"S&R has taken a risk in entering a market that is large, but offers little flexibility in terms of price and business environment." Arvind singhal, Chairman, KSA Technopak

S&R's entry into India at this time raises a few fundamental questions about the company's business rationale. There is too much competition in the Indian clothing sector and with the indicated retail price points it is difficult for S&R to even achieve annual sales of $50 million (at retail value) over the next four-to-five years. As S&R will operate through franchise retail outlets in India, the profits of the company will be limited to the 'wholesale' margin on the supply of clothing and accessory products and brand royalty. In fact, the estimated wholesale value of merchandise (even at a retail turnover of $50 million) is not likely to exceed $20 million. What contribution these numbers can make to S&R's financial statements is highly debatable.

Lingerie and, to a limited extent, toiletries are categories in which there is a void in the Indian market at present. This is one area where S&R can do very well in the initial stages. However, if other companies launch similar products, it is likely that S&R's sales could come under tremendous pressure.

In the ladies and men's clothing category, it is unlikely that S&R will meet any significant success as the brand is associated with ''value for money'' and at the indicated prices, it is nowhere close to the current Indian price points of brands positioned on a similar platform. In the coming years, while the import duties may come down, a gradual devaluation of Indian currency may make imported merchandise more expensive than goods sourced locally. As long as S&R relies on imported merchandise, it will continue to be perceived as a ''premium'' brand, while the global positioning of the same brand is ''value and good quality''.

The size of the outlet is not really an issue since most Indian retail outlets are quite small and congested. S&R can still stand out with its relatively large stores.

On the whole, I believe that S&R has taken a risk by putting in energy and resources into a market that is large in absolute terms but offers little flexibility in terms of price and business environment. With such price points, it has also risked diluting its brand equity by way of creating a dissonance in the minds of the consumer. Further, with official price points being what they are (40 per cent more than retail prices in UK), the brand is more likely to end up selling more through the grey market.

On the whole, I believe that although the retail environment in the country may not be conducive for the entry of a foreign brand, S&R is offering way too less to the Indian consumer by way of an appropriate value-proposition.

Look Before You Leap

"This may be the right time to enter India. But has S&R positioned its brand right?" Y.L.R. Moorthi, Associate Prof. (Marketing), IIM-Bangalore

S&R should take the initial results of the first few days with a pinch of salt. Entrants should learn from the example of Levi Strauss and others who have struggled to find their feet in the Indian market.

S&R's pricing strategy must have left many laughing at the sidelines. One way of knowing how much premium to charge is by checking out the price at which S&R products are selling in the grey market.

Neil Simon's survey indicated that his brand equity is high. But did he pause and ask himself the following questions:

• Which are the competitive brands vis-a-vis which this equity has been measured?
• How was this equity measured?
• Was the brand's equity measured vis-a-vis established brands in the Indian market?

It may be premature to jump into pricing without weighing these issues. This may be the right time to enter India. But has S&R positioned itself right? That is the million-dollar question....