Half of global fashion brands here came through franchise, distribution pacts


March 3, 2014

Raghavendra Kamath, Business Standard

Mumbai, March 3, 2014

Half of international brands which are present in the country had entered the local market through franchise or distribution agreements, said a new study.

The logic for opting for this route is to gain control in terms of the product, price and partly the retail experience, said a study by retail consultant Third Eyesight. "Amongst the new brand launches this year (2013), many are luxury or bridge to luxury brands. For such brands, the low volumes may not justify India-specific sourcing to meet the 30% local sourcing clause of the FDI policy. Thus, franchise has emerged as a logical option for these brands," said the report.

In comparison, in 2010, a considerable number of international brands took the ownership route through joint venture or subsidiary, apart from franchising as well. Series of brands such as Forever 21, Oviesse, Vero Moda and Zara opened their stores here in 2010. About 30% of international fashion brands present in India are from the US while about a fifth of the brands are Italian, said the study.

The prominent among US brands which entered the country last year include Brooks Brothers, Genesco Inc, Stuart Weitzman, Hanes Brands among others. Others belong to the UK, France and Germany, said the report by Third Eyesight.

According to the report, though over 200 global fashion brands are present in the country, the number of brands entering the country could go up significantly. “The growth of international brands entering the Indian market has been slow but steady for the last three years amidst global economic conservatism and a slowing Indian economy.

However, there are enough currents at the deeper level,” it said. Brands such as H&M, Massimo Dutti, Prada and others are expected to open stores in the country in the current calendar year.

(Sourced from Business Standard)