Think big.
- Don't forget the masses when you're looking at the classes.
- Critical need of the country: How to build image of India as a country that produces high quality textile products.
- Break rules. Challenge established retail thinking and practice.
- Space enough for 50-100 new retail formats to come up. Make best use of opportunities available in market today before global players come in and take it away from us.
- Create/get merchandise to fill the mushrooming space in the country.
- Each one look at your core competency.
- Give unique products, unique styles. Command price.
- Retail should not, like tourism, become a great opportunity unexploited.
- Even if we're growing at 30 per cent we will not get anywhere; we have got to grow in multiples.
- These were some of the core thoughts that emerged at the Images Fashion Forum '06 at Mumbai on January 24-25.
Is the industry all ears? Can we have a concerted movement to ensure that the suggestions and discussions are worked out across the industry? Undoubtedly, the Indian fashion and lifestyle market is the cynosure of the world. The domestic industry needs to put its house in order. At the cusp of growth, the industry must lay down strong infrastructural roots within individual enterprises by firming up both front and back ends and bringing in corporate governance and best practices. This perhaps could be the only way to ensure healthy competition to those seeking to exploit this land of golden opportunities. Yes, El Dorado is what India looks like to eyes seeking business from beyond our shores. Can we mine our own pearls and put them to best use?
BS Nagesh, CEO, Shoppers' Stop couldn't have put it better as he led the discussions at the Fashion Vision Conclave with business leaders, visionaries and motivators: "There is huge consumption, huge growth. It is important for us to make the business profitable. Create profitable and sustainable business opportunities with the best value, the best margins, the best profits and the best of corporate governance."
Urging the audience, comprising captains of the industry, to look at fashion from both ends – the masses and the classes, he went on to describe how automobiles and mobiles had driven fashion in the past, and how it was now the turn of textiles to do so. Mobiles became fashionable only when the most colourful handsets came in at varying prices and not when they had remained a status symbol for a select few. Automobiles saw a spurt in business when Maruti brought out the 800 CC model and at the same time we had the Maybachs rolling into the country.
Similarly, for textiles to drive fashion it is crucial that fashion percolates down to the masses. Besides, fashion is in the mind and should be all across, not just clothing. It incorporates the home too. But again he reminded that it is not products alone that can drive fashion, but their mass availability and affordability that can push it in a country like ours. He urged the fashion and retail industry to focus not just on the top rung of the population but also look at the mass of 600 million who can become fashionable. "Is there a way we can produce textile that can make a garment for Rs 100? If we clothe the masses today, we will make them fashionable tomorrow."
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Nagesh reiterated the importance of bringing the right fashion at the right time, and building the necessary backend infrastructure like supply chain and the like to ensure that fashion is given to people at the right time. He also made a case for allowing foreign direct investment into the country. "There is so much luxury buying happening outside the country. Let's not restrict the luxury brands from coming into India." Luxury too will percolate down from the top end to the mass market, and this he believed, would drive consumption.
Dwelling on the basic mall instinct rampant now, he questioned: "Where is the merchandise to fill the upcoming malls?" The point he was trying to drive at was that opportunity is going abegging in the market. He cited the example of one of the fastest growing chain of stores in the UK called Accessorise which does 90 per cent of its sourcing from India. "What is stopping an Indian entrepreneur to open a thousand stores? If not clothing fashionability, then let's market our opportunities in the field of accessories. There are plenty of categories open for Indians to tap. Fashionability has to be driven by looking at the consumer."
Union textiles minister Shankersinh Vaghela, in his inaugural address, sought steps on how to build an image of brand India. Stressing that the fashion and design industry would have to play a healthy role in creating brand value, he stressed that the route in this direction would be to ensure that products the Indian market offers are of "high quality and reliability at the most competitive prices, taking advantages of the cost efficiencies of the country."
Vaghela also underscored the important role that home textiles can play in creating a name for India in the global market. The trade in home textiles is expected to grow at 10 per cent annually. With the global textile trade expected to grow at 5 per cent in the coming years, he said that building of capacities in the entire spectrum of value chain and vertical and horizontal linkages could unleash productive forces that could multiply the potential of textiles in the nation's economy. "Our idea is to ensure a bigger market within India by enriching and empowering a large number of people".
Assuring the government's commitment to ensure that "institutional arrangements and social-physical infrastructure are in place to the advantage of the Indian industry," he urged industry leaders to create and foster development by promoting institutions on a self-sustaining basis. "The industry will need to evolve its own code of conduct and self-discipline. Self-policing is definitely a better instrument than control by others". The minister thereafter released the prized third edition of the annual IMAGES Year Book.
Earlier, flagging off the conclave, the fashion director of Images Multimedia, Harmeet Bajaj welcomed the select gathering of the fashion and lifestyle retail industry, and laid forth some of the issues that would come up for discussions during the two-day meet. TV host Anish Trivedi was her co-anchor for the various sessions.
'The vision of global fashion brands for India' – what is it? Targeting India as a major market and global supplier in its strategic plan, Global Brand Marketing Inc (GBMI) chairman and CEO Killick Sudeepto Datta elaborated why India is emerging as a hot spot for most global fashion brands. "All major brands are looking for the next growth area as the US market is saturated and there is a struggling European market. With Japan and most Asian markets being flat, Russia, China, India and Brazil are the largest untapped markets." Plus, he added, China's economic growth and its fast increasing dominant share of manufacturing has helped open the eyes of the developed world. Thanks to China, products made in other Asian countries such as India are now very well accepted.
However, he warned, like in China, access to the treasure that lies in the Indian market is not easily accessible as in the government policies restricting foreign brand imports. "The fashion sector is still a price sensitive market. Import duties and non-tariff charges such as the complex excise tax structure still prevent imported products to compete freely with local products. While the Indian retail arena has seen a huge change over the last 10 years, it still lags far behind other major markets. A pure wholesaler is at a disadvantage due to lack of multibranded chains and department stores."
So, what does GBMI think are the critical steps it needs to take to ensure that each of its global brands can be equally successful in the Indian market? Datta was emphatic: "It is all about product. The design and quality should be exactly as good as anything in the US or Europe. There will be no dilution of product for the Indian market. In fact, the product sold in India will be a mix of imported and locally made products."
Informing that GBMI will aggressively market all international brands in this country, he said that it is currently evaluating regional distributors and offering their products directly to some national chains. In addition, it is also scouting for partners to launch its retail concepts in India. GBMI is investing Rs 50 crore to set up office for marketing, for manpower and in infrastructure in India. Datta is set to bring a number of brands from his portfolio that include Pony, Schnell, Kimberly, Nautica, Global Feet, and Diesel.
In the session on 'Brand extension through innovative retail concepts' moderated by Eic Musgrave, editorial director, Drapers, UK, Patrick Hanly, group commercial director, Harvey Nichols, UK's premium fashion forward retailer, gave tips on how a brand/retailer can continue to reinvent/value-add to not only keep up with the aspirations of the people but also bring about element of surprise for consumers thus sustaining and exciting interest in the brand and building towards a powerful imagery.
Harvey Nichols, said Hanly, is positioned and perceived as the destination for ultimate fashion experience by applying the following brand values to all aspects of the business:
- Doing it first
- Feelgood experience
- Exclusive but accessible
- Aspirational
- Style/glamour/sexy
- Fashion leadership
- Leading edge creativity
"We sell an image and not a product, be it the fashion merchandise or the food that we offer – it is all high quality and unique, and we will never allow this positioning to get diluted to that of a discount or value store," he affirmed.
Thus, with the target customer in the 25-45 year age group, Harvey Nichols appeals to two distinct groups: the cognoscenti fashion leader, and the fashionable customer/fashion follower. "We have led the way in retailing concepts. For example, we opened the first Aveda Urban Retreat. More recently we launched the Harvey Nichols Beyond Beauty concept of alternative beauty and skincare products that has since been followed by other retailers. Creatively we have a reputation for breaking the mould."
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Store location is another top priority at HN and the focus is always on targeting emerging markets. "We chose to prefer not just emerging designers but also emerging markets; as a retailer we do not believe in creating demand but in meeting the demand that is already there not being addressed," he added.
How do you make a global brand? What can be the learning for brands in India? Holding forth on this subject, Jon Penrice, global vice president, marketing, Invista (Lycra), reiterated the oft-quoted line, "A brand is not just a product, but a promise" to stress that the best way to build one is to grow it, innovate it, sell it, and protect it. Obviously, he was speaking from experience as his company has done this successfully with its portfolio of brands, some of which have become generic names the world over for the qualities they promise. Lycra's key strategy, he revealed, is to partner with other brands and advertise itself as a co-brand. Think innovation and innovation, he tipped young brands seeking to make a market for themselves.
Where do you get the money to fund the growth that is being talked about? Why are Indian companies finding it increasingly difficult to scale up business even though the market is growing? What size should a company reach before it scouts for a strategic partner or what stage of a company would an investor like Pantaloon want to enter to help the other company grow, should companies focus on manufacturing or creativity or brand building, or go for all of it together? A lot more issues were brainstormed at the session on 'Investment in the business of fashion – venture funding, equity stakes and strategic tie-ups' which was moderated by Sanjeev Gupta, MD, Indivision and formerly president, Coca Cola India, and Biren Bhuta, special correspondent, NDTV.
From a banker's point of view, Madhivanan B, GM, ICICI Bank said, "We are here to support any company that has the potential. Banks can offer loans, venture funding for the SME segment, strategic investment for mid capital corporates. Partnerships can build symbiotic relationships." He also recommended that companies put their back end systems in place like making use of electronic transactions that make tracking cash flow easier to facilitate funding.
According to Kishore Biyani, MD, Pantaloon, "Distribution and retailing is the future of the industry that can take you to the top and not manufacturing. There is space for 50-100 new retail formats for the masses." He said he is open to synergies and can help companies that can complement Pantaloon. "We have an appetite for growth and I believe in strategic investments in the early stage of a company". Biyani wrapped up the conclave on the first day urging the domestic fashion industry to emerge out of thinking small and thinking big instead. "Make the best use of the opportunities available in the market today – before global players come in and take it away from us".
Day two of IFF '06 dawned bright and clear, and also very hectic with concurrent sessions chalked out to chart the growth path for various segments of the business of fashion.
The first session on home fashion had Aloke Banerjee, head - domestic business, Bombay Dyeing, as the session leader. Panelist Srinath Sridhar, head - marketing, Welspun Retail, spoke of experiential shopping as a branding tool. "Today, advertising can't be used as a standalone branding tool. You have to show the consumers the product at the store level where they can touch, feel, smell the product. Welspun has a number of brands across a number of segments, and we cater to Home Fashion and Value Retail. The fact is even in Value Retail customers look for coordinated collections. Which means – to a customer fashion is perception, fashion is in the mind, and branding is about creating the right customer experience."
Banerjee sought to know that if there is a brand propulsion and a retail explosion taking place, can a player work on both together? Or, should one concentrate on their core capability? What would be the right way? Recounting his three decade long experience and understanding of the European, US and Middle East markets, Arif Sheikh, head - Home Center, Lifestyle, suggested "each one of us should look at our core competency, and that we cooperate rather than compete. That way the industry will grow."
Commenting on the future for home fashion in that category, CK Nair, head – Home Stop, Shoppers' Stop, said that as the consumer segment is growing, consumers are changing from commodity buying towards lifestyle buying. A brand or retailer's success is going to depend upon how well he/she understands the customers and then works towards winning their hearts.
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Inderjeet S Wadhwa, chairman, Seasons Furnishing, pointed out the potential in the middle class segment of the population, while Rajiv Merchant, CEO, Portico India, felt that the market is growing in all segments – mass and premium. "One of the problems that we face in premium is that our minds limit our growth. Somewhere down the line we feel, will a bedsheet actually sell for Rs 2,500? But I think when we see the results, we are pleasantly surprised. In the premium segment we say that there's a customer, but there's no supplier, there's no seller. That's a reality we face on a daily basis. I think we have a bigger opportunity at the premium level as of now. Mass, I would say, is yet to come, though it will be big. When it comes to mass retailing, we have just seen a glimpse; the mass brands are yet to come."
The session on 'Ethnic fashion' had Aditya Nadkarni, category head-ladies apparel, Piramyd, as the anchor. The panelists felt that the industry should stop slicing/dicing women's apparel in terms of category and instead talk of the fashion and lifestyle needs a woman. According to Vijay Misra, CEO, W, the Indian design language is the future for Indian womenswear market. The panel called for deliverables in terms of unique styles that can command price.
Hemchandra Javeri, president, Madura Garments, spearheaded a lively, absorbing and thought-provoking session on 'Clothing' with Govind Srikhande, COO, Shoppers' Stop, as the moderator with the expert panelists recounting the success stories of their brands.
Fashion keeps changing, said Srikhande and cited how the mobile phone which started as an item of luxury became a fashion statement and is now a necessity. "How to convey fashion in a brand?" he posed and answered himself: "The true power of each brand is how it keeps innovating." Provogue is a good example of how it innovates constantly and builds its image through branding even as it sticks to polynosic shirts as a core item – the product with which it had started.
Panelist Gagan Singh, MD, Benetton India, felt that the success of a brand to a great extent depends on speedy decisionmaking and risk-taking. She also felt that it is important to micro target the consumer and work out feedback systems from individual shoppers. Shreyas Joshi of Raymond stressed on the importance of creating the right environment with a unique retail identity for a brand which needs to be communicated and positioned well. It is also important to get the collections right, achieving the right sale-throughs, rapid retail expansion to acquire economies of scale, and of course a lean, mean organisation.
ITC's Chittaranjan Dar emphasised that apart from brandbuilding, companies should also focus on competencies in terms of design and manufacturing. "It is essential to focus on competencies and collaborate. Brands must build a strong value proposition and communicate it right."
Pepe India's Chetan Shah called for realignments in brand positioning in sync with market demands and also suggested that a brand should not drop its prices too much as otherwise the perception of the brand too dips. RK Dalmia of Cottons by Century agreed with Shah on the fact that discount retailing lowers the value of a brand and rooted for qualitative product at a competitive and reasonable price and consumer service as the mantras for success.
The session averred that it is not brands but the market that decides the price. "Most brands need to reposition themselves as the retail sector is growing. Brands need to have a multi-channel distribution strategy keeping in mind the diversity of the nation, and that the Indian female consumer is emerging as a crucial factor that will push spends."
The changing customer, was once again the focus at the next session on 'Footwear' which was moderated by Subhinder Singh Prem, MD, Reebok India. Prem threw the floor open for discussions by inviting Adarsh Gupta, ED, Liberty, to give an overview of the footwear market. Responding to a query on the challenge of establishing an international brand in the domestic market, Inderdev Singh Musafir, director, M& B, said, "The challenge of handling international brands is treating them as your own brand."
G Shankar, MD, Lifestyle, provided a perspective on sale of footwear in a large format department store. He lamented the lack of enough footwear brands, especially in terms of womenswear, which does not result in high sales per square feet area. Jaswant Singh, CEO, Sierra International, suggested that department stores allow brands to run the brand in their stores and see the difference it would make. He also announced Sierra's plans to bring in Ferragamo shoes that cost about Rs 40,000. "There is a niche market which is willing to pay as much. Customers are gradually moving from need-based purchasing to want-based purchasing."
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Operational excellence and consumer intelligence had helped Adidas achieve great turnaround figures in the last year, said Vijay Chauhan, director- sales, Adidas. On a query whether GBMI sells more in department stores or prefers standalones, Killick Datta who was a panelist in this session, averred that most department stores are followers. "Very few of them buy products that are unique. They have the clout to negotiate better prices. The independents have variety as they take risks. They realise they must differentiate to survive."
Gupta underscored the government's role in the success of any industry. He said the footwear industry should be kept at par with the apparel industry. With the customer being very price-conscious, it is imperative that the various tax rates, excise duties, VAT be lowered so that high quality products may be given at reasonable prices in a competitive market.
The session on 'Watches' had Bijou Kurien, COO, Titan, as the session leader. According to panelist Manisha Sanghani, director, Priority India, the demand for luxury watches in India has surpassed all other categories baffling lifestyle experts. "Nobody had imagined such a phenomenal growth in the luxury segment. We attribute this to the growing awareness among Indian consumers, especially those who fall in the Generation Next category." A query raised was will cell phones substitute wrist watches? "Not at all," she assured. "A cell phone is an electronic device, but a wrist watch is a personal fashion accessory that you simply cannot do without. It would be like stepping out of your home, without your shoes on."
Talking about the challenges this sector faced, Y Saboo, MD, Kamala Dials and Devices, lamented: "Poor infrastructure and a rigid and steep duty structure are two big hurdles before the Indian watch manufacturers. Since the tax component is as high as 89 per cent under various heads, the price of the finished product goes as high as 20 per cent in India. "
The 'Jewellery' session had CK Venkatraman, COO-Tanishq, anchoring the expert panel. Each of the panelists spoke on how their respective companies created value for their respective brands, and how the aim of each is to take the jewellery from the vault to the wardrobe.
The focus was on issues which create the values for brands, ranging from why brands need to re-design for today to the pros and cons of celebrity endorsements, distribution and retail strategy, and the need to invest in human capital.
The session on 'Luxury retail' anchored by Ashish Chordia, CEO, Thanks, had a powerful speaker in Ravi Thakran, group director, South Asia, LVMH. "There is a great euphoria about Indian retail today. But I think we need to look beyond the euphoria at what is lacking. Retail should not, like tourism, become a great opportunity unexploited," he warned.
Indian fashion consumption is fantastic today and so is the consumption for luxury as the attitudes of people change from a "saving nature to spending nature, from basics to lifestyle. They are spending more on luxury items, design and quality has acquired great significance, and women are really coming out of the closet." With so many factors driving retail, and luxury retail in particular, he questioned why is it that the industry overall, the global industry, is still not investing in India?
"Many people say that it's a question of retail infrastructure – we haven't had retail infrastructure that's why brands could not come in. I'll give you one example of how India has had one of the best retail infrastructures anywhere in Asia Pacific for the last fifty years. There was no market in Asia that looked better and more grand than Connaught Place in Delhi. Almost 1800 beautiful boutiques in a single place. Great boulevards, great places all around – we have this most beautiful retail space in Asia for the last fifty years. And what have we done with it? Today if you go around Connaught Place, it just sucks! It's not just about creating retail infrastructure; a Connaught Place is very difficult to create and very easy to spoil.
"Why are all the big brands so China-centric? Be it Armani, be it Dior, be it anyone. Why is it that a single store in China is larger than the total luxury retail space in India today? A single store of Vuitton in Beijing, of 32,000 sq ft; or a 28,000 sq ft store in Shanghai. Just a single store that is larger than the retail space for all luxury brands in India put together. We have got to get our perspective right. Even if we're growing at 30 per cent we will not get anywhere; we have got to grow in multiples."
Will allowing 51 per cent FDI in retail for single brand boutiques make a big difference? Would there now be a flood of brands coming to India? "I don't think it will make much of a difference. The only difference it makes is that it gives the impression to those sitting in Europe that India has started to open up – at least a small window has opened up. But it won't change much.
Where they should have made it 51 per cent, they have not – which is in mass retail. They should welcome all big players, the Wal-Marts of the world. Again, our local players are scared that if they come we won't be able to stand up to them. And because of this fear we have closed the country for 50 years. We keep it closed for another 25 and we'll miss the boat completely," he warned.
He drew comparisons between the Dragon and the Elephant – China vs India. "You get on to the road from the airport to the city in Shanghai, and again you get the message that China has got it. Here in India, when we go around we see some sparks here and there. Again the message is that we are far from getting it. The only good message we get is when we enter Oberoi or Taj – the two beautiful homegrown luxury brands."
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"It's not only the government, it's not only the trade; it's our nation of 1.2 billion that's got to move. We are also moving, but we are moving at elephant pace, they are moving at a dragon's pace, that's the difference.
"I don't want to eulogise China here; I just want to make one point. Twenty years back, we were 71 per cent of the Chinese economy. We were lagging behind, but only by about 30 per cent. Today, we are 31 per cent of the Chinese economy. We have fallen behind by a lot. And it's not like our growth rate is higher than theirs today. Change cannot happen in hiccups; we've got to open up and go the whole hog.
"In this nation we need to start a Civic Obedience movement. We have taken Mahatma Gandhi's message of Civil Disobedience a little bit too literally and are disobedient on every front. But if we don't change, Manmohan Singh can't change this nation. We've got to change, to do things the right way, to pay our taxes, and then the government can contribute further as well."
The next session was anchored by Harmeet Bajaj on 'Designer fashion'. The discussions centred around the designer-corporate relationship, how design, manufacturing, marketing can be synergised in the best possible manner, the market for designer fashion in the country, and the like.
Fashion designer Suneet Verma lamented the inadequate support for the Indian design industry. "If we can develop synergies, it could be a win-win situation." Commenting on his tie-up with Verma, Sanjeev Wadhwani MD, Tuscan Verve, said how it has helped his brand get an extra edge and how three years down the line the association is moving along well. Plans are afoot to get Rocky S on board to do jeans for the brand. Designer Anita Dongre pitched for "more faith on designers" while Narendra Kumar felt the creative vision was missing in some of the brands in the country. Pradeep Hirani of Kimaya spoke how his relationship in selling fashion designers had only strengthened from 26 to 84. "It was challenging, especially when you are working with so many creative people."
Designer Sabyasachi Mukherjee sounded the note of caution when he said designers have a window of about five years to rouse themselves and get their act together what with so many high-end brands pouring into the country. The suggestions that came forth to help designers was that they need to corporatise themselves by putting CEOs or CFOs in place to look after business, use the home ground to their advantage, look majorly into pret by first putting logistics in place. With industry still coming of age, a leg up from brands and corporates could go a long way. Wadhwani called for proper use and showcase of the huge talent fraternity the country has. "There's a big divide which needs to be bridged."
The discussion on 'Fashion accessories' was led by Jaydeep Shetty, chief-CRM & Lifestyle Retailing, Pantaloon Retail. Viewpoints were shared on the accessory industry and the way ahead. Kunal R Sachdev of Hidesign said, "Indian market is evolving. Indian customers now look for quality and value, not just the price. Accessories should be in tandem with fashion."
Hidesign is investing heavily on customer preferences, needs, tastes, trends, designs through research, to find out what it is that they as a brand stand for. Sachdev added, "If we find the answers to these then everything for us as a brand will fall into place. At present, for a brand to sustain in the market it is critical to identify customer needs."
Talking about the optic sector, Harsh Chopra, MD, Rayban, said, "The category is growing rapidly with designer brands. What we need to understand is how to deal with obstacles to growth like the supply chain, fakes, VAT and high import duty of 33 per cent as transfer price." Finally, from the retail perspective, Vinay Nadkarni of Globus, said, "There is no dearth of consumers. 10-15 per cent of our sales are in accessories. We dedicate just 5 per cent of our space and in return get higher margin. So it is a win-win situation for both."
The last session of the conclave on 'Private labels v/s national brands' had Bill D'Arienzo, CEO, WDA Marketing Solutions, USA, as the chief speaker with Tim Eynon from Provogue, and H Ramanathan, director, Landmark Group, UAE, as the experts. D'Arienzo kickstarted the discussion with the view that most successful brands in the world have taken a different approach to branding. Branding today is moving away from product culture to experiential culture. People are not buying out of necessity. And in such a scenario brands have to ask themselves, "What is the experience I am giving to my consumer?"
Stores ought to convey a feeling of openness. It's not how much you pack in a store but it's about the brand experience. Commodity retailing where you are at the mercy of pricing is now antiquated and its place is taken by experiential retailing. He then went on to cite examples of Target, Urban Outfitters and Zara. What they all have in common? They have made the issue of private versus national brands a non-issue by branding the store experience. They have broken the traditional rules of retailing. The brand experience as validated by consumers is the brand, he stressed. Framing your competition in words that are misleading obscures realities that are at the root of their successes as well as their failures: It's impossible to successfully wage a strategy that is based on misperceptions — the same applies to your business.
Talking about consumer psyche in response to queries by Eynon and Ramanathan, D'Arienzo said that the customer is migrating up and down the value chain and this means that it is the consumer that is driving the business. According to Ramanathan, in the private label vs national brands tussle, one needs to strike the right balance to be able to service the consumer; and to deliver a profitable business model both must be complimentary in nature. Eynon said retailers have the power to turn a label into a brand and at the heart of every brand is a product.
The two-day conclave was punctuated with a quiz feast, a dazzling brand display on the ramps and some partying to soulfull jazz by Australian diva Kristy Jeffrey. It came to a resounding end with the glamourous awards night which saw Biyani announce the building of the country's first billion dollar company in two years
