French Fashion Brands in India - the most promising retail market in the world
A recent A.T. Kearney report pegged India as the “most promising retail market in the world”. The report helps gauge the best opportunities for retail investments globally and ranks 30 developing countries by their market attractiveness. India dislodged longtime leader, China, to occupy pole position. A.T. Kearney accounts for this by pointing out that India’s growing middle class, rapidly expanding consumer spending, and increasing urbanization have helped it overtake a mature market like China. This growth story is borne out by hectic activity in this sector, with 50 global retail chains set to open approximately 3,000 stores in India, over the next six months. A significant majority of these new brands will focus on apparel and lifestyle offerings.
And while big names from the world of fashion from across the globe, from Kate Spade, Muji, Cole Haan and Brooks Brothers, to Gap, Zara and Armani Exchange, have made India home, French fashion brands have become an unfailingly familiar part of the urban landscape in India today. French brands in India include luxury players like Chloé, Longchamps, Christian Dior and Hermès to high-street brands like Lacoste, Promod and Celio.
Cashless Payments, GST and slowly-changing FDI Norms = Govt. Support for foreign brands
For its part, the Indian government is doing its bit to encourage global players to consider India as a preferred destination. It recently introduced large scale tax reform with the unified tax structure or Goods and Services Tax (GST) coming into effect in July 2017. The centre is encouraging cashless payments and has also allowed foreign investors to float and run wholly-owned single brand retail stores. This relaxation in policy comes with its share of riders, however, brands like Celio have sought to leverage this clause to the fullest extent.
Celio is one of the largest apparel brands in France and has 500+ stores and owns 17% of the market share of menswear in that country. Celio began expanding internationally in 1992, and today it operates in 65 countries with 1000+ stores, worldwide. Celio entered India in 2009 and has 40 exclusive outlets, and 140 shop-in-shops at departmental chains like Shoppers Stop, Lifestyle and Central. Celio was one of the first brands to apply for 100% FDI in India, as a single-brand store. Over the years, it has steadily taken a controlling share in the company, moving from a 50-50 JV in 2008, to a 65% stake in 2012, and now 97% of ownership lies with the French company.
Tweaking brand strategy to appeal to Indian consumers
In an interview to The Free Press Journal, their CEO Rajiv Nair said that one of the biggest challenges for the brand lay in creating consumer awareness, as Indians tended to be more familiar with British and American brands, but had not heard of Celio, with its French origins. Along with building the brand, Celio had to also focus on a new positioning that resonated with Indian consumers. Rajiv Nair says that this was necessary because, "India is a very different market from Europe. For men in Europe, dressing up is a way of life. Indian consumers are more conservative and followers of fashion.” He added, “Indian consumers are brand seekers and like to flaunt brands through overt manifestations like logos whereas the European customer is more evolved and prefers subtlety.” Celio therefore chose to move away from the concept of “Life Enjoy” that worked in France, where the Celio man is portrayed as an individualistic, fun loving and relaxed individual, to “Effortless Style” as a positioning statement, with an Indian specific logo.
E-commerce, a game-changer
Celio also plans to launch its own E-commerce portal soon. To the surprise of the Celio HQ, the Indian arm of their brand has grown its online business from 0-13% over the last three years, by being present on E-commerce channels like Myntra, Jabong, Amazon, Flipkart and Snapdeal. This pace of growth is unheard of in developed markets like France, where major fashion brands typically attribute 2-5% of their business to their digital presence.
Another French clothing company, Lacoste, who entered India way back in 1993, sells exclusively through its own website, and also has a chain of 50-odd physical stores. According to a company representative, this is a conscious choice to guard against counterfeit, unauthorized or imported goods being peddled via third-party websites. In an interview to Quartz, Rajesh Jain, representative Lacoste in India also said that Lacoste has stayed away from e-commerce websites because of the discount culture. But the rising impact of online behemoths like Amazon, Flipkart and Myntra on a company’s bottom line mean that such decisions may need to be reconsidered in the future.
Access to physical stores may be harder to come by in India, which is why e-commerce business is seeing such phenomenal traction here. Which is why French fashion wear brand Promod, too, has recently forayed into this space, with a launch on Myntra. Retailing over 350 ready-to-wear apparel styles, accessories, and footwear, Promod is targeted at unpretentious yet stylish, modern Indian women. Through the online platform Promod is looking at doing business worth 160, 0000 US Dollars in the first year. This is complemented by their success in the offline format, with their store in Delhi reporting the highest sales per sq. ft. in Asia. This success is in sharp contrast to the brand’s fortunes in developed markets like Europe, for instance the German-subsidiary of Promod filed for bankruptcy in 2016, due to poor sales.
All in all, a stable governmental and increasingly pro-foreign-investment policies, the rise in spending by well-travelled and affluent Indians, and the ubiquity of mobile phones and E-commerce will all ensure that India continues to be a highly-preferred destination for fashion brands from the world over. If you are looking for a consulting firm to help you explore upcoming opportunities in India, and tailor-make a strategy to improve your chances of success in this market, contact Arsha Consulting.
Preeti Prakash | Journalist