![](\"..\/images\/spacer.gif\"){kind=spacer}
Pia \n Heikkila<\/i><\/p>\n Pia \n Heikkila<\/i><\/p>\n
The \n National , November 13, 2011<\/i>
\n <\/i><\/p>\n
It is Saturday afternoon at Mumbai’s posh Phoenix Mills mall \n and the place is buzzing.<\/p>\n
Giggling girls sit by the central courtyard sipping cold drinks, \n taking a breather. International labels such as Zara, Mango and \n French Connection adorn their shopping bags.<\/p>\n
Very soon a new brand could tempt these marathon shoppers. Kenneth \n Cole – the US apparel retailer – has entered into a deal with \n India’s Reliance Brands to launch retail and wholesale operations \n in India.<\/p>\n
Analysts say Kenneth Cole’s market entry comes at an opportune \n time.<\/p>\n
"The timing is right for them because this is a market segment \n which is expected to grow fast. India has a young population which \n wants to spend on clothes, the increased urbanisation trend and \n growing disposable income are also contributors," says Amit \n Gugnani, the vice president for apparel operations at Technopak \n research house.<\/p>\n
The market is expected to grow from US$65 billion (Dh238.7bn) \n to $200bn by 2020, according to Technopak. The sector’s value \n has more than trebled since 2005 and it is expected to grow a \n steady 25 to 30 per cent annually, it said.<\/p>\n
One of the shoppers Kenneth Cole may want to target is Supriya, \n 24, a television executive who spent 5,500 rupees (Dh404) on an \n outfit from the Spanish fashion house Zara. "I would definitely \n visit Kenneth Cole,’ she says. "I know the brand from my \n visit to the States and like their stuff."<\/p>\n
The American company wants to attract the young, brand-aware \n sector – shoppers with plenty of cash to splash. The US group’s \n plan is to open 25 stores across the country over the next five \n years.<\/p>\n
The appetite for western-style clothing is growing and the \n market looks promising, says Devangshu Dutta, the chief executive \n of Third Eyesight.<\/b><\/p>\n
"In the last four to five years over 100 brands have \n been launched that are all targeting this space, whether across \n genders or for any single gender," he says. "Typically \n these brands would be targeted at consumers in households that \n have annual income of 1 million rupees or more, and the income \n and spend levels are also growing rapidly in this segment. Therefore, \n I would say that the market is far from saturation, despite the \n competition."<\/b><\/p>\n
Apparel is the country’s second-largest sector, behind food and \n beverages. And its size has not gone unnoticed from overseas players \n who have been lining up to land on India’s shores. Brands such \n as Diesel, Vero Moda, Tie Rack, Promod, s.Oliver, French Connection, \n Guess, Next and Calvin Kleinhave been present in most of India’s \n big cities for several years now, luring the middle-class rupee.<\/p>\n
But it has not always been like this. Shoppers can thank India’s \n decision to join World Trade Organization (WTO) in 1995, which \n meant a reduction in import duties on clothes. The government’s \n decision to allow foreign direct investment of 51 per cent in \n single-brand stores in January 2006 has also helped the big brands \n to establish a presence.<\/p>\n
Foreign companies were allowed to set up shop in the country, \n provided they had found a local partner. And more recently, the \n government has said it is considering raising the 51 per cent \n cap, which would mean a choice of even more foreign brands for \n Supriya and her friends.<\/p>\n
Not all foreign ventures have been roaring successes.<\/p>\n
Take the UK’s high street retailer Marks & Spencer (M&S). \n When it launched in India in 2002 M&S positioned itself as \n a premium brand despite being a mid-market brand in Britain. But \n middle-class consumers did not flock to its Indian shops, turned \n off by the high prices, nor did the wealthy consumers, because \n they knew the brand was a middle-class phenomenon from their trips \n abroad.<\/p>\n
M&S tills did not sing to the tune of the sitar and a few \n years later the company admitted defeat and decided to turn its \n ship around. It reduced its prices and made its stores more middle-class \n friendly. Today the group is working hard to attract the mid-to-premium \n shoppers in India and sales are rising steadily.<\/p>\n
For Kenneth Cole India is still a blank canvas.<\/p>\n
Analysts say its success will be based on how it positions \n its brand. "It depends upon the brand-product value offer \n that is designed for the Indian market and how well can the international \n brand differentiate itself from the competition in terms of the \n product width and depth and the customer’s experience at the various \n touch-points," says Mr Dutta. "In addition, the product \n sourcing and supply-chain strategy will greatly impact the brand’s \n responsiveness and the margins."<\/b><\/p>\n
Pricing can be a problem for mid-market brands, he adds, because \n the mid-market segment in India is very different from mid-market \n in Europe. Income and spending habits vary greatly.<\/b><\/p>\n
"A brand has two choices: either to be consistent in \n its pricing, or to change its merchandise and shift pricing downwards \n to fit into the very different Indian mid-market."<\/b><\/p>\n
If pricing is kept consistent with European markets, then \n direct translation of European pricing into Indian rupees immediately \n places all mid-market brands into the premium segment.<\/b><\/p>\n
"On top of that, import duties ensure that there is less \n margin to manoeuvre on the retail price," says Mr Dutta.<\/b><\/p>\n
Reliance knows this because it is an old hand at handling foreign \n brands. Its stable has some of the most well-known global brands \n such as Ermenegildo Zegna, Diesel, Timberland, Quiksilver, Roxy \n and Steve Madden.<\/p>\n
So to make it in India, Kenneth Cole’s marketing, advertising \n and product people will need to be able to appeal directly to \n people such as Supriya and her friends.<\/p>\n
"India’s consumer base can be read as ‘many countries \n in one’, and the key to the success of any international brand \n in India at the outset is to be clear about its target customer," \n says Mr Dutta.<\/b><\/p>\n
"Both Indian consumers and the business environment are \n demanding, which reduces the margin for error and increases the \n time to break even dramatically."<\/b><\/p>\n
No financial details of the agreement between Kenneth Cole and \n Reliance Brands were revealed and neither company responded to \n queries from The National.<\/p>\n