India has become one of the most attractive destinations for investment owing to favourable government policies and reforms in the past few months. The approval of foreign direct investment (FDI) in several sectors have allowed investments to pour into the economy. India has become a promising investment destination for foreign companies looking to do business here. Mr Narendra Modi, Prime Minister of India, has launched the ‘Make in India’ initiative with the aim to give the Indian economy global recognition. This initiative is expected to increase the purchasing power of the common man, which would further boost demand, and hence spur development, in addition to benefiting investors. Domestic brands are also getting boost in their revenues due to growth in trade and investment in India.
Fabindia, Manyavar emerge as India’s most profitable apparel companies
Ethnic retail chains Fabindia and Manyavar have emerged as the country’s most profitable apparel companies by avoiding discounts, staying away from prime real estate and making products in-house in a market where most international brands are looking to grab share by offering price cuts. Fabindia Overseas posted a net profit of Rs 54 crore in the year ended March 31, 2014, according to filings at the Registrar of Companies. Kolkata-based Vedant Fashions, which owns ethnic wear brand Manyavar, made a Rs 49-crore profit. Levi’s India was the only marquee international brand that could match them, posting a Rs 49-crore net profit. This is the first time Levi’s India has made a profit since entering the country in 1994. None of the other overseas brands, including Zara, Benetton and Marks & Spencer, were able to come close to the performance of the Indian companies. Right from local boutiques to established traditional retailers and regional brands, every ethnic wear retailer is vying for a share of the consumer wallet in a market that is governed more by design than brand name. However, both Fabindia and Manyavar have over the years expanded across India and are now finding acceptance even among younger consumers, a new development in a category restricted to older buyers. Fabindia opened 17 new retail outlets in FY14, taking the number of stores to 175. Manyavar has been more aggressive, adding nearly two stores every week on average, taking the count to 360 now, clocking annual sales of Rs 373 crore. In comparison, most apparel brands have been offering steep discounts to move unsold merchandise, resulting in the erosion of retail margins and more than a fifth of sales taking place during end-of-season sales. This is just one reason for the strong bottom line, said both homegrown companies. They also make nearly 95% of their merchandise inhouse, helping to keep inventory tight and costs under control. In fact, Fabindia runs every store as a profit centre in an effort to democratise operations while Manyavar either donates or destroys unsold stock, adding pressure on the company to keep designs relevant and sell products aggressively. However, experts feel both companies will need to reinvent their portfolio to sustain the top position in their segments. Fabindia has launched its western wear line Fabels while Manyavar has been adding Indo-western merchandise in its collection. Ethnic wear, still mostly fed by the unorganised segment, has demonstrated steady growth over the past few years and is set to expand by 8.4% over the next decade from Rs 61,679 crore now, according to retail consultant Technopak. Leading department chain formats such as Shoppers Stop, Lifestyle and Westside are increasing the width of their private label range and offer contemporary styling in the ethnic space, fuelling growth.
FashionAndYou opens 3 distribution hubs
Fashion website FashionAndYou has opened three distribution hubs in Surat, Mumbai and Bengaluru to hasten deliveries. The Surat hub became operational in July, followed by Mumbai in November and Bengaluru hub in December. The main distribution hub continues to be in Gurgaon. While opening of fulfilment centres in Surat and Mumbai led to an almost 45-50 per cent increase in orders from Western region; Bengaluru hub which became operation only recently should follow the trend, the portal said. Almost all e-commerce portals such as Flipkart, Snapdeal and Amazon are strengthening their supply chain to shorten delivery times. In July, Amazon, the world’s largest e-commerce player said it opened five fulfilment centres in the country. The centres are in Delhi, Chennai, Jaipur, Ahmedabad, and Tauru, which is on the outskirts of Gurgaon.
Fossil to invest Rs 40 crores to open 25 outlets in India
US-based watchmaker Fossil will invest up to Rs 40 crore to open 25 retail outlets in India by 2017 as it aims to reposition itself from a watch brand to a fashion lifestyle brand. The company, known for its range of watches, will sell non-watch products such as leather bags for women and men, wallets, eye-wear and jewellery through its retail outlets in the country. Globally, non-watch products account for 40 per cent to Fossil’s turnover, which was not disclosed. The company, however, will not launch apparels in the country, which it sells in the US. The company, after receiving government nod on 100 per cent FDI in single brand retail in 2013, opened its six retail outlets since March 2014. The company has stores in Mumbai, Bangalore and Delhi. It will look at opening new stores in Pune, Hyderabad, Ahmedabad, Chandigarh, Chennai, Jaipur and Surat. The company sells its watches through multi-brand retail chains including Shoppers Stop and Lifestyle.
South Africa’s restaurant chain Nando’s sets up India arm
South African restaurant chain Nando’s has set up a fully-owned subsidiary in India, buoyed by the good response to its remodelled franchisee-run outlets in the country. The company has roped in Sumeet Singh, who currently heads Brooks Brothers and SuperDry businesses at Reliance Brands, as its India chief executive, said two people familiar with the development. Nando’s plans to open about 20 own restaurants in the next three-four years in addition to outlets opened by its franchisees, the person said. Yadav is expected to join Nando’s by middle of January. When contacted, he declined to comment. Darshan Mehta, chief executive of Reliance Brands, too, declined to comment on the development. Officials of Nando’s could not be contacted for comment. Nando’s has seen better fortunes in India on its second attempt to crack the country’s market two years ago, after exiting the country in 2008 by folding up three franchisee stores in Mumbai. In its comeback innings, Nando’s completely transformed its strategy by opening larger 4,500-sqft outlets and pitched itself as a dine-in restaurant rather than a self-service fast-food joint.
Only India is anticipated to witness better growth momentum among the BRIC bloc whereas other member countries are expected to see stable growth momentum, according to Organisation for Economic Cooperation and Development (OECD). Furthermore, the new ‘Make in India’ initiative is expected to be a vital component in India’s quest for achieving wholesome economic development.