Sunil Pathare & Kapil Pathare
Chairman and Managing Director & Director VIP Clothing Ltd
Which segment of the market is Feelings catering to?
Feelings caters to the mass market for the women who have aspirational dreams but are the women of today. The brand is aimed more towards the daily lifestyles of women; hence, the officegoer, the housewife, the career-oriented are customers of Feelings. Feelings can be bought on storevipclothing.in. The Feelings brand is sold in VIP innerwear stores, which are multi-brand outlets from the house of VIP. However, Feelings itself does not intend to have a separate store as of now..
What is the price range for Feelings? What about sizes?
Products under the Feelings range start from ₹250 for panties and go up to ₹600 for a track pant. In panties, the sizes are S, M, L, XL, XXL. Bra - 30 B, C onwards to 44 B, and barring a few sizes in between, while the sizes for camisoles are S, M, L, XL. We produce 3 lakh pieces every month.
When Feelings started, it had one of the most memorable advertising campaigns with Bollywood beauties like Malaika Arora. Why is the Feelings brand low-key now?
Currently, Feelings as a brand is communicating through retail outlets. So, there is more of in-store branding and it does not feature in the mass media. Also, digital is the key for today's advertising. For advertising, marketing and promotions, we have been falling back on in-store branding, standees, brand fixtures and store headers, besides social media platforms like Facebook, Instagram and Twitter.
Which is the strongest market segment in India for Feelings? What about competition?
The strongest market is the organized mass segment. Unorganised players with lower margins as well as national and international brands reach consumers through the mass media and are available in large format stores (LFSs), online and exclusive brand outlets (EBOs) that reach the upperclass consumer. The international players have not affected the category that Feelings operates in as they compete at a higher price point. Feelings faces stiff competition from local brands that don't have high overhead expenditures, thus selling at a lower price point. Organised as well as unorganised players dominate the regional markets. The panties market is highly commoditised and price plays a factor in decision-making.
Where does VIP export to? Which styles and brands are exported?
VIP exports to all GCC (Gulf Cooperation Council) countries. The styles favoured are Bonus vests, Frenchie Plus briefs, Leader trunks, and Feelings bras. We get ₹16 crore business from Middle-East countries. About 28 lakh pieces are exported in a year.
Has the innerwear market become competitive with foreign entrants?
Foreign brands have shown consistency in fashion trends, quality and styling. Most of the foreign brands that have entered the country compete in the premium or mass premium categories. These players don't compete at the price points of ours. The competition for Feelings is from local players in different regions of the country, which compete for the same wallet share.
Coming to business, how did demonetisation and GST affect your company?
The final product of VIP Clothing Ltd is liable for GST at rate of 5 per cent, being articles of apparel and clothing accessories, knitted or crocheted of sale value not exceeding ₹1,000 per piece. GST has been implemented since July 1, 2017. There has been increased compliance due to the increased number of returns and record maintenance. Under the GST regime, the cost of production and expenses get reduced, as earlier no set-off was available because we were at nil excise duty, etc. The CST paid and URD procurement is not eligible for credit before GST. The output tax liability under the GST regime is 5 per cent whereas the eligibility for ITC (input tax credit) set-off is 5 per cent, 12 per cent, 18 per cent and 28 per cent on inputs, services and capital goods. Therefore, the ITC is always higher than the tax liability. But the innerwear business is an unorganised sector and primarily a retail business. MBOs were hit badly by GST and their liquidity was hurt. They aren't buying stocks of undergarments as they used to earlier. Now, these MBOs are buying less and stocking less too, and they are delaying payments due to which it is affecting the working capital cycle of the company.
It has been reported that the innerwear business is going through difficult times. Why do you think this is happening?
Conceived by former US Federal Reserve Board chairman Alan Greenspan in the late 1970s, the men's underwear index (MUI) suggests that declines in the sale of men's underwear indicate a poor overall state of the economy, while upswings reflect the opposite. A shrinking disposable income is the prime reason why Indian consumers are holding back from new purchases even in essential categories and staples, experts say. The nominal per capita disposable income growth was 13.3 per cent between 2010 and 2014 but moderated to 9.5 per cent between 2015 and 2018. Market researcher Nielsen revised its growth forecast for the fast-moving consumer goods (FMCG) sector to 9-10 per cent in 2019 from its previous outlook of 11-12 per cent, citing a sharp rural slowdown.
How big is the innerwear market in India according to you?
As per industry estimates, the innerwear category estimated at ₹27,931 crore is 10 per cent of the total apparel market and is expected to grow at a compounded annual growth rate of 10 per cent over the next decade to ₹74,258 crore. However, innerwear is evolving from being functional to a segment with a fashion quotient. It's also shifting from being a price-sensitive category to a brand-sensitive one.
How do you see the future of innerwear business in India?
The innerwear business in India needs to be looked at in a two-fold manner. While the mass market still has a huge draw in terms of numbers, there is development at the top end of the market. Customers who are more informed and brand conscious are willing to pay a premium for products or brands that they identify with. The category lines are being defined better and with that there will be an even clearer distinction among brands & their offerings. The innerwear industry is already on the path of the overall apparel industry.
Has it reached a saturation point, although everybody needs to wear innerwear?
Mass-market products have now become commoditised. There is no difference between one product and another or between one brand and another. That's one of the reasons why brands in this space have used celebrities as crutches to further sales. There has been no innovation in this category for many years. At the top end, style and brand pull is what differentiates some brands. But consumers aren't satisfied with the current offerings. Today, innerwear is seen as a parallel to the main apparel categories. The more discerning customers are looking at innerwear differently-be it occasion-specific or utility-specific. Brands are identifying these gaps and are making efforts to plug them. Going forward, we may see some innovations in the category that would not have been expected some years ago.
What are the new developments created for VIP products in the future?
We are currently working on some new developments across categories. We will soon be launching some of our new initiatives in the market.
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