Promod To Acquire Majority Stake In Major Brands India. Eyes 1000 Cr T.O. By 2015.

Major Brands (India) Pvt. Ltd, the local franchisee for fashion apparel and accessories brands such as Mango, Aldo, Charles & Keith and Nine West, will form a joint venture with French womenswear retailer Promod.

This changes the existing franchise agreement between the two. Both firms will raise their investment in the brand locally, said Kamal Kotak, country head, Major Brands. Promod will hold a 51% stake in the venture and Major Brands the rest.

India has nine Promod stores, and contributes less than 3% of the brand’s global revenue. The venture will set up 40 stores in the five years, with contributions from the region expected to account for 15-20% of Promod’s global revenue, Kotak said.

The venture will also explore opportunities to raise sourcing from India for Promod’s global operations of more than 900 stores. It may also consider price cuts in India.

In the past, brands such as Marks & Spencer and Ermenegildo Zegna have changed from franchisee operations to joint venture partnerships. Both the brands have tied up with Reliance Retail Ltd. Marks and Spencer, which entered India in 2001, also cut prices by around 30% and started sourcing from the country when it formed its venture with Reliance Retail in 2008.

In the past three-four years, the business model has changed for such businesses, said Devangshu Dutta, chief executive officer, Third Eyesight, a consulting firm focused on the retail and consumer products sector.

“Earlier in the 1990s, the preferred route to enter India was (being a) licensee as import duties were high,” he said. “Then, in the last decade, it changed to franchise, and in the last three-four years, it’s a joint venture as India becomes a strategic market for global marketers.”

Major Brands has 80 stores and a portfolio of 10 brands across women’s fashion, footwear, accessories and kids apparel, Kotak said.

“By 2015, the company plans to have 500 stores and revenue of Rs.1,000 crore,” he said. For fiscal 2011, the firm’s revenue grew 40% to Rs.200 crore. Kotak declined to give details on profit made by the privately held firm.

“Over the next 12 to 18 months, we will add four-five new brands to our portfolio,” said Kotak, who is in talks with some 10 European and US brands that are looking at an India presence. He didn’t name any of them.

Major Brands launched its apparel brand Queue Up late last year. It will launch kidswear brand JFK later this year. On average, the investment for a 1,500 sq.ft store is Rs.80 lakh to Rs.1 crore.

“In next 12 months, we will invest Rs.50 crore for expansion,” said Kotak. The capex will come from promoters’ equity and bank debt.

Earlier in the year, Spanish brand Mango appointed DLF Ltd as another franchisee as it sees opportunity for growth. Mango, which contributes close to 25% of Major Brands’ revenue in India, has tripled the number of stores and turnover in the past five years. “We believe that India will be within our top 10 countries in terms of turnover in 2015,” Daniel Lopez, managing partner and deputy general manager of Mango, said in an email. Globally, Mango has 1,400 stores and a revenue of €1.27 billion.

Source: Live Mint . Com, Sapna Agarwal, 26 May 2011.

Tags: Aldo India Franchise, Charles And Keith India Franchise, JFK, Kamal Kotak, local franchisee, Major Brands India, Mango India Franchise, Nine West India Franchise, Promod Franchise, Queue

This Blog/Information/News Item/Press Release has been posted by Sparkleminds, A Franchise Consulting Company Based at India, Offering Complete Franchise Solutions Nationally and Internationally for more than a decade now.We help retail brands franchise and retail businesses expand to various geographies across the globe through our franchise development and franchise recruitment modules.If you are an entrepreneur seeking a international retail franchise we can help you evaluate and start a new franchise.Visit www.sparkleminds.com for more details on how you can either expand your existing business through franchising or start a new business.

India Offers Great Business For Luxury Brands Licenses/Franchises. Top International Brands Re-Work India Retail Strategy.

The recent report 'World Investment Prospects Survey 2009-2012' has ranked India second in global foreign direct investments in 2010. Further, it says India will continue to remain among the top five attractive destinations for international investors from 2010-12. And even though the issue of allowing FDI in multi-brand retail is still being debated in the country, nearly a dozen global fashion brands are waiting to open shop here. Some are already in talks with domestic players for distribution arrangements. British clothing brand Jack Wills, Italian Rifle Jeans, American fashion designer Michael Kors are some big names likely to enter India soon, following licensing agreements with local partners.

Indian regulations allow 51 per cent FDI in single brand retail while no foreign investment is allowed in multi-brand retail. However, many fashion brands prefer the licensing route. Under this, the local retail partner invests in branding, marketing and expansion. As Abhay Gupta, Executive Director, Blues Clothing Company who has licenses for many top global brands in India avers, “If a brand enters directly, it would benefit in terms of financial muscle. While a franchisee would have his own limitations, own growth plans, and his own structure. Sometimes there may be a mismatch between the growth pattern presented by a franchisee and the growth pattern demanded by a brand. That’s where the discontent arises.” Gupta should know as Blues Clothing Company retails brands like Cadini, Versace, John Smedley among others.

Abhay says there is no set rule that brands should enter through the franchisee route. There have been both successes and failures of the franchise route and joint ventures. Similarly there have been failures of direct entries with sleeping partners and successes too. “But we have had two methods working for us. One is the franchise and the other is the license route. And we have done well in both. We have five stores per brand. No brand would grow from one to five stores if they were not satisfied with us as a partner. And we would not invest in five stores if we were not satisfied with the brand.” What works is that India contributes to global sales of these brands.

Ashish Dhir, Associate Vice President, Technopak Advisors, agrees there is a huge market for luxury apparels in India. The growth rate of the luxury segment is more than 20 per cent. Luxury brands are entering India. And in Delhi and Mumbai we have enough retail spaces for them.” According to experts, the luxury branded clothes market is pegged at Rs 2,000 crores or 10 per cent of the overall organized branded garments market in India. It is growing at over 30 per cent year-on-year, making India an attractive destination.

And the list of brands now wanting a foothold in Indian market is growing. For example, Jack Wills, a UK-based brand, is following the licensing route and will be available in metros. Rifle Jeans which entered India in 2006 but did not make a mark has been relaunched through a new local partner. As Dipak Agarwal, CFO, DLF Brands points out, “The business of retail fashion brands is worth $3 billion in India, out of which these luxury brands can easily capture half-a-billion dollars in next 3-4 years, provided they put in the right strategy.”

However, many brands already present in India have had to rework their marketing and retail strategy. The buzz is the likes of Calvin Klein, DKNY, and Hugo Boss are on the lookout for new retail arrangements while Gas wants new distributors. Diesel and Italian brand Miss Sixty which switched partners — Diesel switched from Arvind Brands to Reliance Brands while Miss Sixty did the opposite— are again looking around to add more distributors. Ditto for other luxury brands including Mango and DKNY (currently with DLF), and Brioni among others. Agarwal is clear that DLF’s arrangement with DKNY will continue. “They continue to remain with us. Rather, we are aggressively building up stores for them and are looking forward to opening a few soon,” he opined.

Tags:Jack wills, Rifle Jeans, Michael Kors, licensing agreements, Cadini, Versace, John Smedley, Diesel, Calvin Klein, Hugo Boss, DKNY, Miss Sixty, Brioni, retail business, luxury retail in India

Source:fashion united may 25.


This Blog/Information/News Item/Press Release has been posted by Sparkleminds, A Franchise Consulting Company Based at India, Offering Complete Franchise Solutions Nationally and Internationally for more than a decade now.We help retail brands franchise and retail businesses expand to various geographies across the globe through our franchise development and franchise recruitment modules.If you are an entrepreneur seeking a international retail franchise we can help you evaluate and start a new franchise.Visit www.sparkleminds.com for more details on how you can either expand your existing business through franchising or start a new business.