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Sep, 10 2010

Italian lifestyle in India

Natuzzi S.p.a, a global leader in leather upholstery, recently announced its foray into the Indian market.

Natuzzi S.p.a, a global leader in leather upholstery, recently announced its foray into the Indian market. Geared up for its first flagship store in Delhi in August, Nitin Bahl, Country Manager, Natuzzi Group (India), talks about Natuzzi and Italsofa branded stores.

What are your immediate expansion plans for India?

We expect our first flagship store to be operational by mid-August. At this point in time, we are tying up with franchisees for metros and capitals. Post this, we will start finalising retail spaces. By the end of this year, we expect between 8-10 points-of-sale for both the brands, Natuzzi and Italsofa.

How do Natuzzi and Italsofa serve different set of audience?

Natuzzi is a mature brand; it's more classy, the product proposition is much wider and much larger. Italsofa, on the other hand, is developing into a complete look brand and soon, we would be launching accessories too.

Natuzzi stores are much larger in size, the price points are much higher. Natuzzi sofa cost begin at Rs 3.5 lakh for five seat and goes up to Rs 7.5 lakh. At Italsofa, the cost of a five-piece sofa set would start at Rs 1.75 lakh and go up to Rs 3.5 lakh.

For Italsofa, we would look at smaller but more stores with greater penetration. For Natuzzi, we will have larger stores but fewer stores from image point-of-view. Natuzzi will be operating out of flagship and mono brand stores and we will not go for shop-in-shop format. For Italsofa, we would be looking at flagship, mono brand and galleries. Galleries are essentially shop-in-shops.

How did the Indian market help you develop your retail strategy?

In India, an international brand can operate either through the franchise route or a joint venture. Since 100 per cent FDI is not permitted in India in retail, all our stores will be franchised. For us, the opening up of retail market was not a constraint, as worldwide we operate via the franchise route. We have both the options where we have our own stores as well as the franchised ones. In certain countries, we do operate via franchisees, so it has not been a constraint.

What is your franchise model like?

We work on a city-based model where we give exclusivity to the partners to open stores in a city. They are required to open a minimum number of stores in a city and we jointly work out a business plan. If we have tie-up with someone in Delhi for Natuzzi, he will have the exclusivity of operating Natuzzi stores in Delhi. Thereby, he will be required to open x number of stores in Delhi for Italsofa and there would be another guy opening x number of stores of Natuzzi in Delhi.

How many stores do you plan in the next three years?

We are looking at 70 point-of-sales by 2012 for our two brands. In phase one, we will be looking at Delhi, Mumbai, Bangalore, Chennai, Pune ,Calcutta, Cochin and eventually will move on to tier 1 and II towns for Italsofa than for Natuzzi.

Which are your target retail locations?

We have decided to venture into the market more through high streets. As and when we have more appropriate options in malls, we will venture into malls as well. Malls as a concept is at a nascent stage and for a category like us, there are no malls which cater to our segment as such.

What is your international presence?

We are present in 123 countries with around 700 points-of-sale. Post China, our second largest foray has been into India. The largest markets for us are European and those in North America. We also see a lot of growth happening in Asia. There is a lot of focus on Brazil, Russia and India.

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