The Bindra family, the owners of Biba Apparels Pvt. Ltd, which owns a popular women’s ethnic wear brand of the same name, is on the verge of splitting, said a person directly involved in the development, who did not want to be identified till the details are made public.

Sanjay Bindra, 45, will sell his stake for around Rs 75 crore in an all-cash deal, added this person.

Siddharth Bindra, 36, confirmed that Sanjay Bindra was exiting the business and added that he would be buying his brother out. He declined to speak about the specifics till the transaction is complete.

The Kishore Biyani-promoted Future Ventures India Ltd owns an 18% stake in Biba that it acquired in 2006 for an undisclosed amount. The Bindras own the rest of the privately-held firm. The individual stakes of Sanjay and Siddharth aren’t known; privately-held firms do not have to disclose their shareholding pattern.

Biba, founded 22 years ago by the brothers’ mother Meena Bindra, ended the year to March with revenue of Rs 180 crore and, according to the person cited in the first instance, will end the year to March with revenue of around Rs 200 crore.

Meena Bindra started the business in 1988 with a bank loan of Rs 8,000, selling ethnic wear from home. Sanjay joined the family business in 1994 and Siddharath, in 2002; soon after the firm started film merchandising, creating special clothing lines for Bollywood films.

Biba’s clothing is available in 100 retail outlets across 25 cities, according to its website.

Sanjay Bindra is still on the board of Biba Apparels but he has already started work on his new company, which is likely to sell ethnic-wear apparel under the brand “7 East”, the person cited in the first instance said.

“The company will be launched by mid-March with 18 stores and 60 shop-in-shop stores. The 7 East brand will look at tie-ups with designers such as Manish Malhotra, known to style Bollywood celebrities, and other international designers,” he added.

In 2009, the market for domestic apparel was worth Rs 1.54 trillion and is expected to reach Rs 4.7 trillion by 2020, according to India Textile and Apparel Compendium 2010 published by Technopak Advisors, a retail consulting firm.

It is a highly fragmented market with few significant brands such as Biba, Ritu Kumar and private labels from retailers such as Trent Ltd’s Westside and Future Group’s Pantaloons.

The organized apparel market is expected to grow from 14% at the end of 2009 to 40% by end of 2020, said the report.

Unlike the Western market, customer preferences for Indian ethnic wear vary across the length and breadth of the country, making it difficult for brands to establish themselves nationally, said Devangshu Dutta, founder of retail consulting firm Third Eyesight, explaining why very few brands have succeeded.

Business Standard, Mumbai,16 Dec 2010

Raghavendra Kamath

The apparel & textile major now wants separate strategies for each of its brands.

Last month, S Kumars Nationwide (SKNL) invited pitches from advertisement agencies for its brands. The purpose: repositioning of the brands that include Reid & Taylor and Belmonte. The company has already finalised two out of five pitches from the shortlisted agencies and wants to complete the entire process by January.

But the move surprised many as the brands are already in clear price segments with little overlap. But Ashesh Amin, director of the textile and apparel major, thinks a lot more can be done. “SKNL’s apparel brands have grown big and we operate in different segments. There are some overlaps between fabrics and apparels in case of some labels,” Amin says. For instance, Reid & Taylor and Belmonte sell both ready to wear (RTW) and fabrics.

SKNL is in almost all segments of textiles: fabric, RTW and home textiles. It retails half-a-dozen brands in the RTW segment and a handful in fabrics, which are across price segments.

Within RTW, the company sells Stephen Brothers in super premium, Reid & Taylor in premium, Belmonte in mid-price segment and World Player in economy and retails Reid & Taylor, Baruche, Belmonte and SKumars in fabrics.

So what does Amin propose to do to break the clutter? Apart from setting up an integrated supply chain and focusing on designs and merchandising, Amin wants to launch individual strategies for each of his brands.

The strategy will decide which cities to target, what type of communication to adopt for each brand, which type of events to be associated with etc.

SKNL has already carved out 10 strategic business units such as home textiles, luxury suitings and so on and half-a-dozen chief operating officers (COOs) to manage the RTW brands.

Retail consultants agree with SKNL’s strategy. “Any company with multiple brands has to be very clear about how they segment their brands. Otherwise their own brands end up cannibalising each other,” says Devangshu Dutta, chief executive, Third Eyesight, a business consultancy.

For instance, he says Madura Garments has clearly segmented its brands such as Louis Philippe, Allen Solly, Van Heusen from the beginning and Arvind had a clarity in terms of denim products such as Lee, Flying Machine which are addressing different segments.

But Susil Dungarwal, founder of Beyond Squarefeet, a mall management firm, says SKNL is yet to find its niche in retailing. “A lot of people have left them and as exits happen, the perception of growth plans also change,” he says.

The new branding strategy is also important for SKNL as it is looking to diversify its portfolio and launch new brands at different price points.

For instance, the recently launched economy brand ‘World Player’ is a new focus area, says Amin. The mass brand, in the prices range of Rs 129-Rs 499, could become a Rs 100 crore brand in 12 months and “Rs 1,000 crore in four to five years”, he adds.

Out of 622 districts in the country, the company wants to be in 520 districts in the next 18 months. It has already covered 130 since the launch, he says.

Currently, Bollywood superstars Amitabh Bachchan and Shahrukh Khan are the brand ambassadors of the company’s Reid & Taylor and Belmonte brands.

“We will continue to have a strong brand ambassador-led strategy, but that is not the only thing in our brand campaigns,” says Amin.

SKNL is also gearing up for the launch of its premium casual brand KRUGER which is designed in Italy. The launch is expected in March. Initially, the company is looking at 10 outlets. The company is targeting a business of Rs 100 crore from KRUGER in the first three years, he says.

With a price band of Rs 999 to Rs 4999, it will compete with brands such as Tommy Hilfiger and ColorPlus, consultants say.

“While these brands operate independently at the front end, they will strategically integrate at the back-end,” he adds.

Amin says the new strategy is backed by the economics of the business. He says brands are growing 200 per cent in terms of revenues compared to last year. The company wants to increase the share of RTW to total sales to 25 per cent in FY 2011 and 40 per cent in the next two years, from 11 per cent in FY 2010.

The company is also planning to take Reid & Taylor to the US in the next six to eight months and develop designs suited for that market as part of an overall expansion programme. SKNL posted net profit of Rs 77.89 crore and sales of Rs 1,211.42 crore in the quarter ended September 30, 2010.

Indiaretailing.com,15 Dec 2010

Payal Kapoor

The MRP, or the maximum retail price, of a product plays an important role in the customer’s purchase decision. It tells them the maximum amount they need to spend to buy a product.

The rationale behind printing the MRP on products is to protect the consumer from being overcharged by retailers. No doubt, the MRP does its job well in informing consumers about the ‘fair price’ of a product, but it fails to give retailers the much-needed flexibility in determining the price based on various factors – services offered, location of the store, among many others – that determine the actual cost of a product for a retailer. So, is the concept of MRP still relevant? And, will withdrawing the MRP be beneficial for the stakeholders, mainly retailers and consumers?

In a poll question asked by IndiaRetailing – ‘Should MRP be withdrawn from product categories to allow headroom pricing?’ – 83.29 per cent of the respondents said “No”, while only 16.36 per cent said “Yes”. The remaining 0.35 per cent, however, opted for “Can’t Say”.

But what do experts thinks about the MRP?

“The rationale behind the MRP being mentioned on the packaging [of a product] is to avoid consumers being fleeced by ‘unscrupulous’ retailers. I don’t see that rationale disappearing until there is much greater price transparency in the market, or more consolidation and structure,” says Devangshu Dutta, chief executive, Third Eyesight.

On whether the MRP affects the flexibility of a retailer to sell products at a price lower than the maximum retail price, Dutta’s answer is a firm “No”. He reasons: “This doesn’t affect the flexibility of retailers to sell at prices lower than the MRP. If a retailer wants to work with dynamic pricing, for specific promotions, or to promote sales on a particular day or time, it has the freedom to do so by selling below the MRP. Obviously this flexibility will be more in private label merchandise, or with categories where there is enough margin play.”

Zahir Laliwala, CEO, SportXS, also supports the MRP and says, “It brings transparency in the system. The MRP needs to stay for the consumer’s benefit.”

Siddharthan Sundaram, director – retailer services, The Nielsen Company, however, does not agree with Dutta or Laliwala. He says, “If the government withdraws the MRP, it will create competition among suppliers and manufacturers and this will ultimately help consumers to buy goods at a competitive price.”

Supporting the withdrawal of the MRP, Sundaram says, “I strongly believe it will help all stakeholders, particularly consumers.”

T S Ashwin, MD, Odyssey India Ltd, is of the opinion that the MRP makes it difficult for retailers to manage margins, “as they can’t charge anything beyond the maximum retail price printed on the product”.

Explaining his stand, he says, “When we take up outlets in airports or five-star hotels, the cost of operation is much higher and internationally it is an accepted practice to charge more in such outlets. But in India, we cannot do so due to the MRP. This again impacts our margins.”

Giving the example of Odyssey, he says, “We are a category where over 80 per cent of products are with an MRP. Though there is VAT, the rates are different in each state for the same product. This makes it very difficult to manage margins, as we cannot charge anything beyond the MRP. Not always can we get the vendors to bear the additional cost due to differential tax rates. Also transferring stocks from one state to another becomes a problem due to the same issue. We lose on margins as well as the vendors don’t reimburse.”

He further says, “With VAT coming in, the concept of MRP should be done away with and retailers be allowed to fix their prices based on the market demand, etc [and other factors].”

Clearly, there are strong arguments both in favour of and against the MRP. While some believe the MRP is necessary to protect the consumer, others strongly feel that ‘flexi-pricing’, where the power to decide the price of a product lies with the retailer, will help retailers offer a better deal to customers. Now, the big question is: can we try giving retailers a chance to fix the prices?

RETAILER, December 2010 issue

Varun Jain

National and international brands are yet to make deep inroads into the country’s regional markets, where lies a huge opportunity. The regional markets in the country are dominated by the regional retailers. But national and international retailers are trying to get better of them and are now modifying their offerings to suit the regional tastes and preferences. The result has been very encouraging and more brands and FMCG companies are likely to get into this practice.

Companies like Godrej, LG, Barista and Future Group among others have already started micro-localising their offerings in order to munch away market share in ever growing regional markets. Future Group, which recently introduced their private label brand called Ektaa in the food category, is giving customers more options to choose from their cultural-specific staples and foods. Godrej Consumer Products, with a popular soap brand Godrej No.1, offers sandalwood fragrance for its consumers in the southern part of the country, and a green lemon fragrance for its North Indian markets. Barista Lavazza introduced 100 per cent vegetarian cafés in Ahmedabad, while LG is planning to launch their new range of microwaves which will have fish curry on its auto menu for the eastern markets, and upma and vada for the South Indian markets. Even Nestlé, which will be setting up its first R&D facility in India, is looking to introduce region specific food products. Many others are following suit.

In every market, micro- localisation is important. “If you look at smaller countries like Germany or UK, they have a lot of diversity as well. There are markets within a market and the retailers do make an effort to offer locally relevant products. In a country like India, with diversity in cuisine, values and cultures, it is absolutely important for retailers looking for scale to go for micro-localisation. There may be segments that are homogeneous across the country but those segment could be far smaller compared to what they can reach otherwise”, feels Devangshu Dutta, Chief Executive, Third Eyesight.

It is imperative to keep pace with the changing preferences of the customers with their changing lifestyle. “LG’s ‘India Insight Products’ have been well received by the Indian audience as they are customised and designed as per their specific requirements based on LG’s extensive research and development”, opines Rajiv Jain, Business Head, Home Appliances, LG India. He further adds that this is the step forward towards localisation strategy and the company is expecting an equally rewarding response from the consumers post the launch of customised auto-cook menus for different regions. Based on local insights, the initiative is going to change the way Indians cook various dishes in their kitchens.

Sanjay Coutinho, CEO, Barista Lavazza, the Italian café chain, which has introduced idli and kanda poha at some of their outlets and offering complete vegetarian menus at the outlets in Ahmedebad, keeps his point forward, “If you look at Ahmedabad, out of mere experimentation, we turned cafés there to full vegetarian and it worked for us and are doing extremely well. India is very diverse, and hence it becomes very important for the brands to understand and respect this diversity and the different sensibilities. That is the main reason we work close with the communities”.

“Urban and rural markets have specific needs and requirements. We take care of that”, says Antonio Helio Waszyk, Chairman and MD, Nestlé India. “We introduced rice noodles keeping in mind the rural audience”, he further adds, Nestlé’s decision to establish an R& D centre in India will be an additional competitive advantage in the future as it will help accelerate the company’s growth and contribute towards reducing nutritional deficiencies in India.

According to Dutta, there has to be a deep understanding of the market.

With more and more brands focusing on micro-localisation, it is definitely important to understand the needs and demands of the consumers as every region differs in terms of their culture, demographics, and food habits which ultimately requires products/services to be customised according to their own necessities, suggests Jain of LG.

Also, one should have enough clustering and enough scale at the local level. “One should be able to address the single consumer’s demand. The fact is that for most retailers it is impossible. So, there is a need to cluster, need to build scale,” suggests Dutta to the retailers who are going into regional territories. Regional brands by their very nature will understand the local market better because the brand is based there. They have that instinctive understanding of the surroundings. They connect with the local market which is far stronger and powerful, and national brands will have tough time to replicate that understanding. That becomes a big challenge. On the other side, a regional brand may not have the same scale that of a national brand.

For now the prospect of national brands being a threat to regional brands is still a few years away. At the moment, it is an unequal competition, but national brands are trying to become more competitive locally.

(This is an edited version of the original article.)

Retailer, December 2010

Varun Jain

Recently, 150 all new glittering Mercedes Benz cars rolled out of the company’s premises to be delivered to Aurangabad Group in Aurangabad, a small town of the country. The group consists of top industrialists, businessmen and professionals. Bookings for US-made Harley-Davidson cruiser bikes, expensive luxury and sports sedans from Mercedes-Benz, BMW, Audi and Porsche have hit the roof, with some dealerships experiencing shortfall in vehicle supply.

The fact that luxury in India is growing fast is quite evident. Luxury retailers from across the globe are thronging India, where they see a lot of potential for luxury retailing. But since there are other problems like that of real estate and government policies, the growth rate has not been what the retailers would have wanted to and hence the expansion is taking a hit.

What is the potential in the Indian market?

Luxury exists in India though its numbers may not be the same as of some other markets. "China, for instance, has far more millionaires, and a middle class which is larger than India’s. Luxury brands are not only bought by the wealthy people, it is bought in different ways with different products", opines Devangshu Dutta, Chief Executive, Third Eyesight. He further adds, you may not be able to afford an Armani suit but maybe you can buy a bottle of perfume. You buy into a brand.

And it’s growing, maybe not as fast as the luxury retailers would have want it to be, but yes, with the economy growing in income and wealth, and the number of rich and the middle class growing, the scenario is bright. In the mature markets, growth has plateaued and the Indian middle class with minimum income of around Rs1 million per annum and who loves to get the taste of luxury, this market is the one which is highly under penetrated, will give the luxury market in India huge fillip, feels Neelesh Hundekari, Principal & Head – Luxury & Lifestyle Practice, AT Kearney India. Indian luxury market is currently estimated to be at 4.76 billion in USD and has a latent demand of 3-3.5 billion USD, which is ready to be tapped.

The industry believes that there is a huge potential for luxury retailing in India but it will take some time to mature and be ready to be exploited by the retailers. The market matures with the availability of brands and the increasing numbers of consumers buying and using luxury brands. Since luxury brands started coming to India only recently, it is expected that it will take some time before the market matures. Consumer maturity and market maturity are interrelated. "Consumers will evolve and will make markets evolve in tandem. There is always a certain lag, wherein sometimes the market is ahead of consumers and sometimes consumers are ready but market is not. My belief is that by 2020 Indian market will be a serious luxury market for all global luxury brands. The basis for saying that is by 2020 Indian economy will be as big as Chinese and Japanese economy today. China and Japan are very large and serious luxury markets and are expecting that India will follow that path," suggests Harminder Sahni, MD, Wazir Advisors.

Infrastructure not up to the mark

For the international luxury brand, real estate and infrastructure have been a major problem. For them the location of their stores and the manners in which they present themselves to their customers and their target consumers, are the most important part of their businesses. They will never compromise on that.

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