Carving a niche with licensing

Rajeev Uppal, the CEO of Suncorp Exim Pvt Ltd, the group company of Suncorp India, which is the master franchisee of some leading international brands, has been associated with the footwear industry for the last six years and has successfully launched the international kids footwear brand, Disney and Levi’s footwear, in the Indian market. He speaks about his latest licensing venture of Warner Bros footwear for children and GAS men’s footwear.

Retailer: What prospect you see in this latest venture?

Rajeev Uppal (RU): We deal with world renowned kids’ brand, Warner Brothers. Today, every mother and every child knows “Tom & Jerry” or “Tweety”. Yes, pricing will be on the higher side since certain factors we have to count for, including royalty. Indian consumers are intelligent, well-exposed and they know value for money, so we are careful to make this licensed merchandise totally different from the merchandise of a regular brand. It has to be different, both colour-wise and design-wise. The merchandise should speak about the brand. Eventually, the distribution channels will fall in line once you have good merchandise to showcase.   Market is ready, there are lots of licensed products available in the market and they are holding certain position in the market, but marketers should have patience to hold this position. The advantage is you are dealing with a brand whose equity is well known. Licensing has great future. We’re looking at a year or two of seeding time and then we can seek other business opportunities.

Retailer: What’s the duration of the contracts, both for Warner Bros and GAS? What’s the investment you have made for this venture?

RU: For GAS it’s three years, which is renewable automatically, and six years for Warner Bros, which is also automatically renewable. We started this venture this year. Our initial investment is to the tune of `12-15 crore to start off for both the properties. However, investment is a continuous process that has to be pumped in time to time for expanding and introducing new collections with the changes in seasons. We are also in talks with other international brands for apparel and other categories, but at first, we want to consolidate this business within a year or so, and probably from mid of 2013 we would look at something else. Today, footwear has much larger opportunities, and it has the highest market size and recorded so far the highest growth rate in accessory business.

Retailer: Who are your target audience?

RU: Metros are definitely the primary markets, but we’re also looking at B class and C class cities. We’re basically in kids’ footwear and creating merchandise which suits everybody’s pockets. We are looking at expanding targets. As far Warner Bros is concerned, we’re creating a merchandise that starts from `199 for flip-flops to `2000. For GAS, a pair of flip-flops will cost `600 and the collection will go up to `5500. For GAS, presently, we’re in men’s collection and women’s collection will be launched in the next year.

Retailer: What is the USP of GAS footwear and what is that of Warner Bros footwear?

RU: USP of GAS is its lifestyle and fashionable image and it’s all about fashion statement. It holds immense potential as more than 50% of Indian population is below 25 years. For Warner Bros, styling and comfort for the kids are very important and it should give value for money and suit every pocket.

Retailer: Please shed some light on manufacturing and designing part.

RU: Manufacturing of the footwear is outsourced from the factories in India and China. Till date China is the maximum contributor in manufacturing, but within six months or a year it will be shifted and 60-70% of manufacturing will be done in India.  In India we work with factories in Agra, Himachal Pradesh and NCRs.  These factories are very carefully chosen and we provide them with the guidelines and standards. Most of these factories are suppliers to the international brands worldwide like Zara. For Warner, we’re looking at about 300,000 pairs for a season, and for GAS it’s 60,000-70,000 pairs to start off. For every season we hope to have 120 SKUs, which means 60-70 styles for Warner, and about 40-50 styles for GAS.

We get the storyboard from the licensors and then we have our own design team sitting in our office which coordinates with factories from every angle. We provide factories with the brand spreadsheets and quality standards and specifications which they need to maintain, and strict quality check we have. Our design head is a gold medalist from FDDI (Footwear Development & Design Institute), and I put personal attention to designing and sourcing also.

Retailer: How will you be promoting this licensed merchandise?

RU: In case of these brands, consumers are already aware of them,  but at the same time we need to have proper placements. We are looking at conducting contests for kids in schools and institutes just to generate their interests. It’s not just a commercial activity; it’s a kind of expertise or acumen building contest to win the brand. Also, we are working on promoting through various tie-ups at key locations like malls. It will be more of BTL activities, since ATL is more an expensive proposition. Brand equity is already there, and we need to reach the consumers and tell them the benefits of the product.

The licensors help us out in terms of merchandising and styling. We do receive the publicity materials what they use in other places of the world; the standards and qualities are authenticated by them.

Retailer: How long did it take to develop the product? 

RU: From the day we started to conceptualise the range, it took close to 7-8 months to produce and get into the warehouse. So for Spring /Summer’13, we already started working on that and finalising our style because we need to have production lead time in place, also we need some throw-ins, introducing new styles in between. The process is on. We launched our merchandise in May 2012. We’re three months old now.

Retailer:  Tell us something about the distribution part.

RU: We’re looking at all the possible distribution channels starting with the speciality large format stores like Lifestyle, Shoppers Stop, Metro, Mochi, Regal, In5, Reliance Footprint and Central. We’re critically looking at distribution; we’re working with leading distributors of the country who cater to MBOs and also exploring e-commerce platform.  We’re available on the sites like Myntra, Yebhi and Jabong.  By end of September or early October we will be having distribution in place for every state of the country.

In India, market is large and it’s highly competitive, so you have to create a niche for yourself.  Starting a venture is easy, but sustaining is difficult; so, we’re taking all the precautions. Today, we have probably the best footwear team in the country. We have our sales guys placed all across the country. We are looking at consolidation and growth, not growth for growth’s sake.