Pia Heikkila

The National , November 13, 2011

It is Saturday afternoon at Mumbai’s posh Phoenix Mills mall and the place is buzzing.

Giggling girls sit by the central courtyard sipping cold drinks, taking a breather. International labels such as Zara, Mango and French Connection adorn their shopping bags.

Very soon a new brand could tempt these marathon shoppers. Kenneth Cole – the US apparel retailer – has entered into a deal with India’s Reliance Brands to launch retail and wholesale operations in India.

Analysts say Kenneth Cole’s market entry comes at an opportune time.

"The timing is right for them because this is a market segment which is expected to grow fast. India has a young population which wants to spend on clothes, the increased urbanisation trend and growing disposable income are also contributors," says Amit Gugnani, the vice president for apparel operations at Technopak research house.

The market is expected to grow from US$65 billion (Dh238.7bn) to $200bn by 2020, according to Technopak. The sector’s value has more than trebled since 2005 and it is expected to grow a steady 25 to 30 per cent annually, it said.

One of the shoppers Kenneth Cole may want to target is Supriya, 24, a television executive who spent 5,500 rupees (Dh404) on an outfit from the Spanish fashion house Zara. "I would definitely visit Kenneth Cole,’ she says. "I know the brand from my visit to the States and like their stuff."

The American company wants to attract the young, brand-aware sector – shoppers with plenty of cash to splash. The US group’s plan is to open 25 stores across the country over the next five years.

The appetite for western-style clothing is growing and the market looks promising, says Devangshu Dutta, the chief executive of Third Eyesight.

"In the last four to five years over 100 brands have been launched that are all targeting this space, whether across genders or for any single gender," he says. "Typically these brands would be targeted at consumers in households that have annual income of 1 million rupees or more, and the income and spend levels are also growing rapidly in this segment. Therefore, I would say that the market is far from saturation, despite the competition."

Apparel is the country’s second-largest sector, behind food and beverages. And its size has not gone unnoticed from overseas players who have been lining up to land on India’s shores. Brands such as Diesel, Vero Moda, Tie Rack, Promod, s.Oliver, French Connection, Guess, Next and Calvin Kleinhave been present in most of India’s big cities for several years now, luring the middle-class rupee.

But it has not always been like this. Shoppers can thank India’s decision to join World Trade Organization (WTO) in 1995, which meant a reduction in import duties on clothes. The government’s decision to allow foreign direct investment of 51 per cent in single-brand stores in January 2006 has also helped the big brands to establish a presence.

Foreign companies were allowed to set up shop in the country, provided they had found a local partner. And more recently, the government has said it is considering raising the 51 per cent cap, which would mean a choice of even more foreign brands for Supriya and her friends.

Not all foreign ventures have been roaring successes.

Take the UK’s high street retailer Marks & Spencer (M&S). When it launched in India in 2002 M&S positioned itself as a premium brand despite being a mid-market brand in Britain. But middle-class consumers did not flock to its Indian shops, turned off by the high prices, nor did the wealthy consumers, because they knew the brand was a middle-class phenomenon from their trips abroad.

M&S tills did not sing to the tune of the sitar and a few years later the company admitted defeat and decided to turn its ship around. It reduced its prices and made its stores more middle-class friendly. Today the group is working hard to attract the mid-to-premium shoppers in India and sales are rising steadily.

For Kenneth Cole India is still a blank canvas.

Analysts say its success will be based on how it positions its brand. "It depends upon the brand-product value offer that is designed for the Indian market and how well can the international brand differentiate itself from the competition in terms of the product width and depth and the customer’s experience at the various touch-points," says Mr Dutta. "In addition, the product sourcing and supply-chain strategy will greatly impact the brand’s responsiveness and the margins."

Pricing can be a problem for mid-market brands, he adds, because the mid-market segment in India is very different from mid-market in Europe. Income and spending habits vary greatly.

"A brand has two choices: either to be consistent in its pricing, or to change its merchandise and shift pricing downwards to fit into the very different Indian mid-market."

If pricing is kept consistent with European markets, then direct translation of European pricing into Indian rupees immediately places all mid-market brands into the premium segment.

"On top of that, import duties ensure that there is less margin to manoeuvre on the retail price," says Mr Dutta.

Reliance knows this because it is an old hand at handling foreign brands. Its stable has some of the most well-known global brands such as Ermenegildo Zegna, Diesel, Timberland, Quiksilver, Roxy and Steve Madden.

So to make it in India, Kenneth Cole’s marketing, advertising and product people will need to be able to appeal directly to people such as Supriya and her friends.

"India’s consumer base can be read as ‘many countries in one’, and the key to the success of any international brand in India at the outset is to be clear about its target customer," says Mr Dutta.

"Both Indian consumers and the business environment are demanding, which reduces the margin for error and increases the time to break even dramatically."

No financial details of the agreement between Kenneth Cole and Reliance Brands were revealed and neither company responded to queries from The National.

(This article appeared in The National on 13 November 2011.)

Anumeha Chaturvedi
Business Today , November 7, 2011

While on a vacation in Delhi in the summer of 2006, New York-based investment banker Neetu Bhatia was dismayed to find that the facility for booking tickets for shows online practically did not exist in India. In the United States, she would book all such tickets through global online ticketing agents like ticketmaster.com. "Soon after I returned to New York, my brother in Delhi called me asking what I thought about setting up an Indian ticketmaster," she says. She was game. Thus, in April 2007, after spending a year on preliminary spadework, Bhatia, her brother Akash and a common friend Arpita Majumdar, launched the site Kya Zoonga.

Starting with movies, Kya Zoonga has since sold online tickets for shows of singers Bryan Adams and Akon when they toured India earlier this year, as well as for all the recent top sporting events: the ICC Cricket World Cup 2011, the Indian Premier League matches and the Formula 1. It now sells around 2,50,000 to 3,00,000 tickets a month.

"India may have been a bit late in waking up to online ticketing, but in terms of technology and features, we are at par or even better than most overseas websites," says Bhatia.

Kya Zoonga has had a relatively smooth run so far. Not so the site BookmyShow, at present the biggest online ticketing site, selling around a million tickets a month. First started way back in 1999 by three friends, Ashish Hemrajani, Parikshit Dar and Rajesh Balpande, it struggled to survive till the dotcom bust of 2001 finally put it out of its misery.

"Internet connectivity was poor and we were way ahead of our times," says Dar, while co-founder Hemrajani adds: "The ecosystem had not yet been built."

BookmyShow kept itself going in a different avatar, providing the software for backend operations relating to box office collections to movie theatres. Online ticketing was revived only in 2007.

But in its second coming, the service has been a runaway success – selling around one million tickets a month, expanding at a compounded annual growth rate of 40 per cent for the past four years – more so after media and entertainment company Network 18 bought a majority stake in the company – the exact holding is not being disclosed – putting it on a firmer financial footing.

"As connectivity improved, banks started encouraging credit card transactions which worked in our favour," says Hemrajani. "It also helped that we also got an all India serial number which enabled us to control all our operations through a single call centre in Mumbai, unlike before when we had to run call centres in different cities."

Paid a commission of Rs 15 or above for each ticket sold, online ticketing companies now comprise a Rs 650 to 700 crore market. "The numbers should double in the next few years," says Dar.

Predictably, they have made greater inroads in South India – with its higher Internet penetration and vast number of cinemas – than in the North. A host of smaller companies like No More Queue, Films N Tickets and Limata have arisen, with their operations confined mainly to South Indian towns. (No More Queue has limited operations in parts of North India as well.)

"The action is in South India," says Rama Raju, CEO of No More Queue. "The film industry here has big stars who command a fanatical fan following. The fans want to watch their favourite stars’ movies at any cost."

Starting with tickets for two of India’s biggest obsessions – Bollywood films and cricket matches – these companies have now diversified into other events too.

BookmyShow sold tickets worth Rs 80 crore for the recently held Grand Prix in Greater Noida, handled bookings for FIFA’s friendly match between Argentina and Venezuela in Kolkata, as well as the Sunburn music festival in Goa.

Movie business now comprises just 25 per cent of Kya Zoonga’s revenue, with cricket and other sports event cornering about 50 per cent, and other live events, the remaining 25 per cent.

"Visits to ticketing sites have grown with more live events coming to India including the IPL. People find it convenient to buy tickets online," says Kedar Gavane, Director of the internet marketing research company comScore in India.

While the public response has been enthusiastic, ticketing companies have worked overtime to ensure it increases. Both Kya Zoonga and BookmyShow, for instance, team up with select retail outlets to sell tickets at all their outlets.

"We are not dependent solely on our website," says Bhatia. "We have a centralised system by which we can supply tickets anywhere, anytime. If a customer walks into any of our partner stores, he can buy either printed tickets or e-vouchers depending on the regulatory environment in that location."

BookmyShow also have ticket booking applications on Android, BlackBerry, iPhone and Symbian mobile operating systems. It also has a Facebook page, Ticket Buddy, through which it sells tickets. "Ticket Buddy has over half a million fans, and it allows people to see which shows and events their friends have booked, so that they can buy tickets for those events too," says Dar.

Many of the multiplexes, like PVR Cinemas, Fast Cinemas and Inox Movies, have their own ticketing websites as well. PVR Cinemas revamped its decade-old website last July, providing much more information on it than before: details of the films being currently shown, and the ones that will follow, with the facility of pre-booking; even a list of the snacks available along with the option of pre-ordering them at a discount along with the tickets. "There has been a 25 to 30 per cent growth in traffic on the site since the revamp," says Jitender Verma, Chief Information Officer at PVR.

But there are challenges too, chief among them being the Internet’s limited reach in India. "More broadband networks need to be built and cost of 3G telephony needs to come down," says Hemrajani.

Arbitrary policies of some state governments – like that of Andhra Pradesh which has decreed that online ticketing companies need permits to operate in the state, but has provided such permits to just two favoured companies – are also a dampener. Again, these companies have been saddled with many more responsibilities than their counterparts in the West.

"Unlike overseas, where organisers manage the infrastructure for ticketing, in India, ticketing companies have to manage everything – from printing the tickets to selling them online as well as at the venue and at retail outlets, to home deliveries," says Hemrajani.

With the rise of online ticketing, event organisers are also relying much more on ticket sales than they used to. Earlier such ticket sales were somewhat haphazard and organisers relied much more on sponsorships to recover their investment than on revenue from tickets. "Formerly, 90 per cent of the money earned came from sponsorships," says Bhatia. "But now, with ticket sales much more organised, they comprise 60 to 70 per cent of the revenue from these events."

Users, however, claim their experience has been mixed. "Some sites have plenty of options and a fairly standard procedure which I’m used to, but some don’t," says Delhi-based Rohit Balakrishnan, a cricket buff, who regularly buys tickets for cricket matches online.

There remains scope for improvement. "Enriching the content and community interaction to engage consumers is vital for future growth of online websites," says Devangshu Dutta, Chief Executive of retail consultancy firm, Third Eyesight.