There is a buzz in the retail industry, this buzz is created by lots ofIndian and foreign manufacturers who want to have their retail presence in India especially by way of launching a new apparel brand. Here are some of theissues they need to address while launching a new apparel brand:
Positioning:
Themost important part is the positioning in the Indian consumer mind-space. Smartcasual positions are taken in by the brand such as ColorPlus, Dockers andCanary Blue. Design wear are gone with square-1 mall and Kimaya, Kazo andindividual designer having their stand alone store. Any positioning below thatis lapped up by Zillions of manufacturers. Sports category is gone, withAdidas, Puma and Nike. Does it spell dooms day for the new entrants? Not necessarily,there are still wide open gaps which lie agape between these broad categoriesand one should start considering those to enter.
Location:
Thelocation is the key to the positioning, it determines and in turns reinforcespositioning; in fact, with about 50% of the operational expenses are taken upby the rentals, it has assumed an even more important position. Its astrategic and vital decision, which can make or mar an apparel brand.
Buying vs. Manufacturing:
Itis again a very important decision as about 35% of the expenses in a retailoperation are taken up by the cost of merchandise. It is even more importantfor the foreign manufactures as Indian size set is radically different fromthat elsewhere, say US. There are innumerable problems of fits especially inwestern women's wear. Then there is that Indian touch and taste with which eventhe hot selling merchandise in the western country is rejected by the Indianconsumer. If one is manufacturing oneself, one can control the quality andexpense, which is not, so if one is buying.
Price Point:
Itis said that only thing works for Indian consumers is the price-quality equation. Though this statement is a bit exaggerated, nevertheless, price is a very important criterion in the Indian consumer's mind. It denotes the quality, thestatus or even the worth of consumer for himself/herself or the loved one. Sopositioning, price and location should reinforce each other to justify theconsumer that particular worth.
Pitching/ Promotion:
Itsa moot point whether a brand should be pitched as a foreign brand or an Indianbrand. There are brands for example Coutons which even when they use Discountsas their selling strategy, use foreign models in their advertisements toreinstate the quality perceptions in the consumer's mind. In general, pitchinga brand as a foreign brand (esp. European) evokes a sense of heightened qualityin the consumer's mind and justifies the price premium. But of course, andneedless to say, promotion should be backed by positioning, store experience, product performance and prices. Its important also, as just giving one insertion per page permonth in the four premier fashion magazines in India can easily consume uptoRs. 1 cr.
Discount Policy:
Muchhas been written about discounts in India, unlike elsewhere discounts pull thegreatest of crowds. So one can say that fashion doesnt attract so much anaverage Indian as discounts. In India, discounts hit the mind. At the same timethey take away a part of brand equity. Proper strategies should be maderegarding the timing, assortment and promotion for discounts.
Uncertainty about Indian Retail/Mall Boom:
India
Government Policies:
Governmentpolicies are the biggest external factor in the success of a retail brand.Right from allowing the entry of the single brand FDI in India to the Taxes collected out of the profits are a function of the government.Unfortunately presence of leftist faction in the centre will raise doubts aboutgovernment allowing liberal measures for the success of retail brand. There arealso underhand dealings from incorporation of the company to customs clearanceof the items imported. All these things should be taken in to considerationwhile launching the brand.
High Cost of Real Spaces:
As mentioned earlier, location is the biggest factor for the success of the retail brand. There has been an increase in sales at the prime locations, but high cost of reality is beginning to tear down the profits. Whereas there has been a 20% growth in sales in recent years, there is a 30% decline in profits before taxes. Real estate people should take a note of it as they are cutting the same branch on which they are sitting.
Manpower Turnover:
As a rule 11% of turnover is standard for a retail business. It should not be more than that but due to intense competition, there is a huge turnover in sales and store staff, which results in poor customer service and lost sales. It also results in less training days for the manpower for the fear that people will leave after they are trained. Thus an apparel brand should do well to train the sales people specifically for their requirement, and not generally. Especially train them for non-negotiable such as uncluttered outlets rather than for higher order things such as merchandise planning.
To conclude, in India as an apparel brand, it is just not enough to say that I am close to the door etc. There is a need for the value preposition in the mind of the customer. Apparel brands initially, instead of thinking of expansion should focus on Core competency, offer and value preposition for the customer.
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