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Tommy Hilfiger goes in for solo play

Raghavendra Kamath , Business Standard

17 October 2011, Mumbai

Global fashion brand Tommy Hilfiger says its newly refurbished 5,000 square feet store in Hyderabad is inspired by the brand’s first global flagship store on Fifth Avenue in New York City and the Champs-Elysées store in Paris, and reflects the décor and visual merchandising of those stores.

Tommy Hilfiger, owned by clothing conglomerate PVH Corp, says it is also working on such makeover plans for its other stores in the country. Currently, it has 80 stores.

Just two weeks before its flagship store in Hyderabad was reopened, Tommy Hilfiger announced that it is buying Murjani Group’s stake in its Indian sub-licensee — Arvind Murjani Brands (AMB) to “accelerate India expansion”. Mohan Murjani who partnered with Hilfiger to launch the brand and the company in 1985 and brought it to India in 2004, has exited the brand.

Though Tommy Hilfiger says such acquisitions were part of its global strategy— it took direct control of its operations in China and Turkey— it clearly knows India is too big a market for it to ignore given the slowdown in western markets.

“The market sentiment and talk about a second wave of slowdown have not affected the Indian consumer sentiment so far. As with all markets, we will monitor the situation closely but believe that emerging markets like India have many positive factors that should bypass a slowdown in consumer demand,” says Fred Gehring, chief executive officer of Tommy Hilfiger Group.

To put it in perspective, while the US and Europe, two of Tommy Hilfiger’s key markets, are expected to grow at two to three per cent and 0.6 per cent to 0.8 per cent respectively, India’s economic growth is pegged at 7.5 per cent, making it a lucrative market to invest in.

Another pull factor is that organised retail sales account for nearly 24 per cent of overall apparel sales in the country and are set to grow exponentially.

Gehring says Tommy Hilfiger has been posting a growth of 50 per cent in its Indian business in the last couple of years and its latest move to acquire stake in AMB is aimed at accelerating that.

According to sources, Tommy Hilfiger is doing business of Rs 200 crore in India.

With direct control over the brand, Tommy Hilfiger now plans to integrate India into its global sourcing and design programmes besides opening 30 stores in the next six months and launch new categories such as kidswear which the brand believes will grow 30-40 per cent over the next couple of years.

But the foray into kidswear hasn’t impressed everybody. Ramesh Tainwala, CEO of Planet Retail, which markets brands such as Guess, Nautica, Accessorise and runs Debenhams stores here, says Tommy Hilfiger has done well so far, but will face huge competition from here on. Kidswear is a relatively new segment and it has not been so successful globally. “I think they should play their core story first and then enter new segments. Kidswear is growing, but growing less than the adult segment”.

Tommy Hilfiger is not alone which has ended its previous partnerships.

Italy’s GAS recently ended the JV with textile and apparel major Raymond last year and entered India on its own through cash and carry route. GAS is aiming at three fold jump in its revenues by 2013-14 with the help of a dozen exclusive outlets in the country.

Three years ago, UK’s Marks & Spencer ended its franchise agreement with Planet Retail, promoted by Indonesia-based VP Sharma and others, and did a joint venture with Reliance Industries for faster roll-out of its stores.

“If there are differing perspectives between Indian and overseas partners about the pace of growth, investments and branding and so on, the international brands can choose to go on their own,” says Devangshu Dutta, CEO of retail consultancy Third Eyesight.

Dutta says while Levis, Adidas and Reebok have come in on their own, others such as Mothercare entered with a franchise agreement with Shoppers Stop but later also entered into a joint venture with DLF Brands.

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