European cloth brands make a beeline for India

What is common to Gucci, Calvin Klein, La Perla, Jimmy Choo, Fcuk, Gloria Vander Bilt, Mango, Nine West, Promod, Crocodile, Daks, Saville Row, Trussardi, Guess, Hugo Boss, Austin Reed, Ermenegildo Zegna, Benetton, Esprit, M&S, NEXT, Debenhams, Pal Zileri, Gas and s.Oliver?

They are all foreign clothing brands who are bullish about the Indian retail market and have been making a beeline towards Indian shores. The reasons for the gold rush are apparent.

In men's apparel, existing players like Madura garments estimate that the market size for premium to luxury apparel to be in the range of Rs 1,062 crore (Rs 10.62 billion). However, the category is expected to grow at a rate of 14 per cent for premium wear and at 25 per cent for luxury wear till 2011.

Olivier's director, International sales and retail, Andreas Brill thinks that his company has timed its entry into the Indian market perfectly.

"India is fast changing and keeping abreast of changes in the fashion world. With fast shrinking geographical boundaries, India is quickly catching up with the latest global fashion trends. We believe that India will catch up with the dynamics of the Russain fashion market in the next 2 years with the availability of quality retail space emerging," he said. Brill is not isolated in his views.

"India is one of the fastest growing luxury goods market in the world and we are very keen on capitalising the huge opportunities and potential that India has to offer. We think the Indian market is mature enough to sustain the presence of a brand like Pal Zileri," said Manuela Minola, director, Pal Zileri, an Italian luxury brand of men's formal wear, who is confident that India would contribute 2 per cent of the brand's turnover within 5 years despite an almost prohibitory starting price of over Rs 150,000. Pal Zileri has a global presence in over 70 countries.

Pal Zileri's Indian partner, Gavel Fashions, has ambitions of bringing about 20-odd niche and highly aspirational brands from across the world to India over the next 2-3 years.

Retail analysts say that international brands have identified China, Russia and India as the growth drivers for their products thanks to the growing economic strength of these nations that consequently translates to higher disposable incomes.

"These are the happening markets and international brands are exploring different avenues to mark their presence in these markets. The growing middle and upper middle class, with their newly found freedom to spend and show that they belong are on the radar of these brands," said Prashant Agarwal, an apparel and retail analyst at KSA Technopak.

The trend is likely to continue over the next few years and the preferred route of tying up with local partners may remain unchanged unless the government steps in and allows 100 per cent foreign direct investment in retail.

Brand House Retail's chief executive Tarun Joshi, however, has a different perspective. "Even with the government allowing 51 per cent FDI in retail, lots of luxury brands are entering through the franchisee model based on their worldwide experience that has seen most success through the franchisee route. There is also the advantage of local expertise that a local partner offers that makes foreign brands prefer a joint entry."