When the international retailers in most of the countries are not faring well, they have been on a prowl for emerging and growing markets. Apparently, with around 20% annual growth that Indian retail has maintained even in difficult economic situation worldwide, India has become an attractive destination for the global brands. A year after the exit of brands such as Levi Strauss and Co.s Dockers range, Grotto SpA's GAS apparel and French lingerie label Etam, a new lot of fashion retailers are set to enter India with an eye on the wallets of affluent consumers. Zara, the fashion label owned by Inditex SA of Spain, UK garment chain Topshop, the Marc Ecko clothing line promoted by the US entrepreneur of the same name and the Japanese casual wear brand Uniqlo are preparing to open outlets in India.
They are among two dozen fashion brands expected to enter India this year to try their luck in an apparel market that Anand Raghuraman, a partner and director at Boston Consulting Group, estimates at Rs. 1.3 trillion and expanding at a yearly 20%. "Moreover, over 20% of this industry, at Rs. 30,000 crore, is with the organized apparel retailers and growing at 20% per annum, making it an attractive destination for global retailers," says Raghuraman.
Following the global meltdown, and as part of a change in its market strategy, Levi Stra uss phased Dockers out of the Indian market last year to concentrate on denimwear. GAS, introduced in India by Mumbai-based apparel retailer Raymond Ltd in a 50:50 joint venture with Grotto, shut its 12 stores. Etam ended its joint venture with Future Group.
The influx of retailers coincides with a growth revival in India. Asia's thirdlargest economy grew 7.9% in the quarter ended September, the fastest pace in five quarters. "There is a huge global interest in India," says Kumar Rajgopalan, CEO of Retailers Association of India. Department store chain Shoppers Stop plans to launch the Playboy
brand and around six other international labels in Indian market in the coming year, according to Boston Consulting Group. The S Kumar's group, through its unit Brandhouse Retails, will launch the. Italian apparel brand Oviesse.
To be sure, not all the brands that vie for consumers' cash in India will succeed, given their inexperience in a market in which preferences vary widely. "The year will see all kinds of brandslarge and nichesetting up here. But they will not all succeed in India as they won't understand the market," says Raghuraman. Zara stores will be opened in India under a February 2009 agreement between Inditex and Trent Ltd, the Tata group's retail arm. "We will open five stores in New Delhi, Mumbai and other major cities," Inditex's corporate communication and institutional relations division said. Marc Ecko will launch the brand in the coming spring in a partnership with RPG Group's retail flagship Spencers Retail Ltd, which plans to have in place at least five international alliances this year.
"We are talking to a lot of people from super luxury, luxury to value and will collaborate with leaders," says Raghu Pillai, Chief Executive Officer of Reliance Retail Ltd, the retail arm of Reliance Industries Ltd. The firm already has partnerships with retailers such as Marks and Spencer Group Pic.
Barcelona-based maker of jeans and sportswear Desigual, which earns 300 million (Rs1,962 crore), or 85% of its revenue, from Europe alone, plans to expand into Asia this year as it seeks geographical diversification. "Later this year, we will enter Japan and after that we may either enter India or China. But it is most likely to be India before China," said Nikhil Nathwani, who has the title market entrance at the clothier and is overseeing its Asia push. "We expect Asia, America and Europe to account for one-third each of our overall revenues in the next five years."
Originally published in The Stitch Times: April 2010