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May, 09 2011

INDIAN BRANDS HEADING GULF

What charms the Indian brands to move towards Gulf. Is it only about expansion or more about sharing similar business sensibilities? Also, what drives the demand for Indian brands in the Middle East? Let’s find out.

THE glitter and glamour of the Indian fashion brands has seemingly found the sparkle in the Middle East. Standing testimony to this fact is the large number of Indian brands that have forayed into this market in the recent times. The Middle East with its brimming high net worth individuals and the plush lifestyle has eventually transformed into the Noah's Ark, laden with brands across the globe and India queuing up to showcase its products and talent to tap the USD 12 billion Gulf clothing market.

Smorgasbord of global brands

If success on the Indian soil is the raison d'être for Indian fashion and accessory brands, then overseas expansion is eventually the next step to peddle this brand success. And the Middle East being the ultimate smorgasbord of global brands has been the ideal destination for expansion for most of the Indian brands. Admitting this fact, Vijay Kapoor, Founder and Managing Director, Derby Jeans Community, states, “Yes, our success can be attributed to our strong aspiration to become India's No. 1 men's wear brand and be global-ready. Our goal in India has been to steadily increase presence in prominent cities such as Mumbai, Delhi, Bangalore, Hyderabad and Chennai. But nationally, we cannot open more than 300 exclusive and shop-in-shop stores. This success in India has been one of the reasons for us to enter into the Middle East.” Justifying further, Pradeep Hirani, Chairman, Kimaya, explains, “The Middle East is quite an easy market to understand since it is quite similar to us in many ways. It is an emerging market and holds great potential for Indian fashion and apparel brands.”

What makes Middle East ticks

So what makes the crème de la crème of Indian brands head towards the Middle East? If industry reports are to be believed, the steady surge in the Arab fashion market, including the emergence of a local mall culture quite evident by the launch of numerous commercial centres, has added to this meteoric rise. According to a study conducted by the French Fashion University Esmod, Dubai, the leading fashion institutions in the region foresee numerous opportunities in the USD 12 billion Gulf clothing market, which has been steadily alluring new brands to the much affluent, progressive and fashion-conscious region.

States Mehul Choksi, Chairman and Managing Director, Gitanjali Group, “The Middle East is a region that has one of the most business-friendly environments in the world. The governments have created excellent infrastructure, which is so very important in today's world. There is also a very positive tax regime and not too many obstacles in terms of unnecessary regulatory framework. It is a perfect place to do business. Currently, as the global crisis is easing, the economy is stabilising once again. So, the growth prospects are excellent.” Fabindia, the brand catering to contemporary lifestyle choices, has been in the Middle East since 2004. States Prableen Sabhaney, Head, Communications and Public Affairs, Fabindia, “The first store in UAE opened in Dubai way back in 2004 and its success has encouraged us to look at new avenues in the Middle East. So far, we've had a great response and the brand is a favourite with the Indians and expats along with the local population.”

How it generates growth, profits

Even though the downturn had soured the appetite of most of the HNI buyers in the Middle East, the scenario has picked up pace in no time. This is evident from Indian brands reaping rich dividends. As per recent research reports, the apparel, accessories and luxury goods will be the fastest growing category group with a CAGR of 10.08 per cent from 2010 through 2015. And going by these trends, the Middle East has steadfastly evolved to be a major destination for numerous Indian fashion and accessory brands to tread towards the Gulf.

While several Indian brands have expanded globally, it's only a handful that have been swept by success. So what is it that has been generating growth and profits for Indian brands particularly in the Middle East? Market analysts usually hypothecate this to the widespread acceptance and huge recognition that Indian brands enjoy in the Middle East especially in Dubai.

For Kimaya, the brands that this upmarket fashion house stocks has been the recipe of its splendid success. Says Hirani in this regard, “Kimaya doesn't just stock the high-end designers but also the retail edited collections of these craftsmen keeping in mind the fashion sensibilities of the clientele in a given city. This is definitely what works like magic for us in the UAE. The store in UAE has merchandise that is very different from that available in Mumbai and Delhi or any other of our store for that matter.”

Furthermore, franchising has been an added impetus, leading to the success of brands in the Middle East market. States Choksi, “Franchising is a business model that we have adopted successfully in India and some other parts of the world. Gitanjali is a brand owner and has successfully developed our brands. As we take our brands to different markets, we seek out local partners, who have a good knowledge of the local conditions and cultures, as they help us integrate more easily with faster expansion and penetration in the market. It is a win-win situation for all, the brand is assured of its margins and the local partner can also earn well.” Kapoor affirms, “Franchising is the most valuable tool available for brands wanting to go global. Every country has its own specific regional requirements. To have a strong hold on the Middle East market, franchising will give us a chance to partner with local experts, who know the market well and to form a bond with the customers.”

Several Indian brands who have been in the Middle East are not only counting on high profits but have aggressive expansion plans up their sleeves. Confides Choksi, “Our operations are centred in Dubai, which is the centre but we are expanding into all sections of the Middle East which includes UAE, Qatar, Bahrain, Kuwait, etc.” Fabindia, which has recently opened its second store in Dubai at Jumeirah, has immediate expansion plans, including the launch of two Fabindia stores by the middle of this year in Sharjah and Abu Dhabi. While Hirani discloses, “Kuwait, Doha and Abu Dhabi are definitely on the cards. We receive a lot of inquiries from potential businessman who have expressed the interest of taking up a franchisee of Kimaya in the Middle East.”

Customisation and challenges

Going by the diversity that beholds the Middle East in terms of market mix, some of the Indian brands have simply succumbed to the cartel of customisation. Speaking on the importance of customisation, Hirani says, “The need of the hour is customisation and personalisation of the offering and this would go a long way in popularising the brand in a new region. Being able to adapt to the locals and their way of life and keeping in mind the cultural differences is what the brands need to concentrate on.” States Kapoor, “Derby Jeans are designed for the international customers keeping in mind their physique and sensibilities.”

Risks and challenges are an inherent part of a brand's success story, particularly if the brand is opting for international route. “Initial hiccups are part of every new establishment and similarly, Dubai also needed a gestation period of a few months. Being our very first international store, we took time getting the logistics right,” says Hirani. While Kapoor highlights, “Cultural and economic differences are the two most challenging aspects to keep in mind when choosing global markets and finding the right local partners to work within those markets. The local partner should understand the brand's vision and share a similar dream. To overcome such challenges, we want to choose locations which suit the brand and not us.”

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