Retail Practice, Third Eyesight Third Eyesight is a consulting firm focused on retail and consumer products that supports international and Indian companies through pragmatic research and strategy development, evaluating and developing alliances, and implementation support. This article is based on a more detailed report prepared by the Third Eyesight team (www.thirdeyesight.in) titled “Global Fashion Brands: Tryst with India.” Inquiries about the report can be e-mailed to services@thirdeyesight.in.
While Indian consumers have aspired to own international fashion brands, India’s large population base has been in turn an aspirational market for international companies. To remote observers, the Indian market may appear to be virgin territory as far as international apparel and footwear brands are concerned. But India has seen the presence of international brands for almost a century, including mass brands such as Bata and luxury brands such as Louis Vuitton. However, as the colonial government systematically repressed local textile production, local resistance to foreign products grew as well. Therefore, until the 1980s, the presence of international fashion brands was negligible. In the early 1990s, as the Indian economy opened up again, a few international fashion brands entered the Indian market. The pioneering companies during this stage were Benetton, Coats Viyella, and VF Corporation. At this time, the Indian apparel market was still fragmented, with multiple local and regional labels and very few national brands. Ready-to-wear apparel was prevalent primarily in the menswear segment, which thus became a target for many international fashion brands (such as Louis Philippe, Arrow, Allen Solly, Lacoste, adidas, and Nike). In the midst of this, the media industry in India was also experiencing high growth, which aided the international brands in gaining visibility and establishing brand equity in the Indian market. The late 1990s marked a significant milestone in the growth of modern retail in India. Higher disposable incomes and the availability of credit significantly enhanced consumers’ buying power. A growing supply of good-quality retail real estate in the form of shopping centers and large-format department stores also allowed companies to create a more complete brand experience through exclusive brand stores and shops-in-shop. The number of international brands continued to grow each year at a steady pace until the early 2000s and took off exponentially thereafter. By 2005 the number of international fashion brands present in India was more than three times that in the mid-1990s. The last few years (since 2005) have continued to see significant growth of international fashion brands, including luxury brands such as LVMH, Aigner, Tommy Hilfiger, and Chanel.
Many of the international companies entering India in the late 1980s and 1990s chose licensing as their entry route to India to gain quick access to the Indian market at a minimal investment. A few companies such as Levi Strauss set up wholly owned subsidiaries, while others such as adidas and Reebok entered into majority-owned joint ventures. This helped them to gain greater control over their Indian operations, sourcing and supply chains, and brands. In the subsequent years, import duties for fashion products successively came down, making imports a less expensive sourcing option, and the realty boom brought investors in retail real estate that were ideal franchisees for the international brands. By 2003, franchising became the preferred launch vehicle for an increasing number of international companies, while only a few chose to enter through licensing. In 2006, the government of India reopened retail to foreign investment (allowing up to 51 percent foreign direct investment in “single brand” retail). Using this route, many brands have entered India by setting up majority-owned joint ventures, or they have transitioned their existing franchise arrangements into a joint venture structure.
By the end of 2008, just under half of the brands were present through a franchise or distribution relationship, while over a quarter had either a wholly owned or majority owned subsidiary. These structures allowed the brands to have greater control of operations, particularly of product.
Shifting Strategies Many international companies have evolved their presence in India into structures different from those at the time they entered the market. A good example depicting this shift in business strategy is VF Corporation, which entered India in the1980s by assigning the Wrangler license to Dupont Sportswear. Since then it has launched a variety of brands in different product categories with a number of Indian partners and finally formed a joint venture, VF Arvind Brands Pvt. Ltd., with Arvind Brands. Another example of a company that has evolved its presence is Benetton, which first entered India through a licensee (Dalmia). Benetton then transitioned in 1991 into a 50-50 joint venture, and finally in 2004 took over the Indian business completely. However, it adopted the franchising route in 2006 for its premium fashion brand, Sisley, appointing Trent (a Tata Group company) as the national retail franchisee.
Many other companies such as Nike, Tommy Hilfiger, Marks & Spencer, and Pierre Cardin (as described in our report “Global Fashion Brands: Tryst with India”) have changed their approach as the original structures did not perform as well as they had expected. Obviously, each of these changes in strategy has cost the brands time, management effort, money and, sometimes, market share. We believe that these shifts and the pain related to them could have been reduced had the brands ruthlessly questioned their motivation for considering this market and their expectations from the market in determining an appropriate strategy. What’s Ahead?
In the midst of economic upheaval around the world, how does India look as a market for international fashion brands? It is difficult to generalize even in the best of times, and in the current global turmoil there is certainly a lot more unpredictability about international expansion for most companies. Although India’s position as a target market for international brands has been improving, as is evident from the number of launches in the last six to seven years, some companies considering international expansion may prefer entering other markets that may seem more “familiar,” developed, and safe (such as Europe, Japan, South Korea, or Taiwan). Against such comparisons, India’s growing but fragmented market can seem chaotic and difficult to deal with. However, the fact remains that there are very few markets globally that can provide the sustained size of mid-term and long-term opportunity that India does. We are already seeing the more far-sighted and committed brands consolidating their position and presence in the market by continuing to look at expansion, even while examining how they can make their existing points of sale perform better. We also constantly come across new companies carrying out investigations into the market. In the current environment we expect to see a shift in the nature of the launch vehicle. While franchising seems to be a safe option for risk-averse brands in the current times, we will probably see more brands with a long-term strategy establishing a controlled presence either through joint ventures or through wholly owned subsidiaries, because they can lay the foundation of the business today at much lower costs than in the past few years. India’s foreign direct investment (FDI) policy, allowing FDI only up to 51 percent in retail trading of a single brand, may have held back some fashion brands that are still managed by owner founders with a conservative outlook on control. However, in the last couple of years, we have found companies not being deterred by the barriers to FDI.
As their comfort and familiarity with India has grown, international companies are more willing now to create corporate structures that allow them a presence in the market today and a step-through to a more controlling stake when government regulations allow. All in all, we feel that international brands are in India not only to stay but also to expand. There is yet a lot of untapped potential in the market, and as the integration of the Indian consumer with global trends continues, international brands can expect to find India an increasingly fertile ground for growth. http://www.udel.edu/fiber/issue4/world/internationalbrands.html
Oswal Group is a premier textile group of northern India having its corporate office at Ludhiana,Punjab. The organisation has been for the last 40 years with spinning as its core competency.In 2004, Oswal group forayed into innerwear business under the brand of 'Sensa' with a view to cater to the growing ready-to-wear fashion apparel market. Thereafter, the company renamed its retail innerwear business as 'Straps', offering lingerie, nightwear and maternity wear in 2006. And finally in 2008; Oswal Retail decided to wind up its innerwear business and close down its 22 exclusive outlets of 'Straps'.
Market still in nascent stage
As per reports of study conducted by leading retail consultants, Oswal group had pegged the intimate wear retail market in India at a whopping Rs 2,200 crore and it was expected that it would touch Rs 4,000 crore mark by 2009. The company had planned to capture five per cent share of this market by 2010. Commenting on the market scenario, Pradeep Seth, CMD, Stadia Group, says, "The main reason for suddenly deciding to shut down all stores could be the financial losses in the business and not seeing the growth potential as was envisioned. The markets chosen for Indian Lingerie were probably right but there could be a reason that the more elite class still prefers to wear foreign brands which they purchase from abroad. The other population may still be having cheaper options. However, the reasons for closure could also be mismanagement."
Too many stores too fast
Oswal group had ambitious plans to open 'Straps' stores across the country. They opened 22 stores across Delhi, Gurgaon and Ludhiana and had committed investment of Rs 60 crore in this venture and planned to open 120 exclusive stores by 2009. It even tied up with several premium foreign intimate wear brands including Italian 'Parah', Rene Rofe, Wonder Bra and Women Secret of USA, Body Line and Moon Dance, which were sold through Oswal retail outlets.
Reasons for stores’ closure If the retail business does not align with the group’s expansion plan and it wants to concentrate on the core business Most the stores are making losses and the company decides to stop investing in the retail business If an organization is operating in too many formats and decides to consolidate or change formats
India : STRAPS launches 18th exclusive store in Bangalore June 19, 2007
Oswal Group’s, Oswal Retail Pvt Ltd (ORPL), the leading player in branded intimate wear retail market in the country, has firmed up its plans to expand and consolidate its presence in the country. Under its expansion and consolidation plans, the group launched its second exclusive store of STRAPS, your second skin store, at city’s happening Commercial Street.
With this launch, STRAPS has touched the figure to 18 exclusive stores. With the retail boom underway, ORPL aims to aggressively expand and consolidate its presence across the country, targeting 120 points of operation by 2009.
Recognizing the potential in the South market, ORPL plans to strengthen its presence in the region by increasing its total points of operation to 30 by the year-end 2010.
The plans are afoot to launch stores in Karnataka, Tamil Nadu, Andhra Pradesh and Kerala. The new exclusive store in Bangalore is in synergy with the brand’s vision to emerge as the singular identity for intimate wear for the New Age Indian Woman across regions.
“STRAPS’ is a first of its kind multi-brand retail initiative that aims to offer a complete range of branded intimate apparel to the evolving Indian women. The new store will provide a range of products including lingerie, sleep wear, swimwear, maternity wear, camisoles, thermals along with select range of accessories all under one roof. All STRAPS stores across India clearly communicate the essence of the brand.
A unique environment with great attention to details such as staff, service and windows. STRAPS offer women a hassle free retail experience with a dedicated space, trial rooms, trained female staff and multiple brands to choose from. The female specialists provide counseling to women on the type, size, suitability, and varied purposes of intimate wear, making it easier for them to pick the right wear for themselves. According to Adish Oswal, MD, Oswal Retail Private limited, "Our first store in Bangalore received an overwhelming response. To serve our customers better and have a wider reach we decided to launch another access point. Commercial Street is known as the fashion destination of Bangalore and our presence here will definitely drive more footfalls and provide larger access to the target audience.”
Further added, Adish, “Lingerie has come a long way from being just women's undergarments to a fashion statement. The growth of the lingerie market in India has been aided by new retail space, the rise of malls and emergence of organized retail formats."
"Price no longer a deterrent; it is design and quality that have emerged as the main guiding factors. At STRAPS we understand the important role that lingerie plays and that’s one reason why each and every piece at STRAPS is hanged out of the box. We want to change the way women shop for their intimate wear. The idea is to reinvent the Innerwear Business in India and transform it into an accessible option from an embarrassing purchase.”
According to Technopak, the organized intimate wear retail market in India is pegged at a whopping Rs 2200 crore and is expected to grow at 70% per year till 2009. The company is bullish about the Indian intimate wear market and plans to capture 5% market share of the organized retail in the category by 2010.
Majorbrands is one of the leading online shopping stores that is involved in offered various fashion brands from some of the fines brands. Recently the store has come up with products from the renowned brand named Charles and Keith. http://www.majorbrands.in/brand.html
Marketing is a blog where we all can share the best happening in the world of fashion marketing and sales and distribution.Concepts discussed in class ,Projects etc.
International Brands: India Entry Strategies
ReplyDeleteRetail Practice,
Third Eyesight
Third Eyesight is a consulting firm focused on retail and consumer products that supports international and Indian companies through pragmatic research and strategy development, evaluating and developing alliances, and implementation support. This article is based on a more detailed report prepared by the Third Eyesight team (www.thirdeyesight.in) titled “Global Fashion Brands: Tryst with India.” Inquiries about the report can be e-mailed to services@thirdeyesight.in.
While Indian consumers have aspired to own international fashion brands, India’s large population base has been in turn an aspirational market for international companies.
To remote observers, the Indian market may appear to be virgin territory as far as international apparel and footwear brands are concerned. But India has seen the presence of international brands for almost a century, including mass brands such as Bata and luxury brands such as Louis Vuitton. However, as the colonial government systematically repressed local textile production, local resistance to foreign products grew as well. Therefore, until the 1980s, the presence of international fashion brands was negligible.
In the early 1990s, as the Indian economy opened up again, a few international fashion brands entered the Indian market. The pioneering companies during this stage were Benetton, Coats Viyella, and VF Corporation. At this time, the Indian apparel market was still fragmented, with multiple local and regional labels and very few national brands. Ready-to-wear apparel was prevalent primarily in the menswear segment, which thus became a target for many international fashion brands (such as Louis Philippe, Arrow, Allen Solly, Lacoste, adidas, and Nike).
In the midst of this, the media industry in India was also experiencing high growth, which aided the international brands in gaining visibility and establishing brand equity in the Indian market.
The late 1990s marked a significant milestone in the growth of modern retail in India. Higher disposable incomes and the availability of credit significantly enhanced consumers’ buying power. A growing supply of good-quality retail real estate in the form of shopping centers and large-format department stores also allowed companies to create a more complete brand experience through exclusive brand stores and shops-in-shop.
The number of international brands continued to grow each year at a steady pace until the early 2000s and took off exponentially thereafter. By 2005 the number of international fashion brands present in India was more than three times that in the mid-1990s. The last few years (since 2005) have continued to see significant growth of international fashion brands, including luxury brands such as LVMH, Aigner, Tommy Hilfiger, and Chanel.
Many of the international companies entering India in the late 1980s and 1990s chose licensing as their entry route to India to gain quick access to the Indian market at a minimal investment. A few companies such as Levi Strauss set up wholly owned subsidiaries, while others such as adidas and Reebok entered into majority-owned joint ventures. This helped them to gain greater control over their Indian operations, sourcing and supply chains, and brands.
ReplyDeleteIn the subsequent years, import duties for fashion products successively came down, making imports a less expensive sourcing option, and the realty boom brought investors in retail real estate that were ideal franchisees for the international brands. By 2003, franchising became the preferred launch vehicle for an increasing number of international companies, while only a few chose to enter through licensing.
In 2006, the government of India reopened retail to foreign investment (allowing up to 51 percent foreign direct investment in “single brand” retail). Using this route, many brands have entered India by setting up majority-owned joint ventures, or they have transitioned their existing franchise arrangements into a joint venture structure.
By the end of 2008, just under half of the brands were present through a franchise or distribution relationship, while over a quarter had either a wholly owned or majority owned subsidiary. These structures allowed the brands to have greater control of operations, particularly of product.
Shifting Strategies
ReplyDeleteMany international companies have evolved their presence in India into structures different from those at the time they entered the market.
A good example depicting this shift in business strategy is VF Corporation, which entered India in the1980s by assigning the Wrangler license to Dupont Sportswear. Since then it has launched a variety of brands in different product categories with a number of Indian partners and finally formed a joint venture, VF Arvind Brands Pvt. Ltd., with Arvind Brands.
Another example of a company that has evolved its presence is Benetton, which first entered India through a licensee (Dalmia). Benetton then transitioned in 1991 into a 50-50 joint venture, and finally in 2004 took over the Indian business completely. However, it adopted the franchising route in 2006 for its premium fashion brand, Sisley, appointing Trent (a Tata Group company) as the national retail franchisee.
Many other companies such as Nike, Tommy Hilfiger, Marks & Spencer, and Pierre Cardin (as described in our report “Global Fashion Brands: Tryst with India”) have changed their approach as the original structures did not perform as well as they had expected.
Obviously, each of these changes in strategy has cost the brands time, management effort, money and, sometimes, market share. We believe that these shifts and the pain related to them could have been reduced had the brands ruthlessly questioned their motivation for considering this market and their expectations from the market in determining an appropriate strategy.
What’s Ahead?
In the midst of economic upheaval around the world, how does India look as a market for international fashion brands? It is difficult to generalize even in the best of times, and in the current global turmoil there is certainly a lot more unpredictability about international expansion for most companies.
ReplyDeleteAlthough India’s position as a target market for international brands has been improving, as is evident from the number of launches in the last six to seven years, some companies considering international expansion may prefer entering other markets that may seem more “familiar,” developed, and safe (such as Europe, Japan, South Korea, or Taiwan). Against such comparisons, India’s growing but fragmented market can seem chaotic and difficult to deal with.
However, the fact remains that there are very few markets globally that can provide the sustained size of mid-term and long-term opportunity that India does. We are already seeing the more far-sighted and committed brands consolidating their position and presence in the market by continuing to look at expansion, even while examining how they can make their existing points of sale perform better. We also constantly come across new companies carrying out investigations into the market.
In the current environment we expect to see a shift in the nature of the launch vehicle. While franchising seems to be a safe option for risk-averse brands in the current times, we will probably see more brands with a long-term strategy establishing a controlled presence either through joint ventures or through wholly owned subsidiaries, because they can lay the foundation of the business today at much lower costs than in the past few years.
India’s foreign direct investment (FDI) policy, allowing FDI only up to 51 percent in retail trading of a single brand, may have held back some fashion brands that are still managed by owner founders with a conservative outlook on control. However, in the last couple of years, we have found companies not being deterred by the barriers to FDI.
As their comfort and familiarity with India has grown, international companies are more willing now to create corporate structures that allow them a presence in the market today and a step-through to a more controlling stake when government regulations allow. All in all, we feel that international brands are in India not only to stay but also to expand. There is yet a lot of untapped potential in the market, and as the integration of the Indian consumer with global trends continues, international brands can expect to find India an increasingly fertile ground for growth.
ReplyDeletehttp://www.udel.edu/fiber/issue4/world/internationalbrands.html
STRAPLESS (From RETAILER, August 2008)
ReplyDeleteOswal Group is a premier textile group of northern India having its corporate office at Ludhiana,Punjab. The organisation has been for the last 40 years with spinning as its core competency.In 2004, Oswal group forayed into innerwear business under the brand of 'Sensa' with a view to cater to the growing ready-to-wear fashion apparel market. Thereafter, the company renamed its retail innerwear business as 'Straps', offering lingerie, nightwear and maternity wear in 2006. And finally in 2008; Oswal Retail decided to wind up its innerwear business and close down its 22 exclusive outlets of 'Straps'.
Market still in nascent stage
As per reports of study conducted by leading retail consultants, Oswal group had pegged the intimate wear retail market in India at a whopping Rs 2,200 crore and it was expected that it would touch Rs 4,000 crore mark by 2009. The company had planned to capture five per cent share of this market by 2010. Commenting on the market scenario, Pradeep Seth, CMD, Stadia Group, says, "The main reason for suddenly deciding to shut down all stores could be the financial losses in the business and not seeing the growth potential as was envisioned. The markets chosen for Indian Lingerie were probably right but there could be a reason that the more elite class still prefers to wear foreign brands which they purchase from abroad. The other population may still be having cheaper options. However, the reasons for closure could also be mismanagement."
Too many stores too fast
Oswal group had ambitious plans to open 'Straps' stores across the country. They opened 22 stores across Delhi, Gurgaon and Ludhiana and had committed investment of Rs 60 crore in this venture and planned to open 120 exclusive stores by 2009. It even tied up with several premium foreign intimate wear brands including Italian 'Parah', Rene Rofe, Wonder Bra and Women Secret of USA, Body Line and Moon Dance, which were sold through Oswal retail outlets.
Reasons for stores’ closure
If the retail business does not align with the group’s expansion plan and it wants to concentrate on the core business
Most the stores are making losses and the company decides to stop investing in the retail business
If an organization is operating in too many formats and decides to consolidate or change formats
Overall good observation and study
ReplyDeleteIndia : STRAPS launches 18th exclusive store in Bangalore
ReplyDeleteJune 19, 2007
Oswal Group’s, Oswal Retail Pvt Ltd (ORPL), the leading player in branded intimate wear retail market in the country, has firmed up its plans to expand and consolidate its presence in the country. Under its expansion and consolidation plans, the group launched its second exclusive store of STRAPS, your second skin store, at city’s happening Commercial Street.
With this launch, STRAPS has touched the figure to 18 exclusive stores. With the retail boom underway, ORPL aims to aggressively expand and consolidate its presence across the country, targeting 120 points of operation by 2009.
Recognizing the potential in the South market, ORPL plans to strengthen its presence in the region by increasing its total points of operation to 30 by the year-end 2010.
The plans are afoot to launch stores in Karnataka, Tamil Nadu, Andhra Pradesh and Kerala. The new exclusive store in Bangalore is in synergy with the brand’s vision to emerge as the singular identity for intimate wear for the New Age Indian Woman across regions.
“STRAPS’ is a first of its kind multi-brand retail initiative that aims to offer a complete range of branded intimate apparel to the evolving Indian women. The new store will provide a range of products including lingerie, sleep wear, swimwear, maternity wear, camisoles, thermals along with select range of accessories all under one roof. All STRAPS stores across India clearly communicate the essence of the brand.
A unique environment with great attention to details such as staff, service and windows. STRAPS offer women a hassle free retail experience with a dedicated space, trial rooms, trained female staff and multiple brands to choose from. The female specialists provide counseling to women on the type, size, suitability, and varied purposes of intimate wear, making it easier for them to pick the right wear for themselves.
According to Adish Oswal, MD, Oswal Retail Private limited, "Our first store in Bangalore received an overwhelming response. To serve our customers better and have a wider reach we decided to launch another access point. Commercial Street is known as the fashion destination of Bangalore and our presence here will definitely drive more footfalls and provide larger access to the target audience.”
Further added, Adish, “Lingerie has come a long way from being just women's undergarments to a fashion statement. The growth of the lingerie market in India has been aided by new retail space, the rise of malls and emergence of organized retail formats."
"Price no longer a deterrent; it is design and quality that have emerged as the main guiding factors. At STRAPS we understand the important role that lingerie plays and that’s one reason why each and every piece at STRAPS is hanged out of the box. We want to change the way women shop for their intimate wear. The idea is to reinvent the Innerwear Business in India and transform it into an accessible option from an embarrassing purchase.”
According to Technopak, the organized intimate wear retail market in India is pegged at a whopping Rs 2200 crore and is expected to grow at 70% per year till 2009. The company is bullish about the Indian intimate wear market and plans to capture 5% market share of the organized retail in the category by 2010.
Majorbrands is one of the leading online shopping stores that is involved in offered various fashion brands from some of the fines brands. Recently the store has come up with products from the renowned brand named Charles and Keith.
ReplyDeletehttp://www.majorbrands.in/brand.html