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March 28, 2012
Sarah Jacob , The Economic Times
International fashion brands Versace, Corneliani and Guess are all set to break away from their Indian partners, joining a growing list of international fashion brands struggling to settle down in India.
Italian luxe brands Versace and Corneliani are expected to part ways with little-known Delhi-based firm Blues Clothing Company , three industry executives with knowledge of the development told ET.
“It is the case of a small firm going beyond its means,” a retail executive said. “This business needs deep pockets.” He said a team from Versace would be travelling to New Delhi this week and could scout for new partners. Email queries sent to Versace and Corneliani remained unanswered.
Dinesh Sehgal, MD of the family-controlled Blues Clothing, denied a split. But he admitted that a Corneliani store and one or two Versace stores are being shut.
Sehgal said his company, formed in 1996 with the aim of becoming the largest retailer of suits in the country, plans to pump in funds into the business but would not dilute equity. Other international brands Blues Clothing retails in India include Cadini and John Smedley.
PLANET RETAIL’S WRONG GUESS
Meanwhile, Guess is changing hands after its long-time partner Planet Retail decided to restructure its business. The American clothing maker will now tie up with Major Brands, the marketer of Mango and Aldo in India.
Ramesh Tainwala, co-owner and chairman of Planet Retail, says letting go of Guess is part of the firm’s restructuring plan.
Planet Retail had expected increasing buying power in India to help it break even by 2012-13. But it will take twice the time now, says Tainwala.
That is mainly because most Indians prefer to buy luxury products from abroad because high import duty makes these products costlier here than elsewhere. Also, while rentals in a metro like Mumbai is comparable to global cities, the average sales per sq ft per day in a shop in Mumbai is one-tenth of Hong Kong and one-fourth of Dubai.
“Controlling the bleed is the name of the game,” says Tainwala. “I have no doubt that retail will be profitable. But I doubt if that is two, five or seven years from now,” he adds.
Despite such issues, the luxury garment business is thriving in India with foreign brands rushing in to make the most of a fast-growing economy, thriving middle class and Indian consumers’ rising aspirations and growing exposure to western products.
Madura Fashion & Lifestyle, in fact, is in talks to convert its licensing and distribution deal with Esprit into a joint venture.
BREAK-UPS GALORE
While India recently allowed 100% foreign investment in single brand retail, most international brands prefer to have a local partner for the complex Indian market. But often, the partner does not invest enough to scale up the brand.
About one-third of the more than 150 international fashion brands launched in India over the past seven years have either changed partners or exited the market. Around 26 brands have changed partners, while 23-26 exited the market with at least half of those later returning either as a wholly-owned subsidiary or with a new partner, says consumer goods and retail consultancy Third Eyesight.
Reliance Brands President and CEO Darshan Mehta says, “The single-biggest reason for conflict between foreign brands and their partners is when the interests of both parties are not aligned.”
Differences also crop up over brand positioning , choice of store location and partners’ inability to offer services at global standards, industry players say.
“There has been an explosion in the number of brands entering India but there have not been as many stores,” Devangshu Dutta, chief executive of Third Eyseight, says. “This suggests either that brands have to wait it out or their proposition is not as relevant to the market,” he adds.
admin
March 23, 2012
Writankar
Mukherjee and Sarah Jacob , The Economic Times
Kolkata/Bangalore,
March 23, 2012
So
what if they are in their late sixties, the Ghoshs have a weekly
ritual of tucking into burgers and fries mostly at the McDonald’s
outlet in Kolkata’s Mani Square mall. The couple, whose children
are settled abroad, often proceed to unwind with friends at a
cafe later. "Its a nice feeling to hang out in places. You
feel young at heart, can spend time without interruption and the
food is yummy," Indranil Ghosh, a retired banking executive,
says while his wife Meera, a retired schoolteacher, is busy with
her fish burger.
Eating out joints, including youth centric quick service restaurants such as McDonald’s and Subway, now have a loyal clientele among senior citizens.
Many restaurants are offering special loyalty cards and comforts of blankets and shawls besides reaching out to old-age homes to woo what they say is a booming club of elders feeling young and having enough spare time and money.
This comes at a time when sales have been declining at quick-service and fine-dining restaurants in recent months because of lower discretionary spends by regular consumers. "There is a change in perception and a shift of guests from a very high-flying dining to young and lively restaurant formats or a youthful cafe," says Amit Burman, chairman of Lite Bite Foods, which owns chains such as Subway, Asia 7, Zambar and Punjab Grill.
"This is also noticed from the fact that a lot of our senior citizen guests actively operate Facebook and Twitter accounts and become member of our online forums," he says. The likes of McDonald’s, Mainland China, Little Italy, Subway and Punjab Grill estimate that 60+ age-group consumers account for up to 15% of their sales. "The trend of senior citizen-led families eating out is fast becoming prominent, more so in the tier II and III towns," says Rudra Kishore Sen, director at McDonald’s India (North & East).
WOOING THE ELDERLY
McDonald’s is now developing a menu specifically targeted at this age group and reaching out to old-age homes. It is also evaluating a loyalty programme to grow its relevance as a true-bred family restaurant. Mainland China, a fine-dining Chinese restaurant chain owned by Specialty Restaurants, has introduced some off-the-menu dishes steamed butter noodle (for easy chewing) and special steamed fish (where soya garlic sauce replaced the more spicy chilli soya sauce) for senior citizens and offers complementary dessert for the elderly.
Restaurants have also become attentive about smaller comforts for this age group. At Specialty Restaurant outlets, adult diapers are kept on standby. Just in case the air-conditioning is too much for this age group, shawls and blankets are offered up at many restaurants. Little Italy, an 18-outlet chain finedining restaurant chain, offers reading glasses and is also introducing grab bars or rods to help older people maintain their balance in washrooms. "Many senior citizens find the font size too small on the menu," Raj Mehta, MD of Little Italy Group of Restaurants, says.
Another chain, Barbeque Nation is training its staff in emergency medical assistance like helping a customer suffering from sudden heart attack, which it says would be most beneficial for this age group.
MORE MONEY, MORE TIME
These eat-out joints are tweaking their offerings because a growing chunk of senior citizen have more disposable income due to increase in pension income by the central and state governments as well as increased income-tax exemption limit, say analysts.
While the frequency of eating-out may not be as high, senior citizens are typically more profitable consumers. "This group is less likely to look at the right side of the menu (where the price would be)," says Devangshu Dutta, chief executive officer of management consultancy Third Eyesight. They usually have fewer domestic pressures such as loan repayment commitments, rent or education of children. "They tend to not only have more spare money but spare time too," Dutta says. Anjan Chatterjee, chairman and MD of Specialty Restaurants, which runs 82 restaurants across brands such as Mainland China and Oh! Calcutta, says senior citizens are the most loyal customers.
"They may not be marketer’s first choice, but our experience shows that their bill sizes are at least 10% more than when the youngsters dine," he says. And they account for a significant number of population, though much less than the youth. Babita Jayaram, vice president-operations at BJN Group, which runs restaurants such as Firangi Paani, Aromas of China, Indijoe and Khansama, feels there is no need to segment the older consumer as food preferences do not typically change when they turn 60.
"Consumers only become more health conscious as they become older, which is why they are free to customise their food order for lesser oil or spices," he says, adding over 30% of BJN Group consumers are above 60 years. Raj Mehta of Little Italy says more and more old consumers are now curious to experience what the younger generation favours.
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March 14, 2012
Shweta
Jain, Indiaretailing.com
Mumbai,
March 14, 2012
The
session on “Workwear Market Scenario in India” on the
second day of the ongoing InFashion 2012 at Mumbai focussed on
the consumption potential of the workwear segment and highlighted
how the general attitude towards “uniformed people”
has to change for the category to evolve. The panelists said that
though the consumption of workwear in the country is low, it has
a lot of potential to multiply.
A six-member panel discussion moderated by Devangshu Dutta, Chief Executive, Third Eyesight, revealed the necessity to follow three main actions – identification, branding and uniformity – to enhance and grow the segment. Sharing their thoughts were prominent personalities from the fashion retail industry, such as Sunil Tibrewal, COO, Uniform QMAX; Vikas Todi, Director, SPARSH Textiles; Mukesh Vijaywargi, President, Klopman; Anupam Bansal, MD, Liberty; Sejal Shah, M10Uniforms, and; Kishore Kothari, Director, Ranjit Silk Mill.
India in increasingly becoming a significant player in the world economy and is witnessing a rise in employment figures in the organized sector. In this backdrop, the future of the workwear segment in the country is certainly bright. A major growth factor for the industry is businesses that have begun to focus on branding, such as schools, hospital, and hotels. As these continue to grow and open multiple branches across the country, they create demand for uniforms, boosting the prospects for the workwear segment.
“Comfort is a primary factor for all workwear, so colours, fabrics and functionality play a pivotal role in the equation and have to be designed according to the requirements of the job,” said Tibrewal of Uniform QMAX.
Todi of Sparsh Textiles said people are increasingly ready to spend on uniforms because the mental attitudes and financial issues that prevented the growth of the sector earlier are improving. The panelists were of the view that education, awareness and cultural change are some of the important aspects that have to be promoted among the consumers to create a positive outlook towards workwear. In the current market scenario, uniforms are considered as something forced upon people, rather than accepted by them on their own, they felt.
To give a boost to the workwear segment, the speakers stressed on promoting the concept of uniforms in tier II and III towns of India which are the hubs of many industries. The need of the hour is to create awareness where there is a potential market, but there is also the concern about duplication in design that needs to be address, they said.
Throwing light on another aspect of the segment, Bansal from Liberty said that their company makes three kinds of shoes under the workwear category: safety shoes such as weight-bearing ones and non-piercing gum boots which are need-driven but their awareness is low; uniform shoes which are for corporate use, and; school shoes which are gradually becoming fashionable and trendy.
The industry experts believed that workwear could be more technology driven, offering innovations such as stain-free, anti-creasing, and fire-resistant products to make them more functional. Also, promotional events are a huge opportunity to players in this category. In events such as the Indian Premier League, a huge amount of knitted fabrics was consumed to manufacture the tees and jerseys of cricket players, they pointed out.
admin
March 14, 2012
Meghna
Maiti Mar, Financial Chronicle
Mumbai,
March 14, 2012
Major Brands India, the India partner of premium brands such as Mango, Charles & Keith and Aldo is now looking to add some heft in the affordable brands segment by inking a joint venture (JV) with France-based Happychic group. The JV expects to target the mass segment of apparel retailing with a diversified offering.
“The company is in talks with Happychic for a JV agreement,” said at least three officials in the know of the development. “Major Brands is looking to diversify into the mass segment to break the price-point barrier and use its expertise in Indian retail on a wider platform,” said industry experts.
An email sent to Major Brands India on March 13, 2012 seeking comments on the Happychic JV did not elicit any response till the time of going to press. When contacted at the “India Fashion Forum”, Christophe Ader, international development and partnerships supervisor of Happychic declined comment. “Major Brands is doing very well in the Middle East. The JV could be its India strategy to try out lower tier brands to increase profitability,” said Harminder Sahni, founder and MD at Wazir Advisors.
“Retailers dealing only with the high luxury brands become very restricted. The JV would be a sensible move to broaden the business opportunities,” said Devangshu Dutta, CEO at Third Eyesight, a consulting firm focused on retail and consumer products sector.
Major Brands has been the partner in India for international brands such as Aldo Accessories, Inglot, Le Senza, Nine West, Queue Up and Promod. Happychic has three brands in its portfolio — Jules, Brice and Bizzbee. While Brice is a menswear brand in France, Poland and Belgium. Jules is targeted at youth, while Bizzbee is a teens’ brand.
(This article appeared in the online version of the Financial Chronicle.)
admin
March 11, 2012
Madhurima
Nandy, MINT
Bangalore,
March 11, 2012
Planet
Retail Pvt. Ltd, which sells a clutch of international clothing
and accessory brands in India, has shrunk both its expansion and
investment plans on the back of a weak global economy and slow
sales.
The retailer of Guess, Body Shop, Accessorize, Next and Nautica brands in India may also miss its 2015 break-even target.
Planet Retail, after a substantial restructuring and clean-up
exercise in 2010, embarked on an expansion plan not just for a
wider reach but also to bring in new brands and build existing
ones. All that is on hold now.
“The plan now is to restructure and reduce the pace of expansion across our brands and recast investment plans to half,” said chairman Ramesh Tainwala, adding that it shouldn’t be surprising if Planet Retail is unable to break even as planned by 2015. He didn’t disclose revenue details.
Planet Retail also has a licence to run a chain of Debenhams lifestyle stores in the country.
“Macro-environment issues such as rupee depreciation, weak retail sales in the last two quarters were not at par with expectations for most premium brands and the entry of FDI (foreign direct investment) in the retail sector not happening anytime soon, are some of the reasons that forced us to restructure business,” said Tainwala, who is also president, Asia-Pacific and West Asia, at Samsonite.
Many global brands in India have changed their pricing, positioning and sourcing strategies during the slowdown of 2008-09 to adapt to the local consumer palate, while some including Dockers and Springfield decided to exit the country.
Global brands that have survived and done reasonably well in India, such as Marks and Spencer, have incorporated some flexibility to adapt to the local market, said Devangshu Dutta, chief executive of retail consultancy firm Third Eyesight.
The UK-based retailer restructured prices and sales strategy to suit the Indian market three years ago, and decided to source locally, making it possible for the company to price its products competitively.
Marks and Spencer recently said it will continue to open stores in India and source locally. Six new stores were opened in 2011-12 and Marks and Spencer Reliance India Pvt. Ltd will continue to expand in the country as a priority market, a company spokesman said by email. Besides local sourcing and pricing, even designs have been adapted to India, he said.
Planet Retail’s global brands, on the other hand, are entirely imported.
The retailer has shrunk its investment plan of Rs200 crore by half and is deciding on whether it should focus its capital on existing brands or on a few strong ones such as Debenhams and Accessorize.
Retail sector analysts said that brands that come into India through licensing agreements, such as the brands Planet Retail sells, face challenges in terms of both pricing as well as their product mix.
Tainwala admitted that both pricing and positioning may have been an issue for some of Planet Retail’s brands in India, and these aspects are being reworked.
For instance, Next, which had 15 stores earlier, now has only two in Delhi. Its positioning is being widened from being a garments-only brand to include accessories. Planet Retail will open a full-format Next store in Pune that will have the look and feel of any of the brand’s UK stores.
“We will consolidate our brand portfolio and exit one-two brands if required. For both Next and Guess, we will do an honest evaluation of (the) brands’ potential over the coming months,” said Tainwala.
Another retail analyst, who didn’t want to be named, said premium brands such as Guess will need a substantial capital input to grow. “What largely went wrong with both Next and Guess is that both the brands were not positioned appropriately here and prices were way too high,” he said.
Planet Retail had intended to grow aggressively to 300 stores by 2014 from 80 now, but expansion will be scaled down now.
While international premium brands may be dealing with their unique problems in India, domestic brands have not downsized their expansion momentum despite sales slowing.
Jacob John, brand head, Louis Philippe, a premium menswear brand under Madura Fashion and Lifestyle, said the brand opened 40 stores in 2011, including some large ones of 3,000-10,000 sq. ft, despite sales dropping due to an inevitable price rise.
“We increased prices by almost 30% last year and may raise them further by 10% and we will remain aggressive on expansion plans this year too,” said John. Relatively, most domestic premium brands such as Louis Philippe have an entry-level pricing of Rs1,500 or below for a shirt and only compete with foreign brands for their high-end segments.
