Retail Finish

At another level, branded RTW apparel is like the real estate business: the more retail space you acquire or build, the bigger you become. For big brands like Madura Garment's Allen Solly and Peter England or Arvind Mills' Arrow and Newport, the passport to acquiring retail space is the tremendous consumer pull their brands enjoy, thanks to their multi-crore mass media advertising. In the absence of mammoth advertising budgets, how are these SME brands able to garner retail reach for themselves?

For the volume-driven retailers-around twelve lakh-odd for apparel (and just about 5 to 10 per cent of this for branded)-these brands ride the wholesale channel, which in fact prefers pushing new brands, simply because they earn more margins on it compared to established brands. With big retailers like Shoppers' Stop, Lifestyle, and Globus, it is a known fact that these brands are able to offer better margins (3-5 per cent more, over the 19-23 per cent average margin), simply because their marketing overheads are much lower than those of most big-company brands. The SME brands even source (fabric) more efficiently compared to big professional managed companies, simply because most of them have a history in textiles or export. ''They think bottom-up, cost plus versus your professional-run company where it is lowest price tendering,'' adds KSA's Sahni.

But this over-dependence on trade (whether wholesalers or big retailers) makes these brand vulnerable. Points out Nikesh Jain, Finance Head, Kewal Kiran & Company (which owns and markets the Easies brand): ''Sometimes even big marketers launch new brands, purely to spread their business risk at the trade level.''

No wonder, then, that most of these brand marketers are now aggressively turning to either exclusive brand stores or shop-in-shops with big retailers. TNG, Freelook, Koutons, Blackberrys, and Provogue are rapidly opening exclusive stores. ''Right price, good quality and our own stores,'' notes Polki Garments' Managing Director, Avinash Goyal, ''is the only way we'll survive.'' The company intends opening 4 to 5 stores each in Delhi and Mumbai, apart from the two Freelook stores already in Delhi. Dwarka Men's Wear is giving as much as 40 per cent margin to its own TNG franchised stores.

Agrees Gini & Jony's Director, Anil Lakhani, ''the future for our brand is franchise stores and shop-in-shop.'' The company is adding another five franchised stores to its current tally of 12. So much so that Mohan Clothing is putting its entire Rs 1.5 crore advertising budget this winter on outdoors in Mumbai, that drive its Blackberrys stores as a ''fashion destination brand''.

Exclusive brand stores, apart from displaying the full brand range, will also help these brand marketers drive a more equal bargain for shop-in-shop with big organised retailers. ''Own stores and franchisees will help us to know exactly who our brand customers are,'' says Narinder Singh, Managing Director of Hi-fashion Clothing company, which rolled exclusive stores (5) and shop-in-shop (25) for its 14-year-old denim brand, Numero Uno, only last year.

No doubt the going has been good so far, thanks largely to the boom in the ready-to-wear segment. But the market may not be large enough for all a few years down the line. Some kind of an acquisition-led shakeout seems inevitable. In fact, in the past few months there have been rumours of Raymond eyeing ColorPlus, and currently Indus League is believed to be scouting for a buyer for its Indigo Nation brand.

ksa-Technopak's Sahni contends that none of these brands is growing at the cost of the other, meaning that a consolidation may not be a priority for the industry. ''Find me a brand which has died in the past 3-5 years,'' challenges Sahni. ''I think there's still time for some others to hop on to the apparel bandwagon,'' he adds.

May be. But not all can be the leaders in a market. Besides, a slew of international apparel brands like Hugo Boss, Tommy Hillfiger, Gap, and Marks & Spencer has turned their attention to India. While all of them are premium brands, nothing stops them from launching an ''economy'' range in India. After all, the apparel business, like so many others, is about volumes. In such a scenario, the price-quality-brand equation that the current crop of players seems to have perfected, may get redefined all over again. And for the SME brands, which typically are family-owned, the incentive to sell out to a Gap or even Raymond and Madura Garments is even higher.

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