The world has become fashion conscious, and the Indian fashion industry is expected to touch Rs 750 crore by 2012, according to market figures published by Assocham. Global fashion labels are now fast foraying into emerging economies, of which India constitutes one of the prime constituent, not specifically from an opportunity perspective but from growth prospects too.
Comparing the Indian and global apparel market Purnendu Kumar, Associate Vice-President, Technopak Advisors, says, “The apparel market in India is estimated at Rs 1,20,000 crore and is expected to reach Rs 2,30,000 crore by 2013-14, whereas the global apparel retail market is estimated at US $86,000 crore and is dominated by US, EU and Japan.”

Lure of global brands
Looking at the market potential in India as an emerging economy, most of the well-known apparel brands from the portfolio of European nations like Italy, France, London, Spain and Denmark are now eyeing this productive market to popularise their brands and enticing consumers of different class. Now the question arises, why international brands are too bullish on the Indian market?
In India, nowadays, this hullabaloo of consumerism is on rise, income of middle class is increasing and they don`t mind paying a hefty amount on trendy labels. Experts believe that there is no doubt in saying that India today is a prominent market, as people here are more fashion conscious than before and they are more receptive to foreign labels. The fondness of international brands of Indian consumers prompts foreign brands to explore Indian market. LMG Brands India, has brought two international brands Kappa and Bossini which belong to Italy and Hong Kong respectively. Kappa is quite an old brand; it`s in the league of Adidas and Puma, and it caters to more lifestyle products. Being a youth brand, it has got sports identity. Sandeep, Assistant Vice President, LMG Brands India, enlightens, “Apart from footwear, lot of business comes from apparel, wherein menswear category contributes 70 per cent to the industry while the rest of 30 per cent comes from women`s category.”

Market research
Before entering into any country, it is important to conduct thorough market research prior to introducing the brand in a new market, whether it is international brand coming to India or Indian brand going overseas. Commenting on this, Dinesh Sehgal, Managing Director, Blues Clothing Company (BCC) explains, “Accessories like footwear and bags have an easy acceptance level whereas, the choice of apparel is based on the physical built, social requirements and weather conditions. It is important to study the buying patterns of target clientele to provide right merchandise mix.” Besides this, finding out a right location with high footfall, knowing target consumers, positioning brand, sourcing, considering entry routes, assessing competition, localising products, merchandising and pricing strategy are to be considered before introducing the brand to a new market.

Marketing with localized strategy
Spending more time in market research will eventually facilitate the foreign partner to understand the market demographics, income levels, peoples` preferences to western wear, consumers` mind-set and price acceptability at international standards by the target customers. With globalisation and prodigious growth of regional economic integration, the demands of people have become more diversified and heterogeneous. Samar Singh Sheikhawat, Vice president, Spencer Retai, believes, “Consumers have become pickers and more demanding in choice. The successful practice of many enterprises tells us that only by implementing localised strategy, corporations can acquire competitive edge in the marketplace.” Contrary to this Kotak believes, “In a country like India, people are so fashion conscious that they don`t need localization, hence whatever trends are doing well in the international market do well here too. Indian public only wants to buy products which are available in international markets. So, we don`t go for localisation in India because we don`t need localisation in fashion industry.”
Indian consumer is now more mature than any other Asian market consumer. It is imperative for an international brand to localise its products and offerings as per customers` choice and preferences. Several apparel brands that entered India`s marketplace have created a niche in market by offering right merchandise mix at different price points. For instance, the brands from Armani to Gucci have started Indianising their garment line to designer Saaris and Sherwanis to suit to Indian lifestyle which is quite different from the people in western countries. Isn`t it startling to know that International brands have now started understanding the tastes of Indians? It`s a truth whether one believes it or not.

Indian companies partnering with international brands
India is a vast nation with different tastes and preferences when it comes to apparel industry. The international brands entering India are inspiring the organised retail market in India. To this Kapoor believes, “International brands have brought in the culture of upscale distribution through high street and mall outlets. All this is helping India to become an International apparel destination, both for domestic and international brands.”
Reliance brands, Tata owned Trent, Spencer`s Retail Limited, BCC, Genesis Colors, Arvind Brands, Major Brands India, Future Group, Murjani Group, Raymond, Indus League Clothing, OSIM India, DLF Brands, S Kumars, Kimaya, Shapoorji Pallonji Group, TSG International Marketing, Mafatlal Group, Kishor Bajaj promoted Bada Saab Design, Alta Moda Garments are some of the Indian companies who have partnered with worldwide fashion labels.

JVs and franchise - most preferred entry routes
International apparel brands from European countries or other parts of the world usually make way to India particularly through joint ventures, master franchising agreements, marketing tie-ups, licensing contracts, or by setting up a subsidiary in the country. BCC is a well known retailer of men`s fashion apparel and accessories for past two decades. Talking about preferred routes for entering India, Sehgal considers, “In the current market scenario JVs and franchise options are preferred. It also depends on the brand`s marketing strategies and planning. Direct operating stores are the best option as the operations can be controlled to provide the luxury experience at par with international standards.”
Rachna Aggarwal, CEO, Indus League Clothing, informs, “In December 2008, we entered into a licensing agreement with Daniel Hechter, a Paris based brand. This route gives us access to their inputs along with the freedom on managing the business.”
In this period of global recession, when India is experiencing a slow down, the good news comes, that the Indian government is considering to allow foreign single brand retailers to invest more than the current limit of 51 per cent in their Indian operations.

Franchising finds an edge
Pepe Jeans London, Benetton, Versace, Corneliani, Mango, Savile Row, Debenhams, Mothercare, Valentino, Brioni, Alcott, Banana Moon and Axara are some of the brands that made an entry into Indian market through master franchise agreements. “India, with its huge market, and growing demand in all sectors of the economy, is an extremely attractive proposition for entry of foreign brands through the franchising route. The key attractions for this are lower capital requirements, huge market, cultural empathy, laws and language (English being the commonly spoken language) etc,” says Sheikhawat.

Nowadays, recession in the US and European nations has given rise to franchising not only in western, but in Indian market markets too. At present, the franchising industry in India is growing at the rate of 30 – 40 per cent, and it`s incredible to see franchising business in India taking off like never before. Kamal Kotak, Director, Major Brands India Pvt Ltd says, “All our brands are present through franchise agreements wherein we have brands starting from footwear, fashion to cosmetics.” BCC also has franchise arrangements with Versace, Gianni Versace, VJC, Versace Collections and Corneliani. Whereas, the company has licensing agreement for yet another Italian brand Cadini.

Feasibility of luxury brand franchise
This is a straightforward question that an entrepreneur asks before investing his money on a franchise partnership of a luxury brand. On evaluating the feasibility of franchising business, Sehgal says, “Taking franchise of a luxury brand is feasible if the brand already enjoys a popular reputation and desirability in the market. But the higher property rentals and the strict contractual agreements with the brand prove a deterrent to the desired profitability of an investor.”
While on the other side Kumar believes, “Demand for luxury products in India is primarily restricted to metro and mini metro cities and hence master franchise strategy can work; however it would be very important for the franchisee to understand the brand philosophy and invest accordingly.”
Kapoor considers, “Franchising in Indian industry is feasible. Both the franchisor and the franchisee should be committed to serve the Indian consumer. A long term view through brand strategy should be adopted and shortcuts should be avoided.”
“From my point of view, currently, whatever brands we have are premium brands, not luxury brands and what we feel is - for luxury brands, the investment is very high, so it`s bit difficult to take up franchise of a luxury brand, because import duties are high, and rentals are