Having proved their mettle in India, many Indian retail brands are venturing overseas, thereby increasing their brand presence. The development is happening across verticals as various retail brands are willing to go abroad, exploring a world of opportunities available around the globe, particularly in developed markets.
While retail names like Arvind Brands, Madura Garments have already been doing so through the distribution route and standalone stores, other biggies having joined the bandwagon are Café Coffee Day (CCD), Gitanjali, and Liberty among others.
Expanding their footprints overseas
For some overseas expansion stem out of the need to acquire the number one slot in the world, while for others exploring organised world market is much more lucrative than solely focusing on unorganised Indian market. In order to pursue its vision of being in the top three slots of coffee companies in the world, exploring the overseas markets becomes an obvious step for CCD. Shweta Shetty, President - International Business, Cafe Coffee Day (A Division of ABCTCL) comments, “We are focusing on countries in the Central and Eastern Europe region. We believe that large investments in the last 7-8 years in Central and Eastern Europe, together with the birth of a strong new private sector have had a positive impact on making East European countries attractive emerging economies.” “In Austria the per capita consumption of coffee is very high 8Kgs versus that in India which is 80gms. The coffee drinking habit – at home and out of home already exists in the European countries vis-a-vis India,” adds Shetty.
The reasons are many, when it comes to ‘why’ go abroad? These could range from brand image, timely payments to factors like product reach. Ms Varsha Jain, Brand Manager, Liberty Retail Revolutions Ltd. opines, “In India, the industry is still unorganised and we have to compete with many local brands.” For Liberty Shoes Ltd, the new markets being explored are Egypt, Latin America, Kenya, U.K. & Ghana.
Overseas expansion could be done via different modes. Mehul Choksi, Chairman and MD, Gitanjali Group shares, “In the USA and some other markets we are directly developing a fully owned retail network. In the USA we have 126 stores under the Samuels and Rogers chains, while we have recently set up our first own store in Dubai as well. In USA, the primary focus is on consolidation as the market recovers from the crisis – no plans for major expansion. In Middle East we are finalising plans. Another level of expansion is through the sale of branded jewellery in the internatinonal markets. Our jewellery is retailed through Verite stores in Japan, and Giantti stores in China, and in both markets the numbers are growing.”
Gitanjali’s Indian brands like Nakshatra, Asmi, D’damas, Sangini etc are also being retailed through local jewelers and lifestyle stores in different parts of the world. The company has recently launched these brands in Sri Lanka and plans to expand across South Asian countries. The brands are also being sold in USA, Canada, Middle East, South Africa and other countries. “We are planning to expand our branded presence in many more markets, especially where there is a strong Indian / Asian community presence. The international markets, especially in the developed countries are much organised and have mature retail systems and networks. Consumers are very responsive to brands also,” adds Choksi.
Apparels: high on expansion
The apparel industry too has been buzzing with activity with respect to expansion. Apart from US, and Europe; West Asia, and Africa figure in their expansion plans. Spykar Lifestyle, Arvind Brands, Royal Classic Polo and Madura Garments are active on foreign expansion. Some of these brands are planning to tie up or have already tied up with an established department chain in the region of their expansion. Some retailers believe that there might come a saturation point in the Indian retail market so as a precautionary measure they are considering overseas expansion.
Though the apparel retailers shied away from commenting on the same, the industry experts threw some light on the reasons behind overseas expansion. Looking at the volumes the country generates, India in many ways is the rag-trade capital of the world. India through its apparel industry clocks millions and today, India is a high-replenishment market as lifestyles of Indians change.
Harish Bijoor, Brand-expert and CEO, Harish Bijoor Consults Inc. avers, “Having done wonders in the Indian market, apparel brands are today looking overseas. There is an inherent value in terms of good quality output from India. Mumbai was the textile hub of the region for many decades and Tirupur has emerged to be the Hosiery capital of India. Indian apparel makers realise that to survive in this market, it is important to build strong brands that will set the tone of appreciation not only within the borders of India, but all across.”
There have been factors like population, economy, industry, per capita income among others which are mostly considered by retail brands while entering foreign markets. Shetty says, “We always want to ensure that we comply with all statutory requirements of operating a business per that country's norms. We evaluate the general economic trend of that country and satisfy ourselves that it will offer us a growth platform.”
“We need to take care to study the market dynamics, understand the consumer psyche and identify the right partners for taking our brands to new markets,” adds Choksi.
Investment… in the pipeline
Speaking on the kind of investment they would be making on the overseas expansion, Shetty affirms, “That is hard to say; we have not set ourselves any parameters/limits. It will entirely depend on the merit, size and nature of the deal or in case of organic growth, the locations that we are able to identify and close.” Whereas, Jain reveals, “Our concept is to appoint distributors in new potential areas and untapped markets. We provide stock and sales to our distributors on certain payment terms as agreed by both the parties.”
For apparel brands, Bijoor opines, “This is going to be a tough fight. Indian apparel brands are novices at the science of branding. Belief in investing ahead of the curve is new as yet. This does not work in international markets. The apparel industry in India is largely a commodity offering. Mindsets need to change and the belief in front-ended investment in branding will help. Building a solid apparel brand in international markets is a long-haul game. The 5th P of marketing here is patience. Something a few in the industry possess.”