Has fashion apparel become unfashionable? Is being fashionable a part of the comman Indian’s psyche? Why are there no fashion seasons in India? Why are fashion retailers a harried lot? Why has the average spending curve on apparel seen a downward trend? How good are our shop floor personnel? Are we doing enough to get the best out of them and ourselves as retailers? Remember Images Fashion Forum ’04 (IFF ’04) where industry articulated the need to work together as “one”... where industry voiced the need to discuss innovations?
The IMAGES BoF CEO Meet 2004 at Mumbai on August 13-14 carried a step further the IFF ’04 agenda, as also the discussions held at earlier IFF meets, as it formalised a Fashion Alliance which will serve as an umbrella group representing the country’s fashion brands and retailers. An Alliance where pioneers and leaders of the fashion industry joined forces in a maiden attempt to take fashion directly to consumers. Globally, the Alliance would serve as the Indian identity that links together the consumer, the retail and the fashion industry.
Anchoring the Alliance, its co-chairman Hemchandra Javeri, president, Madura Garments, emphasised the need for Indian players to develop their distinctive growth strategies as part of a coordinated group. “Fashion Alliance is the first step towards this achievement. Its core objective will be to educate consumers and help them benefit from fashion, to inject the desire to look and feel good. It will give consumers enough and new reasons to buy.”
The Alliance agreed that Indian players with well developed business models only will survive, especially once global majors enter the market; and that many players will drop out or be crushed in the next 3-5 years or sooner. The opportunity for winners is enormous, but the terrain ahead is tough.
Kishore Biyani, MD, Pantaloon Retail, also co-chairman of the Alliance asserted that as members of the Fashion Alliance “we will develop the market together, taking the fashion movement to the masses.” Vivek Gupta, MD, AT Kearney India, promised his organisation’s support: “We are committed to assisting the Alliance in setting up a distinctive retail strategy and implementing goals.” Chetan Shah, MD, Pepe (India) felt the Alliance “offers enormous collaborative opportunities and the common interest will be to organise, expand, and in the process achieve individual targets.” The Alliance stressed that it could serve as an effective platform for the fashion business to interact with the government.
The industry captains also promised to make IMAGES the one-point information centre wherein all brand owners, manufacturers and retailers will share information so that there is a ready flow of statistics and data for all to share and learn from. Convenor Amitabh Taneja pledged his support: “By initiating research and development, Fashion Alliance will identify new avenues for growth and then develop new categories of products markets and categories. We will set benchmarks for business ethics, and members of the Fashion Alliance will be committed to corporate social responsibility.”
The Images BoF CEO Meet 2004 was presented by IBM in association with Daks, Safexpress, Arvind Brands Limited and Suncity Projects.
Anjali Sondhi, director, Images, and fashion analyst Harmeet Bajaj set the Meet rolling along with Vivek Gupta who delivered the keynote address.
Emphasising that Indian players in the business of fashion and lifestyle need to develop their distinctive growth
strategies, Sandeep Chugani, vice-president, consumer goods and retail practice, AT Kearney, USA, who took over from Gupta said: “We need to define fashion more broadly. It is a sense of being. Not apparel. I know our constituents are apparel manufacturers or retailers but home/ life/ jewellery, accessories, transportation… all contribute to a sense of ‘style’. We should continue to enlarge the envelope here. If nothing but to generate some provocative thought.”
Forecasting a few trends, he said that specialty retailers like Pepe jeans will continue to try and be more relevant and capture share of mind. They will do this through flagship stores and different product launches that position their products apart. “If anybody does not believe this, just look at Nike, which is bringing a number of different concepts to India, including experiences that make them a destination. Brands drive fashion and we cannot ignore this fact in developing a fashionable India.”
Dwelling on the various topics that would come up for debate during the Meet, Gupta voiced his appreciation at the thought of an India shopping festival. “But it is a question of marketing vs creating consumer awareness of retail and fashion. We should do it, but it needs to be coordinated well.” Technology in merchandise planning/ promotion effectiveness/ inventory management will be key cost items for large retailers.
Deploring the “fundamentally poor” shopping experience that Indian retailers offer, he suggested (after a disguised shopping tour of the Pepe store at Phoenix Mills) experiments with creative compensation approaches. Also, premium products should be sold through flagship stores only and incent the whole store differently, and merchandise differently. “Create a micro-merchandising concept that is quite popular in the US.” Scale matters, Gupta said and predicted that more and more of this will be seen in the coming years.
Bring zing thing
Collaborative opportunities was the underlying theme of the inaugural session — ‘Lack of effervescence: Getting the zing back into business’. Darshan Mehta, president, Arvind Brands, headed the talk with Chitranjan Dar, CEO, ITC Ltd (LRBD), as moderator and Nikhil Chaturvedi, director, Provogue, and Shah on the expert panel, on why and how the industry needs to do something to bring the zing back into the fashion business. “The kind of excitement seen in other competitive industries such as white goods, mobile phones or cars, is lacking in fashion, particularly in apparel, although by definition fashion is synonymous with glamour”, Mehta lamented.
It is imperative that consumers are induced to trade up in apparel, just as they are in a whole lot of other segments. To do this the industry must cater to the four key emotional spaces of the customer — taking care of me, connecting, questing, individual style. Mehta cited the case of an international brand like Seven in the jeans category that has been successful in inducing the customer to trade up to a higher price point due to a greater perceived benefit. “However, in India, we are stuck in the Rs 900-1,295 range.”
Every fifth Rado customer is an Indian, possibly they are trading up on lifestyle items except apparel, he thought aloud and suggested that a “ladder of super benefits connected with efficience” be created – something like what American Doll has done. The food chain charges USD 150 per person. Little doll is a guest. The brand has touched a sore point with young parents who feel guilty about not spending enough time with their kids.
Work against established paradigms of cost management, attack the category as an outsider, the man who has scaled new heights for Arvind Brands exhorted. While Chaturvedi drew attention to the fundamental difference between what you communicate and what you present, Shah emphasised that the real challenge is in establishing an emotional connect with customers — “Pepe has been in India for 13 years but it is still fighting. It has failed to create a connect like Samsung. My IT friend from Bangalore calls up to say ‘I found my pair of jeans Seven fabulous.’ Finally when I saw it, I found nothing exceptional. How much actually you could do to a pair of jeans? It was all about the connect Seven has been able to create.”
How did Seven create this hype — for two months they made every celebrity wear their jeans and starved consumers. No website. No store. No campaign. And then they made consumers queue up to buy a pair.
The media was also accused of playing a “negative role” and a suggestion came up that IMAGES should take the initiative in turning this perception around. Another idea that came up to promote fashion among the laity was to create fashion zones in department stores. Shah pointed out that in Sri Lanka, Nepal or Kenya, though the average people must be drawing a lower income as compared to their Indian counterparts, yet they are far more fashionable and better dressed. “We should start a fashion drive in our organistions to start with. Our sales staff — are they fashionable?”
Gupta intervened to ask Mehta how he would trade up his employees. As Mehta responded that training, as in allowing employees to get a feel of the environment that their consumers belong to, Biyani felt that it is vital that first the overall trade in apparel should see an increase.
Shopping? India?
The second session on ‘India Shopping Festival’ was moderated by Javeri with Ved Prakash Arya, COO & director-ops, Pantaloon Retail, and Aniruddha Deshmukh, executive director, Be:, as the chief speakers.
The Taj Mahal and all that is exotically Indian — be it the now much vaunted curries or snake charmers of the slowly receding past, the IT dreamland or the slum-marked landscape — make this land a tourists’ paradise.
But why don’t tourists to India shop like the way they do in Singapore, Hong Kong or Dubai? Why hasn’t India made it as a shopping destination? Why does the Indian retail scenario not draw enough multitudes? Dilli Haat is India in a microcosm — at least in terms of handicraft and cuisine. Why aren’t there enough such haats? Will the mall sprawl boom retail in size and scope? IMAGES chose ‘India shopping festival’ as a topic only because of the huge potential that retailers can invest in.
Arya was quite in consonance as he enquired: “We CEOs present in this room, are responsible for business over Rs 3,000 crore employing over 20,000 people. What’s stopping us? Are we not capable of evolving the cause of the India shopping festival and succeed?” and challenged the audience to move this idea into action by a joint effort within the industry.
Javeri raised three questions:
- Is it relevant or desirable for India to have a shopping festival?
- Who is the target audience?
- How do you make it happen?
Arya said that there was significant opportunity for India Shopping Festivals given the success enjoyed by other festivals in Dubai and Malaysia. He said that it was important to start small in a city like Mumbai targeted at domestic tourists, NRIs, international visitors, etc. “Mumbai is the best venue for 30 days in the December-February timeframe”. Deshmukh echoed Arya as he recommended that the target group is the NRI. “They are favourably inclined to Indian products.” A wary audience raised problems that plague the harried Indian day in and out — inadequate infrastructure, lack of government support, but also agreed that such a festival does have the potential of scaling the tourism industry to greater heights.
India retail 2005
Post 2004, retail in India will be an entirely different industry. Imagine 200 malls in operation. Obviously the boom that has been triggered now, will actually boom then. Yes, the talk here is of the rapidly rolling mall ball. Retail ambience, differentiation, product innovation and customer service will be touted more than ever as the altars at which this ball can actually gather and hold fickle consumers to keep coming back for more and more.
Lead speaker Biyani set the tempo stating: “Malls are going to be the next high streets. All good spaces by good developers will be occupied. In a year’s time there will be some 100 developers and soon 300 malls by 200 developers”. Moderated by Chugani, this session had Rajan Mudaliar, MD, Colorplus, Sanjay Mehra, country head, Nike, HS Kohli, CEO, Ebony, and Vinay Nadkarni, CEO, Globus on the panel.
As the panel averred that the mall growth will be triggered only by qualified footfalls, the ability of the mall to create a holistic customer experience, and the lack of available real estate to grow high street stores, a member from the audience asked whether standalone stores will survive the mall boom. As Mudaliar posed whether high street stores will co-exist with malls or do they need to shift to malls to grow, and Nadkarni stated that malls invite customers who otherwise may hesitate in entering a standalone plush store, Biyani affirmed there will be no high streets emerging and that the new retail spaces will be in malls.
Mehra underpinned the role of retail ambience, innovation, differentiation, et al. “Until our high streets have something that lures — there is a draw — malls will be the place where brands will provide the experience they recognise”. The portfolio of malls, he reiterated, will play a crucial role. In such a scenario, the evolution of the specialty store is inevitable. On a query on the difference between a good mall and bad one, Biyani quipped to many a smile: “Give us good space and it is a good mall.” Footfalls, he underscored, can be guaranteed only if value and quality is given.
There is no looking back in retailing, asserted Kohli and spoke of the significance of the three Ps: people, product and processes in creating successful retail. Fashion/retailing is not the monopoly of the West but has arrived in India, he averred, adding “India is now no longer an Appu of the Simpsons, running a small grocery store or a country of snake charmers but inarguably Asok in Dilbert, who has buffer stock of super brains giving rise to revolution in retailing”. He however, sounded a note of caution when he said that more than malls, it is the faith and trust that people should have in retailing. “You can, if you think you can.”
Sing a song in crores, not pence
How do brand makers and retailers increase the fashion pie?
A new world everyday. New technology. New fascinating gizmos everyday. What’s new in apparel? What’s innovative in fashion? A challenge staring the apparel and textile industry in the face is how to place apparel on top of consumers’ mind. BS Nagesh, CEO & MD, Shoppers’ Stop held fort on the issue ‘Increasing the fashion pie’ with Krish Iyer, ED, Piramyd, moderating the session and ably supported by Shreyas Joshi, president, Raymond Apparel, Suresh Bhatia, director, Mango, and Vijay Jain, CEO, Intergold, on the panel.
Nagesh set the tone in his usual lively fashion, questioning: “Will fashion be driven by retailers or by manufacturers? Will the apparel industry carve a huge pie for itself?” Figures were rattled off on how credit cards have doubled the number of takers, how gold members account for 35 per cent of the business with their overall spend seeing a rising curve, how spend on apparel has gone up a wee in department stores from 8 per cent in 2001, to 9 per cent in 2002 and 11 per cent in 2003. But, the point that emerged among other points was that the share of expenditure in apparel through credit card has gone down from 17 per cent in 2001, to 15 per cent in 2002, to 14 per cent in 2003. Where are the consumers spending?
People, Nagesh said, are willing to shell out lakhs to enhance lifestyles. They want the beanbag and the plasma television box and even gold and diamond trinkets. The average spend on diamond jewellery, he informed, has seen a 30-40 per cent increase in department stores. Why this disinterest towards apparel, he questioned. Are we giving consumers enough motivation to buy apparel? He cited the wardrobe exchange programme that Shoppers’ did with the charitable CRY. “Can you believe 89,000 conversions as they dumped their old clothes with us? Guess, what was the number of pieces we sold with so many coming? 90,000? A lakh? No! Only 33,000 pieces! Why? Have we asked ourselves why this disinterest in purchase of apparel? Innovations” he sighed, “the industry needs innovations.”
Interestingly, he chose to pick on the Indian kurta-pyjama with stole for men as among the fastest selling category. “There is a trend happening out there,” Nagesh pointed out and in the same breath bemoaned the lack of knowledge within the industry. “Knowledge about customer is going to be critical. Customers are willing to change. It is we who have to build an emotional relationship with them to give us insights into their spending behaviour.”
Nagesh once again reiterated the need for the industry to unite as one to forecast a trend for the Indian industry, and also urged brands to take the initiative to push the market. “How many times have Chetan (Shah), Darshan (Mehta). Sury (Suryanarayanan of Levi’s), together said this is the fashion for this season? We need the industry to get together.”
Joshi placed the onus of “driving the business” on the Herculean shoulders of brand owners. Sounding an optimistic note, he recounted India’s “unique possibility” in having a huge bulk of exporters and textile manufacturers. Jain advocated growth in niche segments, which alone can push the envelope by going in for brand extensions and the like without discounting the criticality of merchandising and ambience in driving sales. He also beseeched the industry to co-exist and collaborate. “Do not discourage competition. It is too early to get into that stage. There should be no fear of cannibalisation. In fact, the market needs more brands. Retailers must expressly understand the fashion and price attitude of customers.”
Iyer suggested that brand owners and retailers must, to begin with, agree to agree on space and margins. Bhatia said there are lessons to be learnt from international brands. The moot points that emerged from the hectic table was:
- Need for differentiation among large format retailers; this needs to be driven by brand manufacturers
- No perceived threat from foreign brands
- Brand owners and retailers need to talk in one voice
- Neither retailers nor brand manufacturers can afford to lose track of consumer needs.
Profiting from fashion biz:
KC Mehra, MD, Forbes Gokak, had the mike all to himself as he drew on his vast experience to talk on the aforementioned subject. He pressed home the immense potential in the premium end of organised retail. He championed brand India but in the same breath also drew attention to its drawbacks. QPD is what he labelled these as and expanded them to mean quality, price and deliverables. The last point of deliverables, Mehra rued, was pathetic in the country. Calling for Indian brands abroad, he rooted for “brand warriers” along with whom “we are creating retail warriers who will study the market”.
Countrymen, raise the bar: Day 2 of the Meet had two sessions running concurrently. While the Fashion Alliance was being formalised by industry leaders, Tim Eynon and Martin Vintner-Jackson, founder partners, Be The Business, in a lucid presentation underscored the need to build Brand India and the challenges faced therein. “A country’s brands shape perceptions about both. A nation’s brand is a powerful business ambassador in this age of globalisation and competition. A new version of India is emerging. International brands are coming in like a crowbar to open the market. Take what is at the heart of your country and develop it. You have to raise the bar yourself,” they proposed.
Dare dreams: Raising the bar was indeed the leitmotif throughout the Meet. It was almost an entreaty from industry members, more so at a stage when the business of fashion and retail is undergoing a churn. The compulsion of putting into practice organised processes is yet another gauntlet the industry must pick up. Simone Tata, chairperson, Trent Ltd, who spoke on the theme ‘Dare to dream big’ voiced some of these concerns as Paresh Vaish, senior partner, Boston Consulting Group, moderated the discussion. Highlighting the importance of good management in enabling the industry to just not crystal gaze but gear industry to “keep up with the future” Tata shortlisted five points that could serve as key drivers: 1) Customer focus 2) Strategic planning 3) Supply chain 4) People development 5) Maximum return to shareholders. “If retailing has to grow as rapidly as everyone hopes, the need to scale up operations, human resources and management is really paramount. And the anticipated exponential growth has to be backed by systems and internal controls.”
This is the time, she exhorted yet again, that industry must re-look the entire operations, be it systems, controls or people.“To scale up our operations is part of a management vision. That vision cannot be just how many more stores shall we open this year and next year, but it has to include a big add-on. How do we do it, what do we need to do it? Strategy, thus, is paramount and though time consuming, it is a vital tool to the expansion of the industry. This applies equally to our suppliers and manufacturers. To dream big is what we all are doing. But the dreams have to be backed by a sound roadmap and the tools to follow the map”.
Tech in retail
Something is going to happen in the next two years that will change everything I have said now, intoned Dan Hopping of IBM Corporation. ‘Emerging technologies for retail’ was the subject he plugged into. Reeling out the various innovations in technology that have affected our lives and are likely to revolutionise our existence over the next five years, he underlined the necessity today of retail companies to see technology as an investment and not be deterred by emerging technologies. More and more of retail will happen on the Net and in such a scenario the paramountcy of understanding technology as an ally, as an investment that will give quick ROIs cannot be ignored.
On the subsequent discussion on ‘Adoption of IT in retail’, moderated by IBM’s Jagjit Singh Arora, the panel comprised Mani Subramaniam, principal consultant, retail & CPG, Wipro, Vivek Keshava Mehta, senior consultant, retail and consumer goods practice, TCS, Mukesh Mathur, director & sr VP, Polaris Retail Infotech, Balasubramaniam G, sales director, CPG & retail, SAP, along with IT heads in retail – Unnikrishnan from Shoppers’ Stop, Prasad Sahasrabudhe, Globus, and Prabhakar Sethi, Reliance.
Mehta enunciated that retailers must realise the objectives they wish to achieve with the implementation of Information Technology (IT) in their organisations. With these clear objectives they must define their proposed functionalities and look at the functionalities of the IT solutions they propose to adopt and then select an application which apart from functionality, meets their cost budgets, implementation support requirements and subsequent maintenance costs. Retailers in malls should also explore the use of IT solutions on an application service provider (ASP) mode so that they need not invest large amounts on IT but can pay on a fee based or a transaction based usage of the IT systems. Niche solutions like CRM are also now available, but these need to be looked at from the perspective of how these packages will help the retailers in retaining their customers.
Computers, Arora said, will never replace merchants, who must still pick the right trends, but technology can help with planning details. “Use technology to focus on the art of merchandising, surveying trends and negotiating deals.” Sethi asserted that technology in the retail sector must be driven by customer science. On a question from Ebony’s Kohli on how does a retailer who does not understand technology go about implementing it, Prabhakar’s suggestion was not to look at costs first. “Sit down with your vendor, explain your requirements. Check if the technology you are getting is: (a) From a company that can withstand your changes (b) Is the company available in various parts of the country (c) Is the technology robust? (d) Will it run on cheap hardware?”
Unnikrishnan recommended taking professional help from consultants. Before implementation it is important to define the scope of the project, understand the methodology, and most importantly go in for a phased implementation. Do not try to modify the software to your requirement, he warned.
The two-day meet ended with a robust, witty talk by Harry J Friedman.
