted way to reach out to consumers directly on their cell phones around the globe. It also claims to give mobile publishers a way to monetise their traffic. Advertisers can use this precise medium to create a strong brand and generate leads. Publishers use mKhoj to get contextual ads for its customers. But, what are the options available to marketers currently?

Nothing reflects the impact of the SMSvoting frenzy more startlingly than Indian Idol, the show that went on Sony Entertainment Television in October 2004. Between November 2004 and March 2005, it saw more than 55 million votes via SMS, each message cost the voter Rs 3. It was boom time for the mobile operator followed by the channel. A close cousin to SMS is MMS or multimedia messaging service. MMS supports graphics, pictures, audio and video. As a result, it provides mobile marketers with additional tools on this format. "But the biggest limitation is the MMSenabled handsets used by mobile-phone users," feels Raj Singh, co-founder and executive director, ActiveMedia Technologies. This perhaps is the reason for the popularity of SMS, which is simpler to use and can be sent in the regional languages too. "Also," says Gupta of Aviva Life Insurance, "Since all SMS replies are track-able, evaluating effectiveness is much better this way."

The benefits

1. Extending marketing communications beyond traditional media
2. Complementing traditional media in order to increase awareness
3. Allowing companies to target specific audiences
4. Encouraging the audience to take action as soon as it sees an ad or promo, rather than waiting until later.
5. Providing opportunities to generate revenues every time users interact with messaging.

THE 5C IMPACT FOR SUCCESSFUL MOBILE ADVERTISING

Content, cross-media marketing, campaign management, customer database and carrier cooperation are vital for the success of mobile advertising efforts. Though, at the moment mobile advertising value chain is fragmented. For mobile marketing to succeed, business models that can capture the synergy of two existing industries, advertising and telecommunications must be conceived. In any future sustainable business model, all players will have to reach a consensus on the structure of the value chain and on the importance of each player in that value chain.

WAP and Mobile Web

Wireless Application Protocol (WAP) is a technology platform used to create websites that can be easily accessed from mobile handsets, especially those with a small screen and limited processing power. Today, WAP 2.0 is standard supported by most mid-level models. Moreover, WAP allows mobile phone users to access a wide range of content and services, including streaming audio and video. Considering that WAP supports banner advertising, traditional marketers see it as the closest clone to internet. Says Hiranandani of mobile2win: "With news and information being the two most widelyaccessed features by WAP-users, marketers need to look at producing content focused to go with this genre." Even so, wallpapers, games and applications are the most widely-used mobile content that is delivered using WAP-push. "The trick with WAP-enabled services is to keep the number of steps taken to achieve the end-result to the minimum," says Singh. Even assuming that mobile internet access is becoming easier, the cost of accessing WAP still does not justify reasons for cell phone users to opt for these. Once costs of services fall further, this one has the potential to sweep in the internet users from PCs to phones.

The benefits

1. Mobile WAP can be a fairly cost-effective way to extend mobile and online marketing efforts.
2. It can support consumer’s needs to browse and pre-select key content on the desktop for access later on
3. WAP banner advertisement is now a viable way to reach consumers
4. A WAP page can be pushed to a consumer’s phone, making the site discovery process easy

Downloadable Content

Downloadable content is often used to entice consumers to participate in a mobile marketing campaign. For instance, the download may be a song, a ringtone, theme or wallpaper, video, game or any other application. "Technology to support this format is still inaccessible to the critical mass, but it is encouraging to note the number of people using GPRS," says Manoj Dawane, CEO, Mauj Telecom. GPRS (General Packet Radio Service) is a technology necessary for WAP to function on phones. "When using mobile campaigns brands need to educate consumers about how to participate in such events to get the best results," feels Jagdeep Kapoor, CMD, Samsika Marketing. This brings in its share of complications. For instance, it demands download instructions that are easy to understand. Downloadable content has been the next most successful tactic for mobile marketing, after SMS. But there are technology issues which force a tie-up between mobile providers and marketers. There are adaptability problems when it comes to handsets. Says Gupta: "Sometimes, it is effective to tie up with an operator or a third party service provider who will manage the campaign across telecom service providers that is supported across handsets." But, experts agree that simplicity in mobile is the key to effective mobile marketing. That’s the one lesson that can be learnt from SMS-driven VAS.

The benefits

1. Relatively inexpensive for certain type of content, especially when you have a web campaign ready.
2. As a mobile phone with cutting-edge is hip, the brand reaching this class is perceived to have a higher recall.
3. Easiest to supplement an existing web campaign.

Though the above are the most widely-used delivery mechanisms to reach consumers, technology helps the latter receive and manage some of the content via Bluetooth and infrared delivery mechanisms. Two years ago, Lee became the first brand in India to use Bluecasting – marketing through Bluetooth technology – to promote its new catalogue. Bluetooth devices were installed in Lee’s stores in Mumbai and Bangalore. Walking by, the customer’s phone beeped a simple quiz in which they were offered discount coupons. Lee claimed to have a click-through of 27 per cent. Makemytrip, Bookmyshow and STAR Plus are a few who have done Bluetooth marketing. Technology-enablers help manage mobile phone content on a laptop or desktop. The challenge here is to make the consumer aware of these technologies. Considering that a mobile ad can reach the consumer at a fraction of the cost of a billboard, marketers need to do the needful and, at the same time, make sure that they don’t alienate consumers.

PUTTING THE JIGSAW TOGETHER

Traditional advertising players such as ad and media agencies have not been the first movers in this category. So, who is involved?
On the face of it, it would seem that there are two different and quite distinct components making up the mobile marketing industry – marketing-advertising and telecom. But it is actually the mobile marketing firms and technology providers who have driven the emergence of this medium.

Mobile marketing was born of the internet revolution. Today, there are more mobile phone subscribers in India than there are landlines or even TV sets. "With the mobile phone becoming a primary means of communication, not only for voice but also for digital services, email, digital photos and navigation, it is an important medium for marketing," says Singh of ActiveMedia. While traditional advertising and telecommunications are well-established and have their own revenue models, mobile marketing and advertising has failed to integrate these two different industries. To analyse the mobile marketing medium, it is necessary to understand who the key players are. According to the MMA Global (an industry trade association for companies involved in mobile marketing), the mobile marketing ecosystem comprises four interconnecting strategic spheres – product & services (brands, content owners and marketing agencies), applications (discrete application providers and mobile (ASPs) Active Server Pages technology), connection (aggregators and wireless operators) and media and retail (media properties, "brick ‘n’ mortar" and virtual retail stores).

"However," says Devangshu Dutta, chief executive, Third Eyesight, a Gurgaon-based marketing consulting company, "The main players in the value chain are the advertisers, the mobile marketing companies, the media owners, the traditional ad agencies, the network operators/carriers, the technology providers and the customers." The mobile operator has a unique place in the mobile marketing value chain. Never before has one player had such a big influence on the development of a new marketing channel. "It is as if the print shop would rule the world of print advertising," comments Singh of ActiveMedia. To understand mobile marketing better, it is pertinent to consider three segments that drive it – the marketing, connection and the enabling clusters. "Integration across these helps get a clear sense on how each fits into the value chain," says Dutta.

The players in the marketing cluster focus on, well, marketing. Their activities include customer identification, managing the brand, promoting a product or service, creating the content that is disseminated to the end-users, developing the applications used to stage, launches and report on mobile marketing campaigns.

  • Campaign sponsors own the brand and benefit from the promotion and delivery of their products/services through the mobile channel.
  • Content providers create content such as advertising, trivia questions, ringtones, messages or promotions, which are delivered through the mobile channel.
  • Marketing agencies help to develop and to manage the campaign, and employ the traditional channels to encourage people to opt-in for the mobile campaign.


This cluster consists of application providers, network aggregators and telecom operators who create the ‘medium’ used to connect and deliver mobile marketing content to the enduser. "This cluster manages the network infrastructure, thereby connecting the marketer with the customer, and enables the one-to-one relationship which is the hallmark of mobile marketing," sums up Dutta.

  • Application providers straddle both the marketing and the connection spheres. While they are primarily techfocused, a few players extend across multiple steps in the value chain. In this highly technical aspect of the value chain, application providers are the interface between the marketing cluster and the connection cluster
  • Network aggregators like media buying agencies hide the complexity of the network by developing technical expertise that shields the application provider and marketing cluster players from the challenges of delivering mobile marketing content through different wireless operator networks. "It is rare, or will become increasingly rare, that a firm that wants to do marketing will interact directly with the telecom carrier," explains Hiranandani. That is perhaps the reason why the role of the network aggregator is the key to the whole value chain.
  • Mobile operators manage the network and provide wireless voice and data services to enduser. With the average revenue per user (ARPU) falling, it is important for operators to generate new revenue streams and they see mobile channel as a critical source of these new revenues.
    This spans both marketing and connection clusters, and consists of players such as regulatory bodies, handset makers, mobile operators and agencies.
  • Regulators address issues specific to each cluster. TRAI, the primary regulator considers unsolicited messages and calls as illegal.
  • Industry Associations such as the COAI (Cellular Operators Association of India) and even handset makers help develop the standards and create a framework around the industry. In fact, a critical role for these associations is to create an effective bridge between regulators and the industry.
  • Infrastructure and intermediate players are too many. They consist of all the companies that create and maintain the technologies used to enable mobile marketing, including the switches, cellular towers, mobile phones, screens, software and even billing systems.

Overall, the role of the telecom operator is the most important one. For instance, as enabler, the mobile operator needs to demonstrate his reach for advertisers to be interested in the media. In order to make this happen it is very important that telecom operators strive to set common commercial and technical standards, not just nurturing their own revenues.

In the initial phase, the value-added services from mobile operators were restricting. They were on offer only to those on their networks. "The services are now uniform across operators, with some customisation, but the look and feel is uniform," says Hiranandani. For the service provider to grow, standards and formats have to co-exist for the development of the industry.

As advertisers, with access to a wide customer base, mobile operators have demonstrated their effectiveness. "From simple billing plans to pushing new VAS, they have demonstrated it all for marketers to be convinced of the advertising success," says Dutta. After all, if the mobile operators themselves aren’t using mobile marketing, who else would?

It is dawning on mobile operators that there might be a new revenue stream in mobile advertising. Their portals will have to provide the best reach and detailed segmentation information for advertisers to make the latter interested.

The mobile operators’ contribution is necessary to continue to drive mobile marketing and advertising forward. But to reach full potential, they must not only get the above three roles working internally but must also work together.

Integrating Sourcing Within Your Business Strategy

In recent years, sourcing and supply management has emerged as one of the greatest opportunity areas for retail business as well as for suppliers to leading retailers. At the same time, it is possibly also the one most prone to risk. This set of activities holds the key to improving service, product offer and overall profitability, and yet also provides some of the most difficult challenges of doing business globally. Certainly, you need to have winning products. Of course, you need to pick the best supply countries to source from and the best suppliers. Certainly negotiation and cost management are an important part. But the only way to achieve these many “bests” is by ensuring that sourcing is well and truly integrated within your overall business strategy, and that sourcing activities closely follow the direction set by overall business strategy.

Setting the Scene

Let us cast a quick glance over the major changes taking place in the textile and apparel trade globally. The of the most important questions in sourcing are “From where/whom?” and “How?”. They also provide most of the unpredictability and the risk that so characterises sourcing.

For this heavily protected trade, one of the most important developments is the transition from the General Agreement on Tariffs and Trade (GATT) to the World Trade Organisation (WTO). Put simply, the WTO is driving towards increasing mutual market access for producers in countries that are a part of the WTO. The major aim is to remove quantitative restrictions, including quotas, and to reduce import duties, which act as a barrier to cross-border trade. If all goes as planned, 1 January 2005 will see a textile and clothing world trade free from quota restrictions. That one element, which possibly guides apparel and textile sourcing more than anything else, will cease to exist. However, to minimise the “cliff effect”, quotas are being phased out in four stages, rather than abolished at one stroke. So, the WTO agreement should lead to greater supply and lower prices due to lower import duties and no quota premium, and make our lives simpler overall.

   
    However, while quotas are still in place, some countries that are relatively smaller exporters of apparel (such as India, Pakistan, Turkey, Indonesia etc.) are being allowed to grow their quotas faster than larger exporting countries (such as South Korea, Taiwan, Hong Kong and China). Also, regional trade agreements are allowing countries close to the major developed markets to export apparel and textile products free of duty and quota already – such agreements include NAFTA (USA, Canada and Mexico) and the European Union’s agreements with former Communist countries, as well as Turkey and North African countries. Annual growth rates of such regional trade are over 20%, compared to the 2-5% growth rate of imports from Asia into the EU and the USA.

Thus, due to these factors, many more cost effective supply bases are developing quickly, adding to the complexity of choice. Many of these are low cost supply countries that now exist not only in Asia, but in Europe and the Americas as well. So which countries should you pick? Is Hungary better than the Hong Kong, the Caribbean better than Cambodia? Should you still be sourcing from the high-cost countries such as Italy, the UK etc. when there are so many low cost bases from which to choose?

Then there is the question of the sourcing method. Virtually every kind of relationship and business structure possible is included in the textile and apparel supply chain:
  • Own manufacturing where the buyer owns the production facilities
  • CMT / contracted operations, in which the buyer directs the overall output of the production facility but does not own or run it
  • Own overseas sourcing office, in which the buyer’s own operation deals directly with off-shore suppliers
  • Buying Agents, Buying Services (or Buying Groups), who act on the buyer’s behalf
  • Wholesalers and importers, who act as independent suppliers to the retailer, but do not actually own any manufacturing
  • Full capability suppliers, who are handed a product concept by a retailer, and take complete responsibility to develop, produce and deliver the product.
  • Brand manufacturers, who create the product concept, own the brand and the factories, and who supply into a part of the retailer’s product range.

Some of these methods are declining, some are increasing in popularity, while others are stable. Should you apply more than one? Should you differentiate depending on the supply country or should you adopt one as “the way” for your business?

Taking the Gamble Out of Sourcing

The problem, clearly, lies in the unpredictability about the benefits from each country and method of sourcing. And, simplistically, the solution lies in taking as much of the uncertainty out. The way to do that successfully is to ensure that your sourcing strategy, organisation and processes are led by your overall business strategy. Many organisations, retailers as well as suppliers, have built up highly successful businesses in the last few years by ensuring that sourcing is one of the core management areas of their business rather than an afterthought. But in many more, sourcing is relegated to the “back-room”, as something that happens mostly outside the company’s boundaries. How can you bring sourcing within the mainstream of your business?

Imagine the sourcing process. Some people might imagine conceiving a product, a style, putting together the fabric and trims, creating a sample, getting it produced within a given time and cost. Others would visualise it beginning with next season’s business plan, a plan to sell certain numbers of a product at a particular price, bought in at a certain cost with a planned profit and mark-down allowance. Still others might remember exchanging endless overseas telephone calls and faxes with their suppliers, the dreaded messages from the shipping company about late deliveries. All of those unpredictables that make sourcing a gamble.

Stop! If you are a retailer, I would ask you to now visualise your retail store, your catalogue, your website. If you are a manufacturer, I would ask you to visualise your customer and their consumers. That is where the sourcing process truly begins. Your business is defined by your consumer or customer, who has certain expectations – a product, a particular price, a time limit, a certain quality. Naturally these demands and expectations are what you are trying best to understand and fulfil. So should your associates who support the process.

No matter what you are, a retailer or a manufacturer, you need to focus on the consumer. The “push” system of supply is outdated – customers have greater, easier access to a much wider choice of goods and services, and expect ever-greater standards of quality, service and customisation. The sourcing and supply process must change too. Previously one end of the supply chain understood consumer demand, and translated that understanding into a product concept that was manufactured, shipped and sold to the consumer through retail stores. Increasingly now, the functions of Design, Development (production), Distribution and Display (retail) must link together to share skills, knowledge and capabilities that allow joint market analysis, product development, common measurement and accurate forecasting, and create a delighted rather than merely “satisfied” customer.

Too often sourcing decisions are made as a reaction to the immediate present and the recent past. Factors such as past relationships, past experience of individual buyers, gut feel and immediate price comparisons are commonly the driving forces. These are all internally focussed; the decisions based on what is available within the business (and its supply base), rather than what the consumer or customer wants.

Let us take business strategy first. Generally, three major areas define and differentiate one business from another: Product, Price and Service. A study by global management consultants, Kurt Salmon Associates in 1998-99, showed that successful businesses had a clear positioning in being focussed on a single or a combination of two aspects. On the other hand, business that were not successful financially, were generally fuzzy in their positioning, in their definition of what the business stood for. Are you clear about where your business stands and what is your platform, on which you sell to your customers? If you are, you have taken the first step to sourcing successfully.

   
   

What are the obvious links with sourcing? If you are price-oriented, surely your sourcing must be driven very much by sourcing cost. But not the FOB cost alone – you need to factor in import duties, transport costs, costs of rejections, costs of maintaining a supplier relationship, and many other factors that are often invisible. If, on the other hand, you are oriented towards Product and Service, surely you need infrastructure within your business or in your supply base to create innovative products, turn sampling around quickly, and ensuring that quality, accuracy and timeliness are the benchmarks used to measure success or failure.

So you now understand what your business is all about, and what your sourcing needs to be. Let us ask a third question, do your buyers, merchandisers, technologists, suppliers and logistics providers have the same understanding as you about the defining factors and the objectives? Unless you draw these links, and make sure that everyone around the business shares a common understanding, you will have to resign yourself to live with unpredictability.

A final point: there is a wide variety of suppliers and supply bases out there. While defining your business, you also should clearly define how much capability exists within your business to handle the sourcing process from concept to delivery. Define your competencies: can you conceive the product, can you design it, prototype it, define technical specifications, produce (or manage the production) and ship it? What are the things you absolutely wish to control, and what are the activities that you want your suppliers to carry out? Once you have done that, choices become simpler. The future direction for selecting supply countries becomes clearer and identifying the winning suppliers becomes a more rational process.

Yogi Berra is quoted as saying, “It’s tough to make predictions, especially about the future.” Certainly, sourcing is a lot about getting your predictions right – the right product, the right quantities and the right timing, the right supply base for future growth. But it helps to make sure that sourcing activity is led as much as possible by targets and business objectives, rather than only by short-term reactions to changes in the environment. Define your business and the business requirements, and let those define your sourcing – that’s the only way to get some of the unpredictability out of sourcing.

   

This article is based on a presentation to the Textile Institute’s London and South East England Chapter and draws on experiences with developing global sourcing strategies of a number of retailers and manufacturer-suppliers.

© Devangshu Dutta, 1998

 

Gross Margin: How reflective is it?

By Diwakar Kumar

Indiaretailing.com

It is being said that it might be easy to turn cash into inventory but the main challenge is to turn the inventory back into more cash. According to researchers and analysts, many retailers fail to make more money just because of inefficient utilisation of space, labour, or product assortment in their operations. Tracking Gross Margin, which indicates the additional amount that a customer pays to the company for its product over and above the costs that the company incurs to procure or make it, has thus become critical for modern day retailers.

Managing a sustainable gross margin poses many challenges to a retailer. For any retailer, with limited space in a store, it becomes difficult to attain margin goals because high-priced products may fetch the business immediate gains – and higher gross margin, but the retailer could lose out to more competitively-priced retailers in the long run. In fact, a higher gross margin is not always an accurate reflector of a retailer’s health.

Improving business efficiency

The efficiency of the business can be improved with careful steps in the line of operation like highly efficient supply chain management, inventory management, demand forecasting, leveraging on technology etc. In an effort to generate sales from higher gross margin products, retailers typically lean on private label development.

“Compared to the western retailers, the Indian retail industry has much thinner gross margins and comparatively higher operating costs (most importantly the rental costs), and there is definitely a need to locate higher gross margins through areas such as private labels (PL),” remarks Devangshu Dutta, chief executive, Third Eyesight. This is one of the reasons behind retail giants like Shoppers Stop, Trent, Pantaloon Retail, Reliance Retail, Spencer’s Retail and Vishal Retail moving towards PLs to address consumer needs and to increase profitability, he states.

The poll question and experts’ view

As a follow up on the subject, IndiaRetailing’s weekly poll question — Is a retailer’s Gross Margin always an accurate reflection of its health? — had 58.82 per cent of the respondents supporting the theory, whereas 37.25 per cent of them negated the same and the remaining 3.93 per cent preferred to stay neutral.

Commenting on the poll question, Dutta underscores that net margin should be the only true reflection of a retailer’s health. “Gross margin is only the starting point. The maximum potential gross margin, to me, is the difference between the cost of the product and the highest price the consumer is willing to pay. A retailer has to decide on balancing the two sides of the equation. The first one denotes the maximum price that the customer would be willing to pay, and the other is the lowest possible sourcing cost without affecting the quality of the product itself,” he analyses.

“Obviously, a higher gross margin allows the retailer much more scope in deciding the operating costs. However, there are businesses with a high gross margin on products but slow inventory turn and high markdowns as well,” underlines Dutta.