Turkish retail giants to hunt for partnerships at India retail forum

With the aim of discovering opportunities and gathering necessary information about the Indian market, a Turkish delegation consisting of a number of Turkish retail brands are set to take their places at a retail forum in India and carry out individual meetings with investors and producers in India

Turkish retail giants to hunt for partnerships at India retail forum

A delegation consisting of a number of Turkish brands are set to take their places at the India Retail Forum (IRF), which will be organized by the International Retail Property Market MAPIC, Sept. 19-20 in Mumbai, India. To discover the unique and significant Indian market, Turkish brands are expected to hold one-on-one meetings with investors and producers inside and outside the fair. During the two-and-a-half day long fair, Turkish retail giants are also expected to seek considerable, large-scale cooperation in India to help them understand the dynamics of the Indian market. Investments by Indian investors are also expected to be attracted to Turkey thanks to the organization.

Stating that India, with a population nearing 1.3 billion, is among the target markets of their brands, United Brands Association (BMD) head Sinan Öncel said India stood out as one of the leading countries arousing curiosity in surveys they conducted among their members as part of their abroad expansion activities.

“In line with the expectations of our members, we are organizing a trade tour to India in cooperation with our Economy Ministry and the Istanbul Apparel Exporters’ Association (İHKİB). Our brands that will join the tour include AVVA, Colin’s, Collezione, Dufi, Kiğılı, Damat Tween, Mavi, Tuğba and Network. During the tour from Sept. 18-22, we will have an opportunity to hold one-on-one meetings with investors and producers in Mumbai. Also, we will strive to discover the Indian market by visiting the IRF Mapic India Fair organized with the participation of 400 retailers and 100 investors. The tour will mainly focus on getting to know the market. Thanks to this organization, we might also attract Indian investors to Turkey, while opening stores in India,” said Öncel.

Number of stores to reach 4,500 by 2020

Underscoring that their brands mark significant economic operations both inside and outside the country, Öncel said that some 99 BMD have more than 2,700 stores in about 110 countries.

“We aim to increase this number to 3,000 by the end of the year and 4,500 by 2020. Our brands that expand abroad develop emotional bonds with the people of the countries they embark on. Therefore, we call our brands “economic special forces” of the Turkish economy and retail sector and believe that they will achieve greater successes in the near future,” he added.

15-16 pct growth expected in organized retail in 2017

Moreover, the overall retail sector in Turkey closed 2016 with a turnover of TL 670 billion (around $ 194.95 billion). The share of organized retail in this turnover is around TL 220 billion.

Indicating that they focused on growing in a cautious way and opening more retail stores abroad during the first half of this year, Öncel said: “Over the past years, organized retail has been growing at a pace that is four times faster than overall growth in t

he Turkish economy. We expect around 15-16 percent growth this year.”

He added that they endeavor to manage growth by focusing on productivity. Through this lens, he said, they prioritized closing down their unproductive stores as part of the four main agenda topics they agreed upon. “Our second priority in this scope is avoiding repeating old mistakes in future investments. Third, we concentrated on export activities to a greater extent this year. And last, we determined to focus on innovations that strengthen the brand, create a difference and have a potential to bring profits,” he added.

Turkey’s leading 412 brands gather under BMD

The BMD was established in September 2001 with the participation of Turkey’s leading brands mostly from the ready-to-wear sector. Over the past 16 years, the BMD has diversified sectorial distribution within the association by incorporating shoe, communications, optics, furniture, home textile, cosmetics and accessory firms. The BMD currently has 412 brands under its roof. BMD member brands employ more than 400,000 people across Turkey in more than 380 malls and 70,000 street stores.

Trade tour to Mumbai, India

Indicating that they are heading to MAPIC India this year with a delegation consisting of a number of Turkish brands to examine the unique and significant Indian market, Yonca Aközer, general manager of Alkaş, a consultancy company that develops fair projects, particularly for retail and real estate sectors, said: “During our tour organized in cooperation with İHKİB and BMD, we will have meetings both inside and outside the fair. Our retail brands attending this trade tour include Avva, Colin’s, Collezione, Network, Kiğılı, Damat, Tuğba Deri, Dufy and Mavi Jeans.”

Aközer added that during the trade tour that will last two-and-a-half days, each Turkish brand attending the fair would introduce themselves with a 5-minute presentation. “MAPIC India is a significant fair that enjoys the participation of nearly 2,000 brands, both local and international, which helps us understand the dynamics of the Indian market,” she said.

Indicating that the Alkaş company has been representing Turkey at the MAPIC Fair, an international retail estate show held in Cannes, France, for 23 years, since 2008, Aközer said that MAPIC started to enjoy growing interest as Turkish brands’ ambitions to expand abroad increased.

“Master franchise firms, shopping mall investors and retailers from 70 countries attend the fair. Each year, a stand named Turkish Brands is set up in the fair in which we organize representations of our brands and b2b meetings. To take its success one step further, MAPIC Fair also conducts special works in several countries. Mapic India is one of the leading examples of this,” said Aközer.

Underscoring that they will hold meetings with some large-scale and considerable corporations of India, such as Tata Group, Arvind, Shoppers Stop, Raymond and RJ Corp, during the tour, Aközer said: “We are planning to have a seminar addressing our participants on the first day of the event to help them achieve better brand positioning and understanding of the market. In this seminar, our embassy’s commercial affairs office and a number of law, logistics and consulting firms will provide the audience with important clues about doing business in India. Along with the b2b meetings, seminars and presentations as part of the tour, we will also visit some leading retail streets and malls in Mumbai, including Linking Road, Lower Parel and Inorbit Mall.”

She also emphasized that they have tried to organize a well-rounded trip to get to know the Indian market and take smarter steps in this respect, saying that MAPIC India portrays the dimensions of the Indian market and that they believe that they will be among the most important delegations in the fair with their Turkish brands.

“As already known, we have been setting up a stand entitled “Turkish Brands” in the MAPIC Fair for the last five years with our brands that wish to expand abroad or already have this experience. We will also be in the fair this year Nov. 15-17,” said Aközer.

Led by İHKİB and BMD, the fair is to host a number of Turkish brands, including Colin’s, Altınyıldız, Aymarka and Kiğılı.

She also marked that they are also planning the participation of strong brands like Damat and Avva and that the prominent concept of this year’s MAPIC is Food & Beverage, saying they believe that their brands in this sector that plan to expand abroad will also attend the fair.

“We believe that the success we achieved with our ready-to-wear sector will grow with the food & beverage sector. Each year, we represent Turkey in MAPIC with around 300 Turkish businessmen. We think that we will reach the same level of attendance in the event this year with food and beverage firms and ready-to-wear and shopping mall investors,” she added.

Furthermore, stating that the “Innovation” section of MAPIC, which has been organized for the last three years, showcases technology firms that offer products or services in the retail sector, Aközer said it is of utmost importance for their attending brands to visit this section. “With the new technologies showcased, conferences and professionals coming from around 70 countries, MAPIC is a significant fair enabling brands to catch up with new trends in the retail and shopping mall sectors,” she added.

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Adidas seeks to create the New

Dave Thomas, Managing Director, Adidas Group India. - Bijoy Ghosh
Dave Thomas, Managing Director, Adidas Group India. – Bijoy Ghosh

The sports apparel and accessories major says better business lies in opening bigger and bolder stores

Dave Thomas looks every inch the rugby player he is. Tall and burly, Thomas, 46, the Australian Managing Director of Adidas India, likes to wear his brand not just on his sleeve but on his whole self. In an Adidas Originals branded t-shirt and sports shoes, Thomas could well be on the way to a rugby match, though he‘s on a market visit to his stores in Chennai.

At the spanking new Adidas outlet at the Express Avenue mall in Chennai, Thomas waves expansively around the store, all 7,100 sq ft of it, the largest so far in the country, explaining that this large format is the way its new stores are all going to look. “We are opening bigger stores and making them more experiential in a new format. We have a lot of small stores, but the ability to experience the brand is limited,” he explains.

Doing business differently

Apart from a large range of its products, the store has three zones: a small football pitch, a treadmill zone to try out the football and running shoes and a jersey zone to personalise T-shirts. To roll out more such stores, Adidas is consolidating its franchisees. There will be fewer and better franchisees. In the past, Adidas had almost 500 franchises. That came down to 75 and now it will bring them down to 45. “In the past, the strategy of franchise partners was, smaller the store greater the chance of being profitable. But we have seen over the years that the bigger stores are the ones which make more money. Consumers are sick of stores with a limited range,” he explains, adding, “We are confident of opening stores above 10,000 sq ft, provided there is a compelling business value.” Devangshu Dutta, Founder of retail consultancy Third Eyesight, says a large store will serve Adidas’ strategy well. “Consumers can experience the brand in its wholeness but it will also need better trained sales associates who can showcase the brand better. Consumers read a lot, there is more awareness of a product before they land up in a store so sales staff need to be prepared.”

Powered by the resurgence in running and in football, Adidas India, along with brand Reebok, registered ₹1,400 crore in sales. Among the international footwear brands, which include Nike and Puma, Adidas and Reebok together claim a 45 per cent share. Adidas has been registering a 12-15 per cent growth in the approximately ₹3,500 crore-a-year market for premium sports footwear. “We’ve done a lot of the right things, the strength of the brand has worked, we have seen huge progress in all parts of the world; in Asia too, we had the same strategy, how do we create the New. We believe that resonates with the youth,” Thomas elaborates.

Adidas today has 450 stores, Reebok 220. More stores will depend on rent and profitability of franchisees. Adidas has got the government’s go-ahead to set up its own stores and will open its first owned store at Ghaziabad, then a large one at Connaught Place in Delhi and an Originals store in the NCR region.

Thomas says the focus has been on a few basic things: focus on key cities, bringing a product to market much faster, and rolling out large stores to showcase the whole range. “When I joined, there was at least a 2-3-month lag between products launched globally and their launch in India. The consumers are very savvy they know when a product is launched in Washington or London, so why should it be different in Chennai? Now most products have a good hit rate as we’re launching at the same time,” asserts Thomas. He points to the success of the predominantly white Originals range. “The key influencers, like the Bollywood community or actors or singers using Originals, have helped it click. Originals is now 10 per cent of our business in India. It may be inspired by sport but they are more of lifestyle shoes.” Stan Smith, its blockbuster Originals, was a tennis shoe, but is now a lifestyle statement.

Running strong

There is a tablet in the store for consumers to purchase online what they can’t find in the store. “We are tying together the online and offline pieces and it’s been fairly successful for us,” he adds. While running and football are the biggest piece of action for Adidas, Thomas recognises that other sports such as badminton are taking off and, of course, that India is a cricket-mad country as well. The brand expects growth in other sports footwear too.

While recreational running is growing stronger in India the running shoe is getting more important. The influx of specialist running shoe brands could crimp a multi-sport footwear brand such as Adidas. “Brooks, New Balance, Saucony and Asics are quite strong brands in this segment. Runners expect the right kind of fitment and suggestion to suit their running gait which is addressed better in running speciality retail outlets,” says K Sriram, co-founder of Running Lab, a running speciality store, which stocks everything from apparel and nutrition to recovery products.

Ask Thomas if India has emerged as one of the top markets, and he grins broadly. “For years, India promised a lot and never delivered, but now that it is delivering, people are interested. We have seen progressive improvement in sales, brand and profits. We are in the top 20 markets; among emerging markets, we are starting to get bigger though we are still not among the more profitable markets,” Thomas explains.

Dutta of Third Eyesight says the timing is right too. “There are more people involved in an active lifestyle which is linked also to rising incomes. Consumers are tending to buy shoes for specific activities.”

Thomas says with the growing trend of people wearing athletic shoes at both at work and leisure, it’s a happy place to be in. “I used to work in P&G and we used to have casual Fridays which means you could take your tie off! But now things have changed. Take the Ultra Boost, a premium shoe, the best running shoe we have ever made, it can be worn with a pair of jeans or to work. Not everyone will run a marathon, but they are buying it too. That leisure lifestyle trend is helping us a lot.” Adidas is a brand that offers shoes for varied sports, will it even offer shoes for kabaddi? To that, Thomas says, “Now, that’s one sport I won’t mind playing!” Given his rugby-size build, at 6.1” and 105 kg, he would fare well.

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‘World’s oldest’ barber shop comes to Ahmedabad

After capturing the premium space in men’s grooming in cities of Mumbai, Bangalore, Delhi, Gurgaon and Hyderabad, the oldest brand holding a Guinness Book of World Records has entered Gujarat with its 12th store in India within a period of three to four years after setting its foot in India.

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Oldest barber shop, barber shop Truefitt & Hill to open in Gujarat

The world’s oldest barbershop from England, Truefitt & Hill established in 1805 with a legacy of clients from King George III, Mahatma Gandhi, Oscar Wilde, Charles Dickens, Lord Byron, Frank Sinatra, Alfred Hitchcock, Laurence Olivier, Jamnalal Bajaj, Prince of Wales, Duke of Edinburgh and Winston Churchill to name a few to its list of current patrons that include actors, politicians, cricketers, businessmen, industrialists, ambassadors and diplomats and even young boys has opened its store in the UNESCO World Heritage City of Ahmedabad.

After capturing the premium space in men’s grooming in cities of Mumbai, Bangalore, Delhi, Gurgaon and Hyderabad, the oldest brand holding a Guinness Book of World Records has entered Gujarat with its 12th store in India within a period of three to four years after setting its foot in India. Complete with a royal suite for clients looking for a complete private experience, 4 barber chairs and a pedicure room.

Hopeful that the city has a demand in this niche space of a premium experience in men’s grooming, the franchise holder of Ahmedabad store Nandita Teaotia who is a professional landscape architect says, “The stores in Mumbai are already serving to clients from Ahmedabad and Surat, so much so, that a few even drive down from Surat to Mumbai to get the experience Truefitt and Hill offers them.”

Not stopping at Ahmedabad, they have plans to expand to other cities of Gujarat too. “Though there is no immediate plan but certainly in coming 2-3 years we would have more stores in Ahmedabad followed by Surat and Vadodara,” added Gautam Teaotia, the franchise partner.

By the end of this year, the master franchise Lloyds Luxuries Limited has plans to explore the demand in smaller cities by opening stores in Chennai, Pune, Chandigarh, Jaipur and Indore.

Opened nearly ten days back without any marketing gimmicks, the Teaotia’s claim to have already clocked an overwhelming response from some of the who’s who of the city and registered several queries for members.

“Since out business is majorly based on reference of our existing clients as so far 70 percent of our new business is derived from reference of our existing clients we do not believe in ‘into your face’ marketing gimmicks. Instead of grand launch we would prefer inviting members and their friends for an experiential service, through tactics like tying up with a luxury car company or golf clubs to reach out to the correct type of audience,” shares Nandita.

The store’s ambience and layouts are as per Truefitt & Hill’s global standards, and the services and products are uniform across all stores in the world. For example, the royal signature shave is 45-minutes long ‘luxury of a timeless straight razor shave’–it starts with a hot towel, a moisturiser, shaving cream, a massage.

The store also offers men grooming products like pre-shave oil, shaving cream, colognes, aftershaves, bath and body products, shampoo, conditioner, shaving kits and even souvenirs.

 

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Formal footwear is facing extinction, says Skechers’ Marvin Bernstein

Marvin Bernstein, managing partner at the Swiss subsidiary of US footwear brand Skechers, talks about his India plans and the latest trends in the global footwear industry

Marvin Bernstein, managing partner of Skechers Sàrl, the Swiss subsidiary of American footwear brand Skechers. Photo: Pradeep Gaur/Mint
Marvin Bernstein, managing partner of Skechers Sàrl, the Swiss subsidiary of American footwear brand Skechers. Photo: Pradeep Gaur/Mint

New Delhi: American footwear brand Skechers is moving beyond footwear in India and has recently introduced apparel and accessories. The brand, which operates through a joint venture with Kishore Biyani-led Future Group, entered India in 2012 and currently operates 90 stores across the country.

“But we are expanding rapidly. We have 50-60 stores coming up in tier-I and tier-II cities this year,” says Marvin Bernstein, managing partner of Skechers Sàrl, the Swiss subsidiary of Skechers USA Inc. that oversees the company’s sales, marketing and operations outside the US. Launched in 1992, Skechers has a presence in 140 countries.

Bernstein is bullish about the Indian market which he calls “a low-hanging fruit”. In an interview, Bernstein talks about his India plans, the latest trends in the global footwear industry and the last time he wore formal shoes. Edited excerpts:

You have been in the footwear industry for more than 40 years. How have things changed globally and in India?

Footwear has gone very casual over the last five-six years. The biggest chunk of footwear sales, right now, is athletic driven and that’s a trend which is going to stay for a while. Of course, comfort has a huge role to play in that.

There are a couple of reasons behind this casualization. Globally, there is a wave of fitness craze and it is growing very rapidly among people. Secondly, the footwear industry is being driven by young people, who like casual footwear. This also has much to do with the start-up culture which has changed the whole workplace dress code.

Is formal as a segment shrinking?

Yes, definitely. Around the world, it has gotten very small. In India, formal is still a growing business but it is facing extinction in a lot of countries now. Like the leather formal footwear industry in Italy is almost gone. In fact, leather footwear itself is getting very casual and athletic-driven.

I personally haven’t worn a pair of formal shoes in a long time, except at one of my parent’s funeral.

What are your current global revenues?

We are a $4 billion company and that is just in footwear. We are present in 140 countries. We recently had our first billion-dollar quarter in 2016. We have just started apparel and accessories business with products like backpacks, watches, shoe care and track pants. Apparel and accessories is currently 5% of our overall revenue but we are growing rapidly. In India, we have just launched apparel at our store in Gurgaon. The products will be priced between Rs2,000 and Rs7,000.

The US constitutes 49% of our business, and 51% of the revenues come from international business. Countries like the UK, Germany and China are huge markets for us.

What are your expansion plans for India?

Our brand has done very well in India ever since we entered four years ago. Right now, we are in that explosive phase where we are building critical mass. Indian market is a low-hanging fruit. We have a partnership with retailers who have excellent exposure in the tier-I cities. We recently increased our stake in our joint venture with Future Group from 49% to 51%.

About 50% of the population in India is under the age of 35 years. Because of this, the athletic-driven business is becoming very strong here. We are planning to open a lot of franchise stores in India. We are looking to add 50-60 stores every financial year (both franchise and company-owned), for the next few years. We are committed to the Indian market, whatever it takes.

How much does India contribute to your overall revenue?

It is a very small percentage, not worth mentioning, given that we launched here just four years back. We have moving revenue targets because the market is growing very quickly. In fact, we have overshot all our growth and revenue targets in the past.

For the last two years, we have been growing here at a rate of 100% (year-on-year) and we expect this sort of growth rate for the next couple of years. Over the next five years, we believe India will probably be one of the top five markets for us.

Currently, what are the most striking trends in the footwear industry globally?

Sandal sales are crazy right now, all over the world. In India, sandals used to be a very small percentage of our business but we are now seeing growth of about 60-70% annually. It is trending worldwide. I think this growth has much to do with the comfort level.

What is your digital strategy?

We are trying to address the digital requirements through our own e-commerce platform. We also do business with third party e-commerce companies. But, e-commerce for us is more of a marketing tool which helps us grow business for our customers. In India, e-commerce as a channel is still getting developed and it is more of a promotional platform.

In those terms, our digital strategy is different from other companies. We are not dependent much on online sales. In India, digital contributes about 7% to our overall revenue. Having said that, e-commerce surely is an important platform.

What do you think about the goods and services tax?

To be candid, taxes going up or going down doesn’t impact anybody much. It’s just a lot of noise. People don’t like change. Whether taxes go up or down, they won’t stop shopping; they are still going to buy what they want. It’s a very short-term impact till everyone gets used to it.

What is your favourite brand, apart from Skechers?

I have been wearing Skechers for the last five years, apparel and footwear both. I have fallen in love with the brand. I buy jeans because we don’t make them. I shop at Pepe Jeans. There is no social pressure but I don’t feel like wearing any other brand but Skechers.

What is your personal style?

It’s very casual. I rarely get dressed in formal. A casual and comfortable lifestyle is what I like to have and I think that is what most people do too.

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ASICS steps up India expansion, eyes over 20 stores by 2018

Japanese performance sportswear firm ASICS is stepping up expansion in India with plans to add over 20 mono-brand stores by next year

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ASICS sportswear

New Delhi : Japanese performance sportswear firm ASICS is stepping up expansion in India with plans to add over 20 mono-brand stores by next year.

It is also intensifying presence on e-commerce platforms while growing business through regional distribution channels to cater to growing demand in tier II cities.

The company, which sells its footwear and apparel products through franchise model, is also keeping options open to have its own stores once it meets 30 per cent local sourcing requirements under the current FDI policy in retail.

“As of now we have 22 mono-brand stores, out of which seven were opened in the first half of the year. Another seven will be opened in the second half. For next year also we are looking at a similar number of new such stores,” ASICS India Managing Director Rajat Khurana told .

Emphasising on the need for opening more exclusive stores, he said: “In a country like India 50-60 per cent of sales happen in mono-brand stores for all the brands and we are no exception. So we continue to focus on opening mono- brand stores, growth and other channels.”

Currently, around 40 per cent of the company’s total sales comes from mono-brand stores.

Khurana, however, said the company’s growth strategy in India will not only be through the standalone outlets but also by intensifying presence on e-commerce platforms and increasing distribution channels to cater to regional markets.

“We are present on the big four e-commerce platforms in India. Our sales from e-commerce account for nearly 20 per cent of business. So we are looking to grow this channel as well,” he said.

Besides, ASICS India will increase business through distribution channels and multibrand outlets like Reliance Footprint to cater to smaller cities beyond metro, Khurana said.

When asked if ASICS planned to open company-owned stores in India, he said: “The FDI policy does not allow us to open our own stores unless we conform to the 30 per cent local sourcing norm. Yes, we want a combination of both – our own stores and franchises.

“However, unless we think we are able to meet the 30 per cent sourcing norm, we can’t open our own. Whenever we reach that level or if the norm gets relaxed, we’ll have both,” he said.

The company began local sourcing in India three seasons back for apparels starting from spring-summer 2016 collection and it has also started some footwear recently, he added.

“It would take at least 3-4 years to reach that 30 per cent, considering the current dynamics of local sourcing,” he said.

On products, Khurana said the company is increasing “width and depth” of its offering by adding new categories like cricket, badminton, tennis and wrestling shoes to add to its main running footwear category.

Admitting that the company has been a late entrant in the Indian market, he said ASICS would be taking up marketing campaigns, including its global campaign ‘I Move Me’ in India with a focus to reach out to a broader audience.

“We would be doing this through traditional media and the digital medium. Besides, we are looking to bring in brand ambassadors going ahead to aid our brand awareness,” Khurana said.

 

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India: Manyavar to buy rival Mebaz after talks to acquire Soch fall through

Vedant Fashions Pvt. Ltd, owner of the ethnic wear brand Manyavar, is set to acquire Hyderabad-based rival Mebaz after talks to acquire womenswear brand Soch fell through, two people aware of the development said on condition of anonymity. Vedant had been in discussions with Soch Apparels Pvt. Ltd since April this year to buy Soch in a proposed deal worth Rs1,200 crore, said one of the two people. The reason for the talks failing is not yet clear.

Private equity (PE) firms Kedaara Capital and L Catterton are in separate discussions to buy a minority stake in Vedant, Mint reported in May. The PE firms plan to buy a stake of about 15% in Vedant for Rs450-500 crore, the report said. Vedant Fashions is valued at Rs3,000 crore, said the second person.

The proposed fund-raising will be used to fuel acquisitions for a pan-India presence, he added. Mebaz was set up by Devanand P. Jethwani in 1971, and is presently run by his sons Sagar and Manoj Jethwani. Currently, Mebaz has about 18 stores across Telangana, Andhra Pradesh, Karnataka, New Delhi and Ahmedabad.

Text messages and calls to Vedant Fashions chairman and managing director Ravi Modi were not answered. Soch Apparels managing director and CEO Vinay Chatlani declined to comment, while Mebaz director Manoj Jethwani could not immediately be reached for comment.

Started by Modi in 1999, the Manyavar brand of garments is sold in around 450 stores across 173 cities in India, the US, Bangladesh, Nepal and the UAE. Vedant Fashions expects to increase that number to 600 by 2020.

The stores are a mix of company- and franchisee-owned outlets. Manyavar, a household name in men’s ethnic wear, entered the women’s traditional wear segment with the brand Mohey in May last year.

Several global PE firms, sovereign funds and mid-market growth funds have shown interest in investing in Manyavar and approached bankers in Mumbai and Kolkata to start discussions with the company, Mint reported last year. Modi has decided not to dilute his stake in the company unless the company decides to go for a large acquisition in India or abroad, an August 2016 Mint report said, citing people familiar with the company’s plans.

The Indian ethnic wear market was estimated to be worth Rs82,220 crore in 2014 and is expected to grow at a compound annual rate of 9% to reach Rs1.26 trillion in 2019, according to a November 2015 report by consulting firm Technopak Advisors. According to estimates by Avendus Capital, the size of the Indian women’s apparel market will reach $20 billion in 2020, from $13 billion in 2015, growing at an annual average pace of 10%.

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Clarifications on FDI in single brand retail trading

The Department of Industrial Policy and Promotion (DIPP), ministry of commerce and industry, Government of India, has brought out a consolidated foreign direct investment (FDI) policy document. The document mentions intent and objective in attracting foreign investment in various sectors, and also lists the conditions that need to be met.

In reference to single brand product retail trading, the document states that foreign investment is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.

However, FDI in single brand product retail trading would be subject to six conditions. First, products to be sold should be of a ‘single brand’ only. Second, products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India. Third, ‘single brand’ product-retail trading would cover only products which are branded during manufacturing.

Fourth, a non-resident entity or entities, whether owner of the brand or otherwise, shall be permitted to undertake ‘single brand’ product retail trading in the country for the specific brand, directly or through a legally tenable agreement with the brand owner for undertaking single brand product retail trading. The onus for ensuring compliance with this condition will rest with the Indian entity carrying out single brand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/franchise/sub-licence agreement, specifically indicating compliance with this condition. The requisite evidence should be filed with the RBI for the automatic route and to competent authority for cases involving approval.

Fifth, in respect of proposals involving foreign investment beyond 51 per cent, sourcing of 30 per cent of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. This procurement requirement would have to be met, in the first instance, as an average of five years’ total value of the goods purchased, beginning 1st April of the year of the commencement of the business i.e. opening of the first store. Thereafter, it would have to be met on an annual basis. For the purpose of ascertaining the sourcing requirement, the relevant entity would be the company, incorporated in India, which is the recipient of foreign investment for the purpose of carrying out single-brand product retail trading. However, sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of products having ‘state-of-art’ and ‘cutting-edge’ technology and where local sourcing is not possible.

Lastly, subject to all the five conditions mentioned, a single brand retail trading entity operating through brick and mortar stores is permitted to undertake retail trading through e-commerce.

The seek permission of the Indian government for FDI exceeding 49 per cent in a company which proposes to undertake single brand retail trading in India, application should be made to the Secretariat for Industrial Assistance (SIA) in the DIPP, specifically indicate the product/product categories which are proposed to be sold under a ‘single brand’. Any addition to the product/product categories to be sold under ‘single brand’ would require a fresh approval of the government. In case of FDI up to 49 per cent, the list of products/product categories proposed to be sold except food products would be provided to the RBI.  (RKS)

 

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Hyderabad-based Lensfit to tap omni-channel eyewear market

To raise over $3 million, expand to other cities, embrace advanced technology.

Lensfit

Hyderabad: There is a potential market of 450 million people who need vision correction in the country but only over 150 million have eyes corrected. Realising this huge gap, Hyderabad-based startup Lensfit, a technology-focused online retailer of prescription and fashion eyewear is expanding its wings through its franchise outlets for high-street presence.

The company operates an optical lab where it creates and assembles the prescription lenses and specialises in single vision, multi-focal and Rx sunglasses. It aspires to provide its customers products with a range of brands, styles and designs. By cutting out the middleman, it claims to provide products at a fair price.

Lensfit was incorporated on January 2 this year and the backend work began in April while customer services took off from July. The company founded by Vamsi Seemakurthi, a B Tech graduate from Gitam University of 2015 batch with startup and MNC experience and Abhilash Borra, an MS in E-commerce from Australia with over nine years of optical industry experience is working on a scalable model. The company has centralised its operations in Hyderabad.

Lensfit founder and CEO Vamsi Seemakurthi told Telangana Today, “We find our pricing and eyewear range to become a key differentiator over our competitors. Our customers can get eyewear at a price 50-60 per cent less than our competitors, offering over 2,500 models.”

He said that orders are pouring in from Pune, Chennai, Jaipur and certain parts of Karnataka. While competitors are focusing on narrow markets, the company is looking at wide opportunities in the eyewear space serving from budget customers to premier. There are plans to create more franchisees in Telangana and Andhra Pradesh in the coming months.
Lensfit follows a 14-point quality test criteria that includes aspects such as lens thickness, curvature, shaping etc.

Market dynamics

When asked what are the challenges in the field where touch and feel are important for a customer to make a purchase decision, he says, “In the US and Europe, online platforms take a major pie in eyewear business, India is still in the transition stage where 50 per cent or more sales still happens through offline route. We are planning our future geographic expansion, accordingly.”

He explains, “We will first create a franchisee in a city and then we will promote business through our portal and app so that customers can have the choice of visiting the store for making their buying decision. On an average, the company takes five days to deliver the eyewear after an order is placed.”

The company is working towards launching world’s first of its kind, Frame-Detector Try-on Kit, which will be priced at around Rs 50 that allows customers to understand their frame-fits and face-sizes before making the actual purchase online with accurate detailing. So far, there are over 500 registered users, of which 220 have become customers.

Funding for growth

To meet its growth needs, the boot-strapped company wants to go for a Series A funding by raising over $3 million by February/March 2018 for building back-end supply chain and strengthening technology to further enable automation within all processes.

“We would like to invest Rs 5-6 crore in the back-end to build our automated warehouse facility in Hyderabad. For building technology and operations, we are looking to invest an additional Rs 5-6 crore. And another Rs 5-6 crore would be used to build the brand and reach deeper markets,” he added.

In the near future, the company plans to foray into Pune, Mumbai, Bengaluru, Chennai, Delhi and Gurugram. It will have 10-15 franchise stores across the country by end of 2017 from four now.

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Our aim is to make Burger Singh the ‘Subway’ of burgers

Founder and CEO, Burger Singh and Tipping Mr Pink Pvt. Ltd., Kabir Jeet Singh, spoke to FoodService India about his chain‘s hectic expansion plans over the next three years and growing the brand equity in the fast casual dining space.

 Our aim is to make Burger Singh the ‘Subway’ of burgers, says Kabir Jeet Singh

Tell us about your chain’s progress in all these years of operation. How many outlets have you been able to add in this period and how many more do you plan to add?

We opened our first outlet in November 2014 in Delhi and today we have expanded to nine outlets in Delhi-NCR. As of today, Burger Singh operates one night kitchen in Gurugram apart
from another experience store there (3,000 sq.ft. with a liquor licence). Besides, we run seven smaller QSR models out of which five are located in Delhi and two in Gurugram.

We are now at a stage where we have put in the hard work, done the experiments and know what is working for us. We have a national supply chain, depth of management and systems in place to make Burger Singh a national chain. We have started franchising the brand. Burger is a highly franchisable product and no franchise industry is more mature than that of the fast food hamburger. Examples include Wendy’s, Johnny Rockets and the big daddy of them all, McDonald’s. In order to compete with these industry giants, we need to have a product differentiator, which we do in the desi burger. Also, we need to move quickly, otherwise someone else will capitalize on the niche that we have created.

We will soon be expanding in Pune, Hyderabad, North India and plan to open a total of 40 outlets in these areas in the next 24 months. The aim is to make Burger Singh the ‘Subway’ of burgers. The plan is to franchise aggressively with small 500 sq.ft. stores, which cost the franchisee under Rs 30 lakh to open. These outlets will come up in high footfall locations and have an efficient delivery system. We will continue to expand our footprint in NCR with a mix of our own and franchisee stores and expect to open 10 of these in the next 12 months.

Some the leading foreign QSR brands have been witnessing slowing same-store sales growth over the past few quarters?

That’s not how I look at it. Most of the big boys have been showing y-o-y growth for many years and at some point a correction happening is not unusual. These are big companies and have been around the block for quite sometime. I am sure they will come back strong.

We are the new kids on the block and too young to see a decline. In fact, our revenue per outlet has increased by 37 per cent. I am no economist but I feel that India’s growth story is robust. In the short-to-medium term, India appears to be in a position to sustain the current growth momentum. As for the QSR sector, the three things that favour the industry are its demographic advantage, robust domestic consumption and cheap labour and these factors will not change in a quarter or two.

Is it right to say that the food business is not affected by the turns and tides of the economy?

Eating out is a luxury, it’s not really a necessity. When the times are tough, any sensible person will spend his resources on the most pressing needs. So I think the QSR industry does get affected by economic downturns. I will go to the extent of saying that the impact on the food service business might be even larger than the average standards for the overall industry.

What do you think is the scope for making value additions to the QSR format and what will be the new innovations to this format in India?

We like to describe ourselves as a fast casual restaurant rather than a QSR. Fast Casual borrows from QSR and Casual Dining. Fast Casual features a more upscale and diverse menu selection in comparison to the QSR format. Unlike Casual Dining, Fast Casual has no table service and orders are placed and paid first and customers are directed to the assembly area where the food is ready for you to bring to your table. Some chains have a slight variant here – they will take your order, let you proceed to your table and a food runner will bring your meal to you. The ambiance is more upscale versus fast food with designs ranging from upscale elements and soft colors.

I feel that going forward, there will be two new innovative trends visible in the Fast Casual segment. A lot more innovation will happen to Indianize the menu. And a lot more independent fast casual restaurants and food trucks will burst on the scene. Casual dining chains will ‘downscale’ to grab this set of consumers and quick service chains will ‘upscale’ for the same reason.

How do you assess the market potential for the burger category in India. How do you see it performing versus the Pizza category and which new trends and infl uences will shape the growth of this category going ahead?

The organized F&B industry is expected to reach over Rs 150,000 crore (US $25 bn) by 2018 from Rs 75,000 crore (US $12.5 bn) in 2013 at a CAGR of 16 per cent. Burgers constitute only 2 per cent of the QSR market but are growing at a much faster rate of 25 per cent. So we are in a good spot. I still feel the pizza category will maintain its position and burgers will take time to catch up. I feel a lot of smaller players like us will enter the market and create home-grown competition in the burger category. I think what will shape the growth of this market and spur the funding landscape. In the recent path, a lot of investors have burnt their fingers in the food and food tech space and therefore the funding sentiment for this sector is not the best at the moment.

What has been the market response to your especially crafted vegetarian menu for Indian consumers. Are you looking to expand its scope further by bringing in newer ingredients?

The response has been phenomenal and this has given us the strength to bring in a new category of vegetarian burgers in the sub-Rs100 range. This range was launched in the first week of May 2017. The purpose of this range is to help us get into smaller cities and attract the value seeking consumer.

International burger chains operating in India usually have third party vendors from whom they source their ingredients. How do you ensure that the vendors meet the quality parameters and benchmarks?

We are not looking to reinvent the wheel. The big boys have set up some exceptionally robust systems and processes throughout the industry. We have adopted a lot of what these first world companies have brought in and it is working well for us. The industry has a lot of people for sourcing the products from. However, there are only a handful that can ensure and maintain consistent quality. We are working with these players. These quality third party vendors are expensive and it is a strain on a small company like ours; but I sleep well at night knowing that I have not compromised on the quality for saving a few coins.

Considering the peculiarities of the supply chain in India, have you introduced any specific innovations to make your back-end operations foolproof?

I think the cold supply chain in India has drastically improved over the last few years. So it is foolproof at a certain scale. We are yet to reach that level of scale but are fairly close to it. The innovation that we have brought to this aspect is predominantly our internal systems of forecasting demand and ensuring minimum wastage.

What has been the response to your home delivery service? How much of online sales are you doing currently and how do you see this segment growing for you?

About 42 per cent of our sales comes from home delivery. This is a big number as the industry standard for burger home delivery ranges from 6-10 per cent. Therefore, we can open smaller stores and compete in this environment. And since demonetization, almost all of this delivery business comes to us through online channels and is almost always prepaid. I don’t see this number changing drastically as a segment of our sales. But this is also the most challenging aspect of our business, especially the last mile logistics.

You spoke of expanding the chain through the self-owned and the franchise route. Are your investment and expansion plans limited to the Indian market for now?

Our plans are not limited to just the Indian market. Burgers are a scalable product and accepted around the world. Indian cuisine is popular around the world and so it makes sense for us to look at the world and not just India. You will soon see a Burger Singh signage in an International capital.

For the Indian market, we will be opening months is to open 40 franchisee in cities of Pune, Hyderabad and north India over the next 36 months. Besides, we are looking to open 40 company-owned stores in NCR, Bengaluru and Mumbai. We are in the process of getting ourselves ready to hit the market to raise the capital for this expansion.

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