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HIGHER disposable incomes, growing middle class, increasing fashion consciousness and varied acceptance of labels among the consumers has led to the ingress of many international labels in the fashion accessories market.
HIGHER disposable incomes, growing middle class, increasing fashion consciousness and varied acceptance of labels among the consumers has led to the ingress of many international labels in the fashion accessories market. Many foreign labels are simultaneously making a beeline into the market to achieve a step-by-step growth. Cut-throat competition amidst domestic and foreign brands is all set to intensify.
The best foot forward
According to the India Fashion Lifestyle Franchise Report 2009-10, the annual domestic consumption of shoes in India is 1s.1.1 billion pairs. It is estimated that footwear market is around $2 billion, which would grow at 10 per cent per annum. The Indian footwear retail market is expected to grow at a CAGR of over 20 per cent for the period spanning 2009-2011. Presently, the Indian footwear market is dominated by men's that accounts for nearly 58 per cent of the total Indian footwear retail market. Product-wise, the market is dominated by casuals, which make up for nearly two-thirds of the total footwear retail market.
Until now, watch market was hugely dominated by the unorganised local manufacturers and Chinese players, who used to sell cheap watches on the roadsides and highstreets. Their business started trembling when organised brands such as Titan and Raga cashed in on woman customers specifically, Fastrack targeted youth, Sonata the mass market while Timex, Maxima and Citizen garnered public attention. These companies began offering watches coupled with fresh designs, newest technology, eventually diminishing the business of local manufacturers /traders.
The watch market is fairly well-organised as compared to other few categories. “It is estimated that about 50 per cent of the watch market is organised and driving growth,” says V. Govind Raj, Vice President, Integrated Retail Industry, Titan.
Purses, handbags and clutches have always been an essential necessity for women. Right from globe-trotting to shopping, bags are a must. The women's handbag sector has emerged as a biggest market with a strong 47 per cent market share by volume and 40 per cent by value.
India's bag industry is divided into mass market brands and the unorganised sector. About 30 to 40 brands compete for the high-end luxury segment, which is a tip of the iceberg. “Brands like Hidesign singlehandedly cover the affordable luxury segment. International markets have very small or almost non-existent unorganised sectors with an exception of South East. Mass market and fashion brands own a chunk of the revenue and luxury brands cover about 10-15 per cent of the market,” claims Dilip Kapur, President, Hidesign.
Facets of franchising
Franchising in the fashion accessories industry is growing at a fast pace. Many domestic and foreign labels are extending their brand reach via franchising and minimum guarantee. Talking about it, Utsav Seth, CEO, Pavers England India, says, “We offer a combination of minimum guarantee and performance-linked revenue stream. It all depends on the location of the store. We control the shop fit, training and standard operating procedure is implemented by our store manager, who is based at the franchisee store.”
Manmohan Agrawal, Director, Bigshoebazaar.com, says, “We give multiple options to the franchisee, giving him better returns with risk. What is unique about our model is that the franchisee is able to buy products that he wants, rather than the company pushing products to his store. This enables us to react better to the market demand and hence better sales for the franchisee.”
Talking about his model, Vinayak Mahtani, MD, VI-GA, informs, “At present, we are working on both systems of business formats as well as minimum guarantee. In this case, location is the key. If the location is A+, then we are prepared to give MG.”
Emphasising on their franchise concept globally, Kapur adds, “We've had much better luck with franchising abroad where we have 18 franchisee stores. The issue in India has been one of maintaining the luxury feel and look of the franchisee store. We are open to it but we've not had much luck up till now.”
For effectively running the outlet, franchisors provide effective training and support to each of its franchisees and their employees. Franchisors in the accessories market provide an extensive product and sales training, manage the infrastructure of the store, store fit outs, visual merchandising, stock planning, brand promotion and marketing, train the staff with regard to keeping in-store security and helping them in using various technologies that are installed at the store.
In India, Lotto is licensed through Sports Lifestyle Pvt Ltd since July 2007. According to Lalit Kishore, MD, SSIPL, “The choice depends on the location of the prospective store, rentals, city or town. The company's uniformity of operations is maintained through training modules and induction programmes, which our front-end staff goes through. The back-end and front-end staff have a uniform set of processes and best practices, which are then implemented across the different locations to maintain uniformity in store operations. The common set of KPI's and KRA's help in monitoring the same. The common software too ensures the uniformity in the billing/inventory management for all stores.”
Raj confirms, “The franchisee gets all the support in setting up the infrastructure, store design, assistance in project management for store fit outs, visual merchandising and stock planning, support in local promotion and training of sales staff and the franchisee.”
Whatsoever idea appears sizzling today, often cools off tomorrow. That is why companies are in favour of an initiative of brand extension strategy. For instance: Adidas expanded into apparels, Reebok into accessories, Titan into eyewear, Louis Philippe apparel into footwear, Lotto into apparel and accessories, Nike and Puma to yoga mats, pouches, water bottles, caps, dumbbells, weights, wristbands and headbands as well as gym bags.
To ensure higher sales, companies are paying strong attention on aggressive promotional and marketing campaigns. These include seasonal advertising, corporate tie-ups, strong public relation tactics, styling newer design materials, retaining present customers and targeting more customers through loyalty schemes, advertising through social networking sites and e-marketing initiatives. To target more value for money customers, many companies are in the favour of extending their brand's reach to the untapped regions through various retail distribution models.
Inflow of labels
Inflow of global labels has metamorphosed the Indian market. Consumer demands are increasing from considering accessories such as footwear, watches and bags as being mere necessity to a product that swanks their fashion sense and lifestyle. Localisation is considered as a significant element for the success of any foreign label in the market. The company must endeavour to localise its product range as per customer preference in terms of sizing the product, price range and other local market conditions.
“Pavers England's brand statement is 'European brand with Indian heart'. We have instead invested $3 million in an R&D facility in Tamil Nadu, making us probably the only international retailer to make such a significant investment in a R&D facility to ensure that products are customised to the Indian environment,” states Seth. Few industry experts are quite optimistic about foreign brand's entry to India, as their quality standards in every product line with varied choices and good customer experience have eventually helped them to gain popularity. By adding local feel and touch in their products, they have been able to capture the bigger share in the market.
To lessen the risk from foreign labels, Indian labels are renovating and consolidating their present stores, strengthening presence in good locations and creating products for value-for-money consumers.