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Celio to outfit Indian arm with global look

Raghavendra Kamath, Business Standard
Mumbai, November 25, 2013

As French menswear brand Celio looks to become the sole owner of its Indian business, it has drawn up plans to not just open more stores, but make them look better as well. Celio, whose joint-venture with Kishore Biyani’s Future Group is called Celios Future Fashions, has got clearance from the Foreign Investment Promotion Board (FIPB) to increase its India stake to 100 per cent in July this year. Celio has already increased stake in the JV to 65 per cent.

It is planning to increase the count of both its standalone stores and shop-in-shops, stationed at multi-brand retail chains (please see box).

"Our aim is to expand this presence and make the brand more accessible to customers. Along with the major metropolitan cities, we aim to grow stores in tier II cities as well," says Rajiv Nair, chief executive, Celio Future Fashions.

CELIO IN INDIA – JV WITH THE FUTURE GROUP

CELIO WORLDWIDE

Not just footprint, Celio is also looking to refurbish its store design to bring them at par with its global presence. It has brought its design concept played out in its Via Del Corso (Rome) and Champs Elysees (Paris) signature outlets to India. So far, two standalone stores and one shop-in-shop have been redone. Nair says that the brand will look to upgrade the overall look to offer the same experience across the world.

The concept stores integrate technology and contemporary chic fixtures. The open and flexible layout and subtle colour scheme are geared to exude a premium feel.

Celio’s plans echo that of Britain’s apparel retailer Marks & Spencer (M&S), which plans to make India its largest market outside its home market and more than double its store count.

Its JV with Mukesh Ambani’s Reliance Industries, is looking to open large flagship stores in metros and supporting stores in neighbouring locations. It has already opened its new concept store in Bandra, Mumbai’s tony suburb.

Celio, however, will face a few challenges as it moves towards becoming the solo owner, say consultants.

"Any brand which is going direct has to connect with Indian realities, both on the customer and business side. Cultural, language and legal frameworks are different," says Devangshu Dutta, chief executive of retail consultancy, Third Eyesight.

Adds Dutta: "The brand has to build both explicit and implicit infrastructure, apart from investing capital. Yet, for a customer it does not make any difference whether a brand is with an Indian partner or not."

According to sources, Future Group provides strategic inputs such as market and product know-how, vendor negotiations and distribution clout to the JV. Celio would have to manage all of this on its own when it forges out on its own.

But an executive in the JV defends Celio’s decision, saying that the French brand has a full-fledged team in India and has sufficient expertise in all areas such as designing, sourcing and marketing.

Like M&S, Celio is increasingly sourcing more from India. In its summer-2014 merchandise, the brand has sourced 53 per cent of its requirement from India.

"This is a crucial step as it also helps us be flexible to respond to the market needs and helps us de-risk the dollar price movements," Celio’s Nair says.

To differentiate, Celio is also looking to underline the simultaneous launches of its collections globally. "We are a very strong product-driven brand with major design capabilities in Paris and a strong sourcing office in Hong Kong, which enable us to bring the same product range (and at the same time) to over 70 countries. So, we offer the same range to the customers in India as we do in Paris, with minor adaptations on account of fits, colors and seasonality," Nair says.

Third Eyesight’s Dutta says that local sourcing helps overseas brands to lower prices as they can by-pass import duties and logistic costs, and helps them with India-specific ranges.

Celio is close to EBITDA (earnings before interest, tax, depreciation and ammortisation)-level break-even at its stores and is expecting at company-level profitability soon.

" We have grown 17 per cent like- to-like this year in our own exclusive stores and we aim at a 25 per cent growth next year," says Nair.

But the question is whether it sustainable as the economy weathers a prolonged slowdown and brands such as Arrow, Van Heusen, Louise Philippe rule the segment or not.

But Nair is unfazed. He says that Celio is one of few only-menswear brands which offers a full wardrobe and has design capability to match. "We are competitive in markets like France, Italy, Spain, eastern Europe where the competition is even more intense," Nair says.

(Sourced from Business Standard.)

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