admin
June 21, 2014
Vikas
Kumar, Outlook Business
New
Delhi, June 21, 2014
On Gurudwara Road in central Delhi’s bustling and crowded
Karol Bagh market, it is easy to miss the nondescript, grey four-storey
building that houses Aero Group’s corporate office. Entering
the reception, you feel as if you have been transported to a trading
house from the 1980s. The ageing paint and weathered wood paneling
gives the sense of a company steeped in its past, nowhere close
to the youthful and vibrant image of Woodland, the popular homegrown
adventure brand it represents.
That is, until you step into the cramped but modern elevator that takes you up to the first floor. Here, gleaming workspaces, open layouts, wall cabinets whose doors cleverly double up as writing boards all give out a fresh vibe of a company gearing up for the future.
Clearly, Woodland is a brand that’s being refreshed for a new innings. The transformational process has been underway for some time now, says MD Harkirat Singh. “We needed to reinvent the way we do business, because if we didn’t change, somebody else would have come in,” he says.
Since its launch in 1992, Woodland has single-handedly built a small category — outdoor lifestyle — and grown it through a mix of sharply targeted advertising for its young buyers, community building and events and alliances with environmental organisations such as the World Wildlife Fund and the United Nations Children’s Fund. In doing so, it has cleverly straddled an expanding adventure gear market.
“Woodland connects with the outdoor lifestyle image without being dependent on it,” agrees Devangshu Dutta, CEO, Third Eyesight, a retail consulting firm.
Now, Singh and his team are upping the ante. Preparations have been underway for a couple of years: a new line of innovative products has been unveiled and the brand extended into specialised categories within the adventure and outdoors space. Take, for instance, shoes and garments used in mountaineering, trekking, cycling and equipment for rappelling. The idea was to address the needs of entry-level users and not necessarily professional climbers and trekkers to begin with. “Some products need safety approvals and we may not go for them right now,” points out Singh. For sourcing such products, it has tied up with global manufacturers. A few of these products have already been introduced, such as GoPro outdoor cameras and climbing stick sourced from an Italian company, and trekking umbrellas from a German supplier.
The initial response has been encouraging, prompting Woodland to work on a plan to introduce five to ten new products each year. “Right now, I am holding a Woodland shoe with Gore-Tex lining and a Vibram sole, which will cost you only Rs 8,000 a pair,” says Singh, who is down south visiting the company’s Kochi store. The point Singh wants to make is this: Woodland makes shoes that are comparable with global brands.
But old-time sellers such as Avinash Kamath of Mumbai’s Avi Industries haven’t heard of these yet. He remembers the company’s traditional range being perceived as rugged but bulky and unsuitable for climbing mountains. “Their shoes are 50% heavier compared with European brands,” he says. Started by his father in the ’70s, the business is run by Kamath, a seasoned mountaineer. Stores such as Avi, Adventure18 in Delhi and Cliff Climbers in Dehradun have been the go-to places for gear for professional or early mountaineers. They are also the key influencers for the category, which grows mainly by word-of-mouth. Kamath is pleasantly surprised when told about Woodland’s advanced range. “If they have such products, they should be promoting them.” It’s exactly what Woodland is trying to do with marketing and innovation.
Brand push
From selling shoes to adding apparel (extending into a more formal line of wear under the Woods brand), the Rs 1,000-crore group has come a long way from its origins as a supplier of finished leather uppers to footwear manufacturers across the globe. An impulsive decision to replicate a design that the Aero Group was manufacturing for an Italian client and test it in the Karol Bagh market led to the creation of a brand that is now available in 4,000 multi-brand outlets and boasts of 450 exclusive showrooms in around 200 cities. In the past few years, Woodland has been clocking 13% to 18% growth (see: On a firm footing), compared with 20% for the overall footwear and apparel market. But Singh is in no hurry to grow any faster. Though he wants the company, which earns 60% of its revenues from footwear, to be seen as a more entrenched and focused player in the outdoor wear and adventure gear business, which currently accounts for a negligible share of revenues.
The reason — the adventure sports market is gradually picking up pace in India on the back of corporate outbound programmes and a general sense of awareness through television. Trekking, climbing and rapelling have been most popular in that regard. It’s a category that barely existed among the most passionate of adventure lovers — trekkers, mountain hikers and climbing enthusiasts. “The outdoor category is a huge universe. We are addressing only a small part,” says Singh. And the company is doing that by creating awareness of the category, celebrating everyday heroes. Woodland’s brand ambassadors include people such as Loveraj Singh Dharmshaktu, an assistant commandant in the Border Security Force who has climbed Mt Everest five times; Planning Commission employee and ace endurance runner Arun Bhardwaj; Deeya Suzannah Bajaj, who at 14 was the first and youngest Indian to go kayaking in the Arctic Ocean in Greenland; and Archana Sardana, who is the country’s first woman B.A.S.E. jumper, skydiver and scuba diving instructor. Woodland, in fact, developed special gear — a flappy bird-like jacket — for Sardana for B.A.S.E. jumping, considered among the riskiest sports since it involves leaping off buildings and bridges with a small parachute.
Apart from using images and videos of these ambassadors and sharing details of their achievements on its website, Woodland also leverages them as field testers for its ongoing product development and design process. Dharmshaktu, who has been tapped for his feedback on a new range of jackets, has also been hired as a consultant for an upcoming adventure zone being created on the outskirts of Delhi. Located on a 100-acre property on the Faridabad-Gurgaon Road at the foothills of the Aravallis, Singh says the zone, which is likely to be ready in six months, will serve as an events hub to connect with its audience and demonstrate its newer range of mountain gear.
True to its Timberland-inspired positioning, Woodland has stayed consistent over the years about what it stands for — rugged, outdoorsy and for people with a desire to explore and seek adventure. Communication, too, has remained largely consistent with the brand’s core values. “Over the years, it’s been the most well-defined brand I’ve worked on,” says Tanul Bhartiya, senior VP at Lowe Lintas & Partners, the agency that’s been handling the brand since its launch in India, now under division Karishma Advertising. While Woodland’s advertising is largely print-centric, over the years, there has been a greater push towards digital marketing to stay connected with its target group — 18-24 year olds. The rethink process was kicked off four years ago, when Singh enrolled for a two-week Taking Marketing Digital course at Harvard Business School with Amol Dhillon, vice-president, strategy and planning. That led to a digital marketing push for the brand that continues over popular platforms such as Facebook, LinkedIn and YouTube. Woodland now has 3.2 million fans on Facebook and 6,000 followers on Twitter. Its in-house social media content team is currently working on a Woodland TV app for iOS and Android, and a quarterly digital adventure magazine modelled along the lines of Redbull’s Red Bulletin. “Brands have to be their own content creators,” says Dhillon.
All these initiatives assume importance as the larger market for adventure and sports goods opens up in the country.
Continued below…
admin
June 13, 2014
Rashmi
Pratap, The Hindu Businessline
Mumbai,
June 13, 2014
In
a market where homegrown and multinational companies alike make
a beeline for the hinterland, here’s one that has boarded
a bus to urban India after becoming a household name in villages.
Jyothy Laboratories has meticulously targeted rural consumers
to grow its brand into the country’s fifth-largest in the
fast-moving consumer goods category.
Every month, truckloads of Ujala fabric whitener and detergent, Maxo mosquito repellent coil and Exo utensil cleaner arrive at the doorstep of retailers in lakhs of villages, saving them precious time and transportation costs. The goods are also sold on credit, which is a major draw for rural retailers such as Gyaneshwar Kadam of Ajang village in Maharashtra’s Dhule district. “We are always short on working capital. Credit is a big help. Even our buyers prefer to pay after they get their wages. So I don’t stock products of distributors who don’t give me credit,” he says.
This, then, is the story of thousands of retailers who now swear by Jyothy Labs products. “In rural India, we have the first-mover advantage. Since we went to villages first, gave them respect and credit, we get trust in return. Big companies don’t give credit, but I ensure my distributors do it. The moment you give credit, people become your patrons,” says Ullas Kamath, joint managing director of Jyothy Labs, best known for its Ujala fabric whitener.
City shops beckon
The company’s products are available through 2.9 million outlets, and it supplies directly to one million of them. Now, as it readies to spread into every urban nook and corner, it has re-jigged some strategies. To begin with, it has added more products to its line-up.
“When you are in business, you want to spread your risks as well as product portfolio. And that’s what we have done,” says Kamath.
The company acquired 50.9 per cent in loss-making Henkel India, a subsidiary of Germany’s Henkel AG, for ?60.73 crore in March 2011. With that it attempted to improve its rural-urban sales mix. Before the acquisition, 65 per cent of its Ujala sales came from rural India. “Now it is 50:50 from urban and rural. That is how Henkel has helped. They have distributors in urban areas and that network has improved our reach,” Kamath says.
Earlier, retailers and stockists in urban areas were reluctant to take on Jyothy Lab’s products. “Along with Henko (Henkel’s detergent brand), we are able to push other categories too like personal care and liquid mosquito repellent. And people are accepting it.”
Villagers buy more
“In rural India, the consumption per family might be small but the number of families is so large that it outgrows urban India,” says Kamath. His assumption is not without basis. Rural spending at ?3.75 lakh crore far outstripped urban consumption at ?2.994 lakh crore during 2009-12. Rural consumption per person exceeded the urban equivalent by 2 per cent, according to CRISIL and data from the National Sample Survey Organisation.
But for a national presence, Jyothy has to look beyond rural India. “In moving to urban India, there will be more opportunities than challenges. Migratory population in cities is humongous. And their needs are more like those of rural consumers — whether it is the kind of products or even the price they are willing to pay. If a company can ensure a good supply chain across large cities, it can grab a substantial chunk of the market,” says Devangshu Dutta, chief executive at consulting firm Third Eyesight.
Jyothy has accordingly made changes in its management structure. Its top team now has 17 people, including the CEO, S Raghunandan. Each brand head operates in a silo. “We have brought in a new management team to grow the categories. We give them enough money to spend on a brand and understand the reasons behind their performance or non-performance.”
The gamble seems to be paying off. Raghunandan, an FMCG veteran, has helped the company restructure and cut the distributor margin from eight per cent to six per cent.
Advertising and sales spend has increased by 65 per cent to ?135 crore in FY14. “Brand expenditure continues to pay returns over a long period of time,” says Kamath. He points out that even when MNCs advertise, they not only grow their own brands but also create new categories. “Everybody’s brand grows as people know a product exists and then they compare similar products.”
Global dream
Jyothy Labs is looking to launch newer products and re-launch some others. “We should be in at least two more categories in a few years. The aim is to be among the top three players in each category,” Kamath says.
That does not appear to be daunting. Henkel can still buy a 26 per cent stake in Jyothy Labs by 2016. That would give Jyothy the financial muscle to take on the biggies. Moreover, an equity partnership with Henkel should allow it to hop onto the German company’s wide international network and ride into emerging markets.
But until then, Kamath and his team are busy marking the miles and the milestones on the road to urban India.
(Published in The Hindu BusinessLine .)
admin
June 11, 2014
Pia
Heikkila, for the International Bar Association
Mumbai,
June 11, 2014
The
unprecedented victory by Narendra Modi in the world’s biggest
democratic elections in India has created what can only be described
as a wave of optimism, with many hoping that the country’s
economic and business climate will now take a similarly dramatic
turn for the better.
Foreign investors are watching closely in the hope that the country’s new Prime Minister is able to move swiftly to implement much needed change.
This optimism isn’t without foundation: there have already been promises to make India more investor friendly and resolve ongoing issues plaguing several foreign companies.
Core supporters were amongst the business and enterprise classes, thanks to the visible changes achieved in the state of Gujarat where Modi was the Chief Minister for the last 12 years.
Akil Hirani, managing partner of Indian law firm Majmudar and Partners and Vice-Chair of the IBA Asia Pacific Regional Forum, said the Modi has already shown potential for turning the country back onto a growth path. ‘Changes were achieved in Gujarat in terms of better roads, greater electricity connectivity and foreign investment. With a resounding majority, the government is well poised to bring about the same changes nationwide,’ Hirani says.
The ‘Modi Wave’ was born out of widespread frustration at corruption scandals and India’s inability to sustain growth. To show that Asia’s third-largest economy is open for business and on the right track, action is needed quickly. ‘Steps such as making the tax environment more friendly, working towards a time bound implementation of the Goods and Services Tax, cleaning up the balance sheets of state-owned banks, are needed initially,’ says Hirani.
But there needs to be more than words and promises: movement in a consistent direction over a long period is vital for the country’s economic success.
‘Modi has specifically mentioned that governance needs to build further on what has already been built so far. Sustained economic progress is not feasible if inconsistent or even mutually opposing policies are adopted […] Momentum for equitable development takes a long time to build in a country the size of India,’ says Devangshu Dutta, the Chief Executive of Indian management consultancy company Third Eyesight.
India’s tax battles against foreign companies have been attracting headlines and raising concerns with potential investors for some time: uncertainty about taxes and regulation in India has discouraged companies from expanding into the country. There are a considerable number of examples. Vodafone has been fighting a multi-billion tax bill through courts in connection with its 2007 purchase of the Hong Kong based Hutchinson Whampoa’s India operations. Nokia is another well-known case: the Finnish company is alleged to have wrongly claimed exemptions for software imports and is taking its legal challenge against a judgment of the Delhi High Court to India’s Supreme Court.
The list goes on: Royal Dutch Shell, General Electric and Microsoft are just few of the household names that are fighting tax cases in India.
Companies have now begun seeking assistance from bilateral pacts and pursuing international arbitration. But help may be on its way as Subramanian Swamy, widely expected to take a key policy role in the new government, announced recently that his top priority will be to change tax regulation, which experts agree could aid India’s return to economic growth.
‘They should repeal the retrospective amendment that was introduced after the Vodafone decision,’ says Vivek Kathpalia, partner at the Mumbai-based law firm Nishith Desai Associates and a member of the IBA Asia Pacific Regional Forum. ‘This will send a very positive message to the world that India is open for business and that there exists regulatory certainty.’
Kathpalia added: ‘The other is the introduction of the Goods & Services Tax. The government has said that they will try and build a consensus for this amongst all the states of India. Once implemented, this alone will add around two per cent to India’s GDP.’
India’s new Government has promised it will try to create a level playing field for all investors by limiting bureaucracy. ‘Modi’s aim is to have more governance and less government, and to this end, he has reduced the number of ministries and ministers in his government. In addition, he seeks accountability, responsiveness and results from his team members, which will benefit everyone,’ says Hirani.
India also needs more foreign direct investment (FDI). The previous government did introduce a slew of economical reforms, such as changes in the banking and retail sectors that were hailed as successes. But, in order to achieve a steady flow of FDI, the government needs to implement further reforms, and not just focus on the stock market performance. ‘They have understood that for India to creep back to a growth rate of 8–10 per cent, development is the only solution,’ says Kathpalia.
The new government’s upcoming budget will be closely watched and may give indications of what’s to come. ‘The stock markets, though not a perfect barometer of real change, have displayed positive market sentiment,’ says Kathpalia.
(Published on IBAnet.)
admin
June 9, 2014
Mayu Saini, Women’s Wear Daily (WWD)
New Delhi, June 9, 2014
In
another fillip for onlinefashion retail in India, FashionandYou,
one of the pioneers in the online fashion retail space, has raised
$10 million in funding, the company said Monday.
The etailer, which got a boost from its early partnership with
Lakme Fashion Week is known for its focus on designers and its
flash sales model.
Aasheesh Mediratta, chief executive of FashionandYou.com, said
that the additional investment would help "acquire more customers
to bolster our flash sale dominance and build a more cohesive
brand."
Competition in the fashion retail segment has intensified over the last few months, especially with the acquisition of fashion portal Myntra by Flipkart last month. After the acquisition, Flipkart said that it would invest $100 million to further the growth of Myntra.
"Fundamentally, nothing has changed in the market," Devangshu Dutta, an analyst and chief executive officer of Third Eyesight, observed. "E-commerce platforms still need a path-to-profit; their business models have so far been driven mainly by discounts and promotions in a race to the bottom that no one is winning. Customer acquisition costs have dropped in recent months, as competition has thinned, but remain high. What is most worrying is low customer retention and the lack of differentiation – these are the foremost challenges to be addressed."
Snapdeal, Koovs, Jabong, and several other online apparel retailers
are trying hard to keep up in the race for the Indian customer’s
online wallet, and competition continues to intensify.
(Published in Women’s Wear Daily (WWD).)
admin
June 7, 2014
Meghna
Maiti, Financial Chronicle
Mumbai,
7 June 2012
Even
at a time when the economy has put in its worst performance in
nine years, Mukesh Ambani, chairman of Reliance Industries, continues
to be overtly optimistic about the conglomerate’s retail business.
Ambani expects Reliance Retail to increase its revenues by around five-six times to Rs 40,000-50,000 crore in the next three-four years. At present, unlisted Reliance Retail has a turnover of approximately Rs 7,600 crore.
“We are investing aggressively in this business (Reliance Retail) to consolidate and strengthen our leadership position in this sector. With scale, supply chain integration and continuous learning, we expect this business to be profitable within three to four years and achieve a satisfactory return on capital,” Ambani told Reliance Industries’ shareholders at its annual general meeting (AGM) in Mumbai.
“Reliance Retail will be one of our important growth engines in the next few years and will have amongst the highest growth rates and earnings potential,” added Ambani.
To achieve this feat, the company aims to treble its customer base from about 30 lakh people visiting its retail stores every week now to over one crore in the next three-four years. This over three-fold expansion in customer base would thus power the growth in sales.
Devangshu Dutta, chief executive of Third Eyesight, a specialist consulting firm for the retail sector, said the plans of India’s richest individual reiterates the promises and prospects of India’s retail story. “A long-term growth story is unfolding in India, which would support the growth strategies of any retail company,” said Dutta. “The total size of India’s consumption market is around $550 billion. Whereas GDP growth has shrunk to 5.3 per cent, retail spending has only increased. Considering the situation, Reliance Retail’s promises do not look daunting,” said Arvind K Singhal, chairman at Technopak Advisors.
“Our consumer businesses are going to provide a second dimension to our growth strategy. We will build on our position as the leading retailer in India. The execution of this business plan will benefit the India’s kisans and consumers and create new value for our stakeholders,” said Ambani.
RIL claims the retail business, which is still losing money, has grown strongly in the past five years and now spans across 1,300 stores and has a leadership position in three verticals. Reliance Retail has provided new employment for 50,000 people, including 25,000 people directly by Reliance. “We have built a sustainable growth model for our retail business,” said Ambani.
Reliance has used an expat management team and has partnered with experts around the globe to cement its position in India’s nascent organised retail market. "We have strengthened our portfolio of global brands through partnerships…We will continue to invest in partnerships with consumers, brands and producers. Consumer businesses will form a significant part our business in less than a decade," said Ambani.
Reliance Retail, through its newest format Reliance Markets, is partnering with kirana stores and small retailers to supply them products at low prices. "We aim to be a supplier of choice for kiranas and small retailers. We will grow in retail in partnerships with small retailers," he added. It claims to have tripled the number of its digital stores and expanded product offerings.
“We engage with 70 lakh farmers and procure fresh produce and milk from them. In apparel retailing we have established the largest chain of stores in the country,” said Ambani in his AGM speech.
