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Apparel Market for Foreign Brands in India

December 1, 2009


This is an excerpt of thoughts shared by Mr. Sanjeev Mohanty, MD of Benetton in India. You must read and understand this if you are planning to be a Franchisee of Apparels. Read our previous coverage here.

Scope and Size of the Indian Apparel Market: It has 3 key segments, value (>INR 600), mid (>INR 1100) and premium (>INR 1800) model price points. The biggest growth is being seen in the mid and premium segment and the value segment is clearly dominated by unbranded, regional brands, hypermarkets.

Impact of Slowdown: It has had an impact on same store growth and slide in sales densities and basket size, other than that, consumers have continued to spend but have been driven more by value. Rising interest costs, lower or no increments have pushed the disposable incomes down and therefore, fashion clothing has taken a beating and slid down the priority list in the shopping basket. Retailers had unrealistic forecasts driven by the herd mentality as they signed up real estate at unrealistic costs as if there was no tomorrow.

Foreign Brands Vs Indian Brands in Apparel:
Both international and domestic brands have performed well. If one was not having EOS sales lasting for more than 30 days, if one was showing an aggregate same store growth of +5%, if one did not have to close more than 5% of operating stores and had an interest cost of less than 1%, then you will be seen as a good performer.

Luxury Segment of Apparels: The luxury segment where most of the international brands are positioned is insignificant at this point of time but is gaining relevance and will surely be important in the next 3 to 5 years.

The Benetton Brand in India:
Benetton as a brand has come a long way but this is just the beginning of the journey. A full service lifestyle brand which cuts multiple usage occasions, across age segments and across categories. It wants to grow the Benetton and Sisley brands and focus on them in the next 5 years. See a huge potential in the (012) kids business and the Undercolors (undergarments) business.

In the next part we will see the Strategy of United Colors of Benetton for the Indian Market.

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