admin
September 7, 2011
Now that direct investment into
India is on the verge of opening up, the country could hold
increased opportunities for clothing companies who want to source
and sell fashion there. Rebecca Danton reports from a recent
conference on ‘Sourcing And Selling Fashion In India,’
where speakers discussed the advantages and disadvantages of
setting up and trading within India.
In terms of its fashion and clothing opportunities, India is generally seen as a poor relation to China.
While the great red dragon of the Republic of China embraced the end of global clothing and textile quotas and furthered its domination of the world market, the Bengal tiger of India appeared to stumble and, as a consequence, lost ground in the race between these two developing economies.
Foreign investors certainly have India in their sights. At a recent conference on ‘Sourcing And Selling Fashion In India,’ organised by UK fashion business magazine Drapers, Devangshu Dutta, chief executive of advisory and business services firm Third Eyesight, noted that software and services companies have been already talking about what their ‘India strategy’ is.
Meanwhile, US retail giant Wal-Mart has admitted that it missed the China boat, but said it would not miss India. And this is seeping into the consciousness of some fashion companies.
But despite these predictions of growth, development has not occurred at a fast enough pace for many foreign players, from retailers to sourcers.
Indeed, India continues to be dogged by its reputation for its poor infrastructure, unreliability and outdated factories.
As Dutta pointed out, India not only lacks trading-bloc
partnerships and has a relatively lengthy transit lead-time,
but laws applying to the industry are erratic, energy is unreliable,
and a lack of government support and high cost issues continue
to put off potential investors.
Recruitment can also pose a problem. There is a general
lack of expertise in the country’s fashion industry and
a shortage of skilled workers. It is a problem retailers are
working towards combating with schemes such as mini universities.
Risk and uncertainty
On top of all this, foreign companies may be put off by what,
to them, may seem an alien work ethic and way of conducting
business.
Andrew Levermore, chief operating officer of retail venture Hypercity Retail, cites a low tolerance of risk and uncertainty, a lack of direct communication, and avoidance of conflict as typically Indian business traits.
And yet, India is a market that many are beginning to view with genuine enthusiasm. Dutta cites the supply chain manager of an international brand who says: “We’ve been blind-sided and ignored India as a supply base, and need to take quick corrective action now.”
Another to be converted is a buying director of a multi-billion dollar European fashion retailer – also cited by Dutta – who remarks: “We can see India going from 2% of our sourcing to 10% in the next three years.”
The jewel in India’s crown is its sizeable and rapidly expanding consumer class. The country’s economy is one of the fastest growing globally and is expected to double by 2010.
“With growing urbanisation, we see a sustained growth in the consumer market,” Dutta says. “Credit and debit spending is rising by 30%-40% a year.”
As for Indian consumers, there is a definite predilection for better-end clothing, Levermore says. “We’re not talking about a Wal-Mart level. People are value conscious but also quality aware. It’s not purely about value.”
With increasing consolidation of the industry and up to 300 shopping centres planned for the next few years, Dutta says that there is “huge growth” for modern retail in India, which is perhaps demonstrated by the levels of foreign investment heading in that direction recently.
Improving outlook
But, it is not just India’s economic outlook that is improving
for those looking to do business in this market; the country’s
legal and structural lay of the land has shifted positively
too.
As of now, international companies can only sell their branded goods through franchise stores, or through wholesale operations. But this may change if the Indian cabinet accepts recent recommendations by a Group of Ministers that foreign investment of up to 51% should be allowed in operations that produce and sell a single brand.
Under this proposal, companies such as Tommy Hilfiger, Louis Vuitton and Mango could take control of their own stores in India – a significant step forward for global companies looking to strengthen their standing in the market.
In addition, existing factories are working to improve themselves. Technological upgrades and a newly found focus on ethical issues both go in India’s favour in the fight against its more developed competitors. Dutta says that more engineered planning, more compliance audits and expansion plans will all combine to help India’s factories come up to par with those in Eastern Europe, for example.
India is already the number two or three supplier to Europe in a handful of categories such as skirts, men’s nightwear and woven blouses. In addition, the production of basics is improving, helping shake off the country’s image of only being worthwhile for more detailed garments.
On top of this, India is strategically located, and could be viewed as the south Asian market’s hub – not just as a single country. The likes of Bangladesh, Sri Lanka, Pakistan and Dubai all offer prospects for apparel companies.
Mike Flanagan and Liz Leffman, co-founders of sourcing intelligence company Clothesource, agree and say companies should consider the whole of the south east Asian subcontinent as a sourcing destination.
Although India and its surrounding countries may not be the easiest place to do business, it should be considered a real alternative.
“There are phenomenal prospects if the product is right,” says Dutta, who concludes that companies should look at India in its own right instead of making comparisons with China.
(The Drapers Conference on “Sourcing and Selling
Fashion in India” was held in London on January 31, 2006.
This article was published in www.just-style.com,
February 24, 2006.)
admin
August 26, 2011
Sagar
Malviya and Sarah Jacob, The Economic Times
26 August
2011, Mumbai/Bangalore
Paris Hilton — American actor, singer, fashionista and great-grand daughter of Hilton Hotels founder Conrad Hilton — will spread her business empire to India next month by launching her handbags and fashion accessories.
The 30-year-old celebrity, who helped Chihuahuas become fashionable, will travel to India for the launch of her eponymous brand at Shoppers Stop, the department store chain’s MD and customer care associate Govind Shrikhande said.
Shoppers Stop will open Paris Hilton shop-in-shops across its metro stores. Paris Hilton built a brand around her celebrity lifestyle over the past few years. She has 17 product lines including fragrances, apparel, footwear, music albums, sunglasses, pet products, stationery, bedding and handbags.
Earlier this year, Hilton admitted to CNN that she earns upwards of $10 million a year without divulging the true extent of her earnings. If that was not enough, Hilton launched a Moto Grand Prix team called SuperMartxe VIP last year and plans to follow through with hotels and beach clubs.
Betting on her brand recall, Shoppers Stop will position the brand at a premium, targeted at the rich and upper middle-class consumer base.
"Paris Hilton’s personality may be aspirational for a consumer well under 30 years of age," says retail and consumer products consultancy Third Eyesight Chief Executive Devangshu Dutta.
Indore-based Brand Concepts will distribute Hilton’s bags in India. The company also distributes handbags by Indian designer Rocky S, which is largely retailed through Shoppers Stop. The American handbags and accessories brand, co-designed by Hilton and monogrammed with her initial and a crown, has 30 stores across 35 countries including Philippines, Bahrain and Malaysia.
It will add to Shoppers Stop’s handbags line such as Hidesign and Elliza Donatein, which are the largest selling brands. Analysts say it makes sense for Paris Hilton brand to first bring handbags and accessories.
"Accessories is the first category that consumers use to upgrade, either from the mass segment to the premium segment or from there to luxury," says management consulting firm Technopak Advisors Senior VP Saloni Nangia. "The brand here acts as the pull to draw consumers to upgrade faster," she adds.
The woman’s fashion accessories market in the country is estimated at 6,000-6,500 crore, growing anywhere between 8-20%. Branded goods account for 12-15% of this market, according to data from Technopak Advisors.
Other international brands in Shoppers Stop’s portfolio include infant products brand Mothercare and apparel brands Mustang and Austin Reed. It also operates stores for skincare brand Clinique and cosmetic brands Estee Lauder and MAC.
admin
August 17, 2011
Sagar
Malviya and Pradeep Pandey, The Economic Times
Mumbai,
August 17, 2011
Reliance Retail has begun door-to-door direct selling through housewives and housing societies to boost sales of its private brands such as Sudz detergent, Amara soaps and Healthy Life food items.
Its subsidiary Reliance Home Products has launched a ‘Home Club’ initiative on a pilot basis to sell products at consumers’ doorsteps at 30% discounts through members-primarily housewives-who will earn 10% of their sales amount as commission.
Since the past two weeks, executives of the Mukesh Ambani-owned company have been distributing brochures and price lists in several housing societies in Navi Mumbai asking them to join Home Club.
"I took membership two weeks ago and sold products worth Rs 1,500 to my friends. I earned Rs 150 for that and I think it’s a good deal for a person like me," said Devika Diwekar, a housewife staying at Gitanjali Housing Society in Navi Mumbai.
A Reliance Retail spokesperson said it’s too early to comment on the pilot project. "Reliance Retail undertakes pilots of models which are under active consideration. It will be premature to comment on any of these pilots," the spokesperson said.
Two years ago, the retail subsidiary of India’s largest private company tried selling its own FMCG and food brands through its outlets and kirana stores but failed to mop up enough sales.
"This is an attempt to sell our products at wholesale prices which could not only exhaust the inventory that has been piling up but also create a new sales channel," a Reliance official said on condition of anonymity.
Launched in 2006, Reliance Retail runs about 1,000 stores across formats in 86 cities. Its flagship retail format Reliance Fresh, a food and grocery supermarket, grew 20% last year with sales of 2,514 crore for 2010-11. It posted a net loss of 160 crore.
Reliance Home Products, which is responsible for sourcing, quality checks, branding, distribution and marketing of its in-house brands, clocked revenues of 28.43 crore during the same period, with a net loss of 5.08 crore.
The retailer’s new discounting sales channel comes at a time when most consumer product companies are increasing sticker prices across categories to negate margin pressure. Reliance private labels are priced 15-30% lower than national brands in their categories.
A discount of 30% will make them more attractive at a time when consumers seek more deals and bargain to deal with rising prices and a squeeze on incomes.
Experts say several retailers in developed markets such as the US are quite active in such multi-level marketing initiatives. "Retailers including US-based Best Buy sell products through multi-channels such as online and catalogue modes," Boston Consultancy Group Director Amitabh Mall said. "In India, direct selling is becoming a huge success as one doesn’t need physical infrastructure to do it," he added.
"The overall margins for private labels are significantly higher than national brand. So it will allow them to play with the pricing," said retail and consumer products consultancy firm Third Eyesight CEO Devangshu Dutta.
The country’s largest retailer, Future Group, has a number of successful private labels under its belt. But Reliance Retail is the first national retailer to try direct selling.
admin
August 12, 2011
Prashant
Mahesh, The Economic Times
Mumbai,
August 12, 2011
Be it a holiday package, dining at a star restaurant or getting a hair cut at a fancy salon, everyone wants a better deal (read huge discounts) these days. This has led to a mushrooming of internet sites that offers discounts on everything under the sun. There are 20-30 websites like snapdeal, taggle, sosasta, mydala, and so on, offering such deals to customers. "Consumers want to try new products and at the same time save money," says Anisha Singh, founder and CEO, mydala.com.
The way it works
Group-buying sites offer heavy discounts on a range of products and services that are in demand. This is how the economics works: Any organisation broadly has two kinds of costs – fixed and variable. In the case of a restaurant, for example, the fixed cost includes expenses on air conditioning and maintenance, salaries paid to staff, etc. The variable cost is that of food. Now, a new restaurant needs to popularise itself to attract new customers. It may have a 100-seat capacity, but there may be only 50-60 people, on an average, seated at the restaurant. As a marketing exercise to attract more customers, the restaurant gives promotional offers through websites.
"Generally, a discount is given in such a way that the variable cost is covered, which, in the case of a restaurant, is food," says John Kuruvilla, founder and CEO, taggle.com. So if a meal at the restaurant costs 300, it is offered at a discounted rate of 150 to attract customers. This 150 covers the food cost.
This creates a win-win situation for both the customer and the restaurant. A lower price attracts customers to the restaurant to try the service out, which they may otherwise not do. At the same time, it also gives business to the restaurant. The website, in turn, gets a commission for every customer who buys the deal. A customer who wants to buy a deal from a website is given a voucher after the payment is made. So when you buy a service for, say, 500, some websites insist that you pay the entire amount upfront. Some others may allow you to pay 100 for the voucher and pay the balance to the vendor when the service is provided.
The typical group-buying site goes live when a minimum number of customers buy the deal. Generally, websites give a commitment to vendors to get a minimum number of customers. For example, for a dance class deal, the merchant may insist on at least five customers. Once the deal is put up and five customers buy it, the deal goes live (it is on the website). However, some websites do not go by this minimum commitment. Once the deals are uploaded, any number of customers can buy them.
What’s on offer?
Almost all these sites offer deals on restaurants, salons and spas, dental check-ups, car cleaning, pest-control services and so on. Among the products they offer are electronic items and gadgets. Discounts could vary depending on the brand and category. In some cases, the discounts may be as high as 80-90%. As these sites pick up, new and exciting services get added.
[Article continued below…]
admin
August 7, 2011
Vrinda Oberai, Retailer
August 2011
A crucial point which needs to be addressed while referring to the influx of foreign players in India is the customisation of products as per the Indian customer’s preferences. While innovation forms to be a crucial part of today’s marketing strategy of brands, customising as per the market’s requirements is something which holds an important grip over a brand’s experience in a market. What better than taking the MNCs into picture which launch their products across the globe! Companies sure do have to take into account the diverse Indian market in order to take their brand(s) to the next level.
Devangshu Dutta, Chief Executive, Third Eyesight shares his insight on the same and points out that some products are obviously non-starters (for instance, skin tanning lotions may sell in Europe, but there is no significant domestic demand yet in India). Other than that, product customisation needs to cater to the specific needs and nuances of the market segment.
How’s it different from abroad?
Most large markets worldwide are extremely diverse. Dutta
explains by sharing that the US market of 300 million people is
built of multiple segments, many of which need to be addressed
with distinct strategies. Similarly, the 500 million citizens
of the European Union live very differently, offering unique lifestyles
with diverse cultures and languages. Even China has multiple languages
and cultures within its 1.4 billion people. So in that way India
is no different.
Sanjeev Kumar, Brand Manager- Surface Care, Reckitt Benckiser (India) Limited asserts, "Most of the sale happens over the counter with very limited consumer-product interaction unlike in developed markets where Modern Trade (Key Accounts) forms bulk of the business and has higher consumer-product interactions."
Indian audience: Tough to cater?
It all depends on category. Some new categories in FMCG like Hair Gels or Hair Colours won’t be that difficult to introduce. "While food is so local and taste buds are so different, thus, in many categories you need to cater to the Indian palate," points out Devendra Chawla, President (Food & FMCG), Future Group.
The Indian audience is tough to cater primarily because of the
diversity that we have in India, ie, so many languages, religions,
geographical preferences, etc. "This makes the job challenging
for a marketer as the groups are so diverse that we cannot use
a blanket approach pan-India. Besides product offering, communication
also warrants customisation to make inroads across geographies
within the country," comments Kumar.
For instance, before launching any global brand or product in India, extensive researches, both qualitative and quantitative, are carried out in order to understand consumer usage and attitudes. Also, on the basis of this learning, required changes are made in the offering so as to cater to the requirement of the Indian consumers.
Customise as per the Indian taste
In a country where food and tastes change every 200 km, localisation of assortment to suit communities and regions is going to be important. Indian market is highly fragmented with very high contribution coming from traditional trade outlets (mom & pop stores contribute over 90% of the overall business). "We have a large rural as well as urban consumer base, so, again, there are more variables to satisfy due to sheer stage of evolution we are in," says Chawla.
For any segment of a significant size, some customisation
is needed, whether of the core product, or its packaging or promotion,
or the way in which it is sold. "I don’t think that the Indian
market or Indian consumers are any more difficult or any more
demanding than consumers anywhere else in the world. However,
the challenge in India for large international FMCG companies
is achieving economies of scale. The price points here are typically
lower, and both supply chain infrastructure and the retail front
end are fragmented, which erodes margin even further. This makes
it initially more difficult and needs a more strategic commitment
to building the business in India," avers Dutta.
Kumar brings forth a simple logic by sharing that the requirement for customisation clearly stems from the fact that what consumers are expecting from the product, ie, on the functionality front and other aspects like look and feel, value, etc. It is on the basis of these inputs that changes are made in the product offerings so that the consumer expectations are met across parameters.
Indian market: Attracting MNCs
India offers a unique opportunity for the MNCs because of the huge consumer base across the strata (socio economic classification). "On one hand, India is seen as a market with huge consumer base at the bottom and at the same time, because of improvement in the per capita income, there are more than enough consumers at the top of the value chain. This presents a unique opportunity for the MNCs to enter India and launch products/services across the spectrum, ie, top end as well as true value for money offerings," asserts Kumar.
The prime attraction that India offers, despite its initial hurdles,
is that the market here is already significant in size, and also
growing very rapidly. "Any company that establishes a
presence in India today has several decades of growth ahead of
it. So, any sharpening of the product and marketing strategy to
meet India-specific needs can be expected to pay off handsomely,"
adds Dutta.
"At 10 per cent projected growth of economy for the next 10 years, it’s going to be on every consumption driven company’s radar, sooner than later, given that the growth is here," sums up Chawla.
In their endeavour to enlarge their market share , marketers are coming up with more personalised, tailor made products. The focus is to please the customers of all strata, to reach out to a larger customer base. Though this phenomenon is common across the globe, in India this is imperative as diversity is India’s core characteristic.
(This article appeared in the August 2011 issue of RETAILER.)
