OVS is busy doing lots of experiments in the market to leverage the trends. Daniele Piatto, CEO, OVS India, spoke to the Retailer Magazine in details about the near future plans of the latest brand extension in India.
Neha Malhotra (NM): What is stature of OVS in India today? What are the speed breakers in its journey?
Daniele Piatto (DP): OVS is growing at the rate of 20 to 25 per cent. In India, the enemy for retail is rent. Especially at a good location where the footfalls are assured, the rent is too high. The rent is not balanced.
Presently, we have 11 stores and we have opened a store in Pune recently. Overall in this situation we’re happy. We’re in some locations where we have to review the position. When one starts a new business in a new territory, one makes mistake that has to be rectified. Apart from metros we’re present in Surat and Aurangabad.
NM: How do you wish to position your brand in India?
DP: In India, we started with big stores like that 7000-8000 sq. ft three-floor store but that didn’t work. Now we’re making it 4000-4500 sq. ft which is the right size along with the right innovation of collections. We are catering to 2-8 years’ old kids, and we have collections for 9-14 years’ old as well in some locations. Unlike some Indian kids’ brands where they have the same collections for 2-14 years’ age group with just the extension of sizes, we have completely different collections for 9-14 age groups.
NM: What is your USP?
DP: Our USP is offering latest fashion at affordable price. Sadly, India has this problem of end of season’s sale - selling merchandise at marked down price. Twenty-five per cent of sales for OVS came from EOSS and that’s high. We have to bring that down.
OVS stands for Italian design so we will not do anything to dilute our brand identity.
NM: How many stores do you have at present? How do you select store locations?
DP: We have four stores in Mumbai and one each in Pune, Surat, Aurangabad, Chennai, Delhi, Ludhiana and Amritsar. Since the last couple of months, I have been in charge of the company as far as selection of a location is concerned, and we’re following very strict guidelines since we prefer only ground floor and that also in a successfully run mall. I want right number of stores with good locations and right positions. We’re going to open in Chandigarh and Jalandhar this year.
NM: How are the products priced?
DP: Indian mentality is more close to Italians’. Indians are very conscious about value for money. Our price is perfect for Indians. As far as entry level price is concerned, a tee shirt for women costs Rs 399 and it goes up to Rs 2000 as it all depends on the apparel. We have more options at the entry level but emphasis is always on fashion. Any company planning to enter India has to work on pricing since there is a direct competition with local players, like those operating in Sorojini Nagar and Lajpat Nagar. India is very sensitive market. We will also ensure that we’re never going to be out of stock.
NM: Have changes been made in the operations at the back end?
DP: At this moment, we have changed our logistics systems and IT systems to have a better control over store management. For IT we were using Navision from Microsoft and now we are using the application developed by our in-house team based out of our head quarter in Italy. This is tailor-made application developed with our 30 years’ experience. Now we can oversee and monitor everything what happens in our store. This is required to give the real information to our buying team in Italy where they assess certain indication and trend in the Indian market.
NM: How are you sourcing the products?
DP: We’re € 2 billion company and we have sourcing offices everywhere, in Bangladesh, Sri Lanka, Hong Kong, China, Indonesia, Turkey and so on, and these sourcing hubs are all directly controlled by us. Our office in Okhla is the sourcing office for Gruppo Coin, the parent company of OVS. We have our office in Tirupur and these offices procure the goods for our network. We have total five distribution centres, one each in Mumbai, Shanghai and China and three in Italy. We have a design studio in Venice and Milano. Recently, we’ve appointed Katarina Salvatore as the fashion co-ordinator who worked with the fashion houses like Dolce Gabbana and Armani. We want to create more collections for our shelves. We will be picking up potential designers across the world to work for us.
The Indian suppliers are making a contribution of 20 per cent to the Gruppo Coin. When it comes to fast fashion for women the most of the supply comes from Italy, Mediterranean cities and Eastern Europe. However, Bangladesh is doing very good as a supplier in terms of quality besides China and Cambodia.
In India, we don’t have perfumery, mamma size department and some parts of the business lady collections. We have a huge basket of collections in Italy and have big stores, but here we make selections. We have tested success with the introduction of kids’ collection.
NM: What merchandising strategies have you adopted?
DP: We have different merchandising strategy for different cities in India. Say, if we send 10 sweaters in Delhi, three will be sent to Mumbai, and that too will be of light weight. However, we’re selling winter jackets quite well in Surat. Not because Surat is cold, but the customers there travel a lot. Similarly in Mumbai, we have customers for winter collections who travel a lot. This year, we sold 50 jackets in Surat. Next year, we will send 70 jackets to stretch the demand. I want to figure out the demand and market potential. We will invest where there’s an opportunity. We may introduce beachwear to find out if there’s a demand.
At this moment, we’re doing lots of test and investments in the market to understand the trend in the market and how can we stretch the trend and leverage it.
NM: Can you tell us about your marketing strategy?
DP: Presently, OVS is having EBOs only; but in the next season, we will be in departmental stores. Six to seven per cent customers who visit our store purchase from us. Our brand recall is high. Now we will focus more on advertisements. It’s time for enhancing brand visibility through print media including national dailies.
NM: Is the brand targeting tier II cities as well? What potential does it see in these markets?
DP: Yes, we are very much targeting tier II cities. We feel the buying capacity is there in such cities and all they lack is options. The tier II cities are very fashion conscious as well as fashionable but they do not have much exposure to new trendy fashionable options. The feedback on OVS Italian Fashion pricing has been excellent and we strive to bring great Italian Fashion into India at very best prices.
NM: The premium fashion sector in India is growing significantly over the luxury segment. What is facilitating this growth?
DP: Economy products are produced industrially and in large quantities. The mass production influences the pricing, as well as logistic advantages, the form of point-of-sale and the rate of turnover. Economy products will have a grand future, first because production technologies are getting better, faster and more secure. In the premium economy segment, premium economy products are placed with strong brands. They show premium as well as economy characteristics. Wherever their origin lies, they are carried by strong brands and what distinguishes them, most of all, is that they are purchased for the satisfaction of wants as well as needs.
NM: What are your future plans? What will help encourage your business in India?
DP: Reduction of import duty will help a lot for the international brands like us. There’s a high level discussion under process to address this problem of the European community. We have big investment plans for India.