MUMBAI, India — International fashion brands are looking to capitalize on India’s economic and retail boom.
Mohan Murjani, a native of India and one of its most well-known entrepreneurs, was just waiting for the right time to return home. Murjani has been known in international fashion circles for decades, having launched brands such as Gloria Vanderbilt and Tommy Hilfiger globally.
“My sights were set on India, but I was just waiting for the right time to get in,” Murjani said.
Murjani entered the Indian market by bringing Tommy Hilfiger to the country in 2004; it was one of the first international brands to enter the Indian market. Today, there are 10 Tommy Hilfiger flagships in India and several hundred licensees. By the end of this year, the Murjani Group plans to launch Gucci, Calvin Klein, Jimmy Choo, French Connection, Tumi and several other international brands in the market.
“We could have just stayed in the U.S., where we would do well, or come to India and really evolve and be a part of retail and business history,” he said.
Murjani’s foray into the Indian market comes as all eyes are turning toward the second most populous country in the world.
At Kearney’s Global Retail Development Index, which measures developing countries in terms of attractiveness for retailers looking at global expansion, has ranked India number one in its most recent survey. The country’s retail sales are projected to soar from $300 billion today to $637 billion by 2015, according to estimates by Indian firm KSA Technopak. A report by PricewaterhouseCoopers estimates about $412 billion in investment will flow into the Indian retail sector by 2011.
India’s retail revolution is being fueled by its rapid economic growth, increasing disposable income of its huge middle class and more lavish lifestyle habits.
A recent study by American Express estimates that there will be over 1.1 million Indians with liquid wealth of $100,000 or more by 2009. Global luxury and upmarket brands have been taking note of this. Companies such as Louis Vuitton, Chanel, Hugo Boss, Christian Dior and Fendi have already entered that market. Many others are clamoring to get in, and the marketplace is not limited to luxury and upmarket brands. Wal-Mart announced plans to launch its first stores in the country by the end of this year.
Related Articles
You May Also Like
Business leaders from India and abroad gathered last month at the Images Fashion Forum in Mumbai to discuss India’s vision for fashion brands and the burgeoning retail market. Bill D’Arienzo of WDA Brand Marketing, based in New York, told the attendees that the promise of India was enticing for international retailers.
“The Indian consumer’s lifestyle and shopping habits are evolving rapidly,” he said. “You have the largest and youngest English-speaking population in the world, easier to teach and more open to trends than even China.”
Rob Henin, vice president and India country manager for American Express, said until recently, the Indian middle class lived frugally and saved out of insecurity. Now, with steeply rising incomes, the upper crust is ready to splurge.
“There is also an easier acceptance of luxury and an increased willingness to experiment with mainstream fashion,” Henin said, noting the difficulty was finding the affluent customers. “We know from the statistics there are 1.4 million in Bombay and Delhi alone. But most affluent customers in India are self-employed. That creates a challenge because you have to find them. And in India, they don’t necessarily look like luxury customers.”
India is also different because the men’s wear segment has greater saturation in the apparel sector than women’s.
“For women, when it comes to formal occasions, they still often stick to traditional dress, yet will accessorize with a luxury foreign brand handbag or sunglasses,” Murjani said. “But for men, the field is wide open.”
Despite the economic boom, many brands have been cautious going into India. Laws prevent foreign companies from fully own anything other than single-brand outlets. Wal-Mart will operate in India under a 50-50 joint venture agreement with India’s largest mobile phone marketer, Bharti Enterprises.
But finding the right partner is not always easy. Gucci, which historically has enjoyed great popularity among Indians, had been waiting to enter the marketplace. Murjani, who will open the brand’s first stores in India in April, said understanding the complexities of the brand as well as the unique context of the Indian consumer was not easy.
“When a local partner does something harmful to the brand, that reverberates all the way to the mother ship,” he said. “So, in the brand’s point of view, they would not rather have that business unless it’s with a partner who knows how to nurture the brand.”
While some single-brand outlets can enter India without a local partner, most choose not to.
Tarun Joshi, chief executive officer of Brandhouse Retail, which has the license for Escada and Dunhill in India, said keeping up with the Indian consumer was the key to success.
“The offering has to be very contemporary and in sync with the same things you find in Milan, London, Paris or New York,” Joshi said. “Also, the product needs to be priced on par with global costs in order to be competitive because Indians are value-driven.”
There are still major infrastructure challenges in the Indian market. One of the biggest concerns for luxury and upmarket brands is the lack of appropriate retail space.
Currently, the market is dominated by millions of tiny mom-and-pop shops. Malls are going up at a maddening pace, but most lack the appropriate planning to attract global retailers. Brands that are eager to enter the market, exploit the first-mover advantage and establish strong brand loyalties have taken space in shopping arcades of five-star hotels.
The Murjani Group did not want to be limited to hotel shopping arcades and instead decided to develop its own luxury mall in Mumbai, which will open this summer.
“We have architects from England designing the space,” Murjani said. “At the end of the day, the Indian consumer doesn’t want to feel like they are going to Gucci in India. They should feel like they have walked into Gucci, period. It has to be world class.”
The big question for the Indian government and business leaders is, with the influx of global brands into the market, how will the Indian brands survive. D’Arienzo said Indian companies had to strengthen their brand essence.
“Build it now before the foreign brands take over,” he said.
Hem Chandra Javeri, ceo of Madura Garments, one of India’s leading clothing manufacturers and retailers, believes this is the time for Indian companies to sink or swim.
“India is a new market for fashion in terms of an organized industry,” Javeri said, “but Indian fashion traditions have been known all over the world. The challenge for us Indian companies is to bring that heritage back alive.”
In addition to having several homegrown brands, Madura Garments also has the license for Adidas in India.
“Of course, there is room for everyone in this marketplace,” Javeri added.