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Mar, 01 2008

Fashion-wear in style with franchising

When it comes to fashion, it`s not just about smart clothing, it`s about grooming your personality as a whole. The Indian fashion industry is largely dominated by the small-scale unorganised sector. However, well-known Indian fashion designers are beginni

Whatever we wear leaves a lasting impression on people we are associated with. Fashion designers are true masters of disguise. It is they who help us to show off our best body features and disguise our body flaws through intelligent and smart dressing. Our society relies on fashion as a form of expression, which is why designer clothing is gaining so much recognition nowadays. The vocabulary of women`s clothing is usually more developed than that of men`s. Also, women`s designer wear range is priced lower than that of men. This is because women shop for more things and they shop quite often, and also their usage per garment is less as compared to men. As per the estimates, Indian designer wear commands a category engagement of 66 per cent for male customers and 57 per cent for female customers.

Growth of fashion industry

The fashion industry is one of the fastest changing and most dynamic industries in the world today. As explained by Sanjay Kapoor, MD Genesis Colors Pvt. Ltd, “The Indian fashion design industry can be estimated at Rs 270 crore in the current level. Genesis Colors Pvt. Ltd owns approximately five per cent in the Indian designer wear market”.

He further adds, “The Indian consumer has reached a point where he has realised that fashion is not limited only to the fashion weeks and the ramps, but is something that can be integrated into everyday life. This coupled with the inspirational value generated by designer creations has propelled the fashion industry`s growth and will lead to a bigger rise in the demand for designer wear”. The reason for the growth of the industry can be attributed to the growing awareness amid consumers about designer brands, courtesy mass media and belligerent marketing campaigns that are carried out by the designers. Apart from this, higher disposable income with the people is also giving impetus to the industry. The consciousness concerning fashion and the changing trends in the industry worldwide also add to the growth. At present, the global designer wear market is worth about Rs 1,62,900 crore and growing at 9.5 per cent every year, according to Associated Chambers of Commerce and Industry (ASSOCHAM) analysis on Indian Fashion Industry. As India is the third-largest cotton producing country in the world and also possesses an abundance of talented designers, the Indian fashion industry is at an advantage over other countries as far as its growth prospects are concerned.

Jattinn Kochhar, designer, labels the market as, `really big`. The industrial towns are witnessing a huge growth, as lifestyle seems to be becoming very important in these cities. “Our market share in terms of Indian field is 10 per cent,” he adds. According to JJ Valaya, designer, “The size of the Indian market for designer-wear is 0.2 per cent of the total apparel market in the country. Our market share is 20 per cent of the total designer-wear market”.

The penetration of designer clothing has become deeper in the country and the interaction with the customers has also increased. Consumers are becoming more fashion savvy, they attach more value to brands and understand and follow trends. Media has flaunted fashion and more consumers are enthralled by its sheer spirit. Moreover, with the growth of the economy and the resultant rising living standards and deeper pockets, there is a drift from local market garments towards high street and designer brands.” Vikram Phadnis, designer, says, “We are just a drop in the ocean. People follow all the latest fashion trends and even the celebrities have a major influence as most of them are brand ambassadors.”

Franchising in designer wear

The fashion industry is expanding by leaps and bounds but lack of government benefaction and not so encouraging commercial terms erode the ability to assertively invest. High excise, local sales tax, service tax, 40 per cent retailers` cut off are also some of the hurdles in entering the retail market. Earlier designers worked on consignment basis with various hypermarkets and stores where they would house and sell their merchandise. But now they are withdrawing their stuff from these stores as they feel they were losing their significance. They are opening up exclusive stores and these stores are either company owned or franchised. Opening up of company owned stores all over the country and abroad is not possible, as it would require massive investment and management. So keeping this in mind, designers are opting for the franchising route.

Franchising of designer wears is proving fruitful as it is serving to increase the brands` visibility along with sales. As viewed by Kapoor, “Franchising is a long-term benefit and not a short-term business initiative. Hence, a franchising model is complete only when one is clear about the structural expansion of franchising. Considering India`s skyrocketing real-estate prices, franchising is a cost effective and market friendly method to enter fresh territories. It also allows a company to expand the brand presence while retaining control over the business.” Further he adds, “Franchising appears to be thriving in India but most agree that this industry is at a nascent stage here. While franchising accounts for about 17 per cent of the share of all retail trade in other parts of the world (about 25 per cent in US), in India it is still at only about three per cent. There is an enormous untapped potential for new entrants in the franchise sector”. On the other hand, Kochhar is not having any franchisees at the moment but wanting to enter the field. He is looking for someone who is as passionate about work as he is and also someone who matches his ideology.

The International market in franchising is much more organised and franchisors there do their homework well before starting. They have the infrastructure and the finances available readily which makes it a success there. Here it is still coming up and it is not advisable to rush into any venture. Valya says, “Franchising is a marketing format, a very powerful way of retailing goods and services. From our perspective franchising represents an efficient method of rapid market penetration and product distribution without the typical capital costs associated with internal expansion. It is a typical win-win situation for franchisors, franchisees and consumers. We are on the brink of rapid expansion and franchising is one of the important routes we are using to grow.” He also says, “Franchised operations are becoming more popular in geographically vast and culturally diverse nations like India, as franchising helps to overcome the difficulties of having a chain of company owned outlets. Likewise in the designer industry, franchising holds great opportunities and acceptance. Once a brand is built, the best way to reach the market is via franchising.”

Phadnis who has three franchised stores says, “I feel that franchising helps in terms of growth of the company. It allows the company to penetrate quickly in the market. It also makes it easier for the buyer where convenience is concerned. . Rathi Vinay Jha, Director General, FDCI says, “Franchising is in its early stages in India, and has become increasingly popular. It definitely has a lot of scope in India. In this respect, fashion councils are an integral part of the fashion industry, which not only look into the overall development of the industry but promote the interest of the fashion fraternity and offer various opportunities to promote the business of fashion. Franchisees can definitely gain from fashion councils so as to understand trends and needs of the fashion industry”.

Significance and role of fashion councils

Internationally, designers have organised themselves into various councils which help them in their functioning. The Council of Fashion Designers of America (CFDA) in New York, the Camera Nazionale della Moda Italiana in Milan, British Fashion Council (BFC) in London and the Chambré de Syndical Iin Paris, all play essential roles in enhancing their respective fashion trades. Established in 1998, Fashion Design Council of India came with a clear mandate of promoting the business of fashion within India and at global marketplace and providing capacity building measures to upgrade the skills of the Indian designers. Jha opines, “The FDCI has forged relationships with international fashion councils and events in France, Italy and New Zealand, which we will continue to leverage in the years to come. As an industry body, FDCI has facilitated designers` and buyers` meet and conducted mentoring sessions for new designers. The members of FDCI include individuals and organisations from the fashion industry; for example fashion designers, accessory designers, representatives from the industry like models, choreographers, backstage coordinators and hair and make-up artists. It also includes corporate bodies like retailers, suppliers, exporters, buying houses, institutional bodies and, of course, honorary members. FDCI focuses on the overall growth of Indian fashion, through various opportunities and events like the Wills Lifestyle India Fashion Week, fashion communication workshops, seminars or talent hunts and fashion awards”.

Franchising trends in fashion retail

Fashion designers have realised that they not only have to cater to the elite clientele, but also to the prêt and ready wear market to be successful in India. And the target is not just the la crème de la crème now, it is the budget buyer who is being analysed and targeted. The growth of the designer wear segment is seen as being steered by the upper middle and middle classes. An increase in the awareness about designer clothing has resulted in the middle class gradually shifting preference from unbranded to branded clothes. This sway is further pushed by the changing lifestyles of the people, value systems, and an increase in individual disbursement on clothing. It is for this reason that designers have decided to level down the cost of their valued labels. They are now creating to suit the choices and pockets of the escalating upper middle and middle classes. Most of these new designer wear ranges begin at around Rs 600 and go up to Rs 10,000. But many of them lack the processes, systems, and financial resources to scale up their operations, as it is a costly and risky proposal.

Scope for future growth

Indian fashion design industry is expected to grow much faster than projected. Kochhar says, “The future growth would be great. The gap of corporate backup should be filled in so that the creative energy of designers is not lost in other kinds of organisational and business work.” Valaya opines, “The Indian fashion industry is experiencing a `boom` thanks to the Indian consumer becoming more fashion conscious. According to a recent KPMG study, the designer wear fashion industry in India is estimated to grow to Rs 10 billion by 2010. Experts in the fashion trade estimate the annual turnover of the industry to be about Rs 60,000 crore. With figures such as these and the growing fashion conscious public, we can only visualise the designer market to grow at a constant pace and create a significant space in the retail segment.” LVMH (Moët Hennessy – Louis Vuitton) does not appear to be the only one who has planned large investments for the Indian designer wear industry. Various other investors from some overseas fund-houses and from countries like US, France, Dubai, Singapore and Mauritius are also ready to be associated with this industry. Phadnis says, “The fashion industry here is doing extremely well. I do feel that we are on par with the international markets. Over the years there has been tremendous growth where patterns and styles are concerned. If it continues to be the same then we definitely will be more recognised and known.” Jha says, “The FDCI is holding a Couture week in 2008, which will be hosted in Mumbai. India has a strong couture tradition and therefore there is a need to offer a window of opportunity for this market”.

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