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notjustinfo.com |
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Knowledge centre for MBA students. |
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To dress or not to! R Jaygopal As this gets underway, I am reminded of a story from our
younger days. "The Emperor who wore no clothes". The story goes
like this : It so happened that the Emperor was very fussy about the clothes he
wore (his tailors were a hassled lot). And one day he was duped into not
wearing any. But living in today's world he would have been a happy man. What
with a Louise Phillipe, Van Heusen, Arrow, Proline, Pepe, Flying Machine,
Allen Solly and others hitting you in the face be it the press, audio or any
other media you turn to. Today's world of garments has turned anyone and everyone
into a fashion conscious yuppie. No longer are the head-of-the-family
dominated shopping prevalent. Even a toddler today (before he utters
m-u-m-m-y or d-a-d-d-y) says J-e-a-n-s followed by the brand name. Such is
the effect of high pressure branding resorted to by the major ready made
garment companies that today's mom and dad are in for a culture shock when
the child puts its foot down about the dress he chooses to wear. The ready made garments market today has leaped to an
amazing Rs.8000 crores industry from a paltry Rs.250 crores a few years back.
Out of which the branded menswear market consisting of shirts, t-shirts, sweatshirts,
gym wear, denim shirts, casual trousers, formal trousers, partywear and
accessories like ties and socks is estimated at Rs.900 crores. In terms of
value, the growth rate of the readymade industry is put at 30 - 35% annually.
All the major shirting companies (brace yourself for this)
get a half sleeved shirt/full sleeved shirt (of course a semi finished one)
at Rs.32.50 and Rs.36 respectively from jobbers. By the time it reaches us on
the shop shelf, it is tagged at a whopping Rs.500 and upwards. A clean margin
of Rs.450 plus. Considering their expenditure on advertising, retailer
margins, transportation, showroom overheads etc. clothing companies still
manage a neat profit of Rs.300 plus. All this for a monogram of a crown or an
`A' with an arrow on the cuff. Thanks to gullible consumers like us. I am sure that buying the exact fabric and with proper
instructions to your tailor (not to forget the monogram) you will end up with
a shirt matching the very best. But unfortunately our macho man believes in
shopping out at those trendy and flashy what-you-call boutiques or showrooms.
A burgeoning upper class and a fashion-conscious growing middle class taken
in buy hyper advertising sometimes bordering onto histrionics are only to be
blamed. Cashing in on this boom are the numerous. Jeans, shirting
and suiting companies. The result being today's pricing, that is more
concentrated on the brand and its image rather than the actual product
itself. A Louis Phillipe or an Arrow commands a premium just for that
monogram (which, most people buy it for) while a similar quality shirt or
pant is available at a Kumar's, Cambridge or Weekender. Here too the culprit
being 'us' - the consumers and partly enticing advertising. Companies like Denim, Arvind, Allen Solly etc. can afford
to pile crores of money on to advertising and in creating exquisite
showrooms. Walk into a Levi's or a Benetton and you will find 200 watts of
music, CTV's et al, tempting you like the proverbial apple. But can the
smaller brands afford these. The point worth pondering is that the advantages
of allocating a portion of your profits for advertising can do wonders to
your brand. Maximum volume of purchases of ready made garments were in
the lower income group, according to a survey - Consumer Market Demographics
in India - conducted by NCAER. Of the total purchases of their product group,
more than 65% were purchased by low and lower middle income households. The
respective shares of purchase in these two classes were 33% and 32%. In case of shirts, more than 70% of the total purchases
were made by these two income classes. For trousers, the share of purchases
was around 61%. Jeans were not very much popular among the low-income group.
Jeans found more favour with the middle-income group. This income group
accounted for 38% of the total purchases. Lower-middle income group accounted
for 20% and the upper middle-income group had a share of around 17% of the
total purchases. Thus, we find that in the centre is the Middle Income Group (MIG), which again like in other segments has a decisive say in what is sold and for what price. This MIG is so important that most of the ready-made
manufacturers are re-focusing their attention. Leading to sub-brands at
lesser prices. Like the Arvind Group that has come out with 'Newport Jeans'
against its torch bearer 'Flying Machine' and T-shirts at a much lower price.
And this in a market, where a good quality branded jean is available upwards
of Rs.600 only. Another innovative brand extension is Ruf and Tuf , which is
India's first self stitchable jeans. What could be the reason? One could be the price sensitivity displayed by this
group. Second could be fashion backed quality consciousness. And third could
be the conservative approach (which no amount of advertising and direct
selling is likely to change). One more reason could be the brand loyalty,
which of course is suspect. But the question to be pondered over is whether Newport
will be able to sustain itself. Already there are rumblings about the thin
material used and lack of quality finish. Not repeating the mistakes of Arrow
or Allen Solly is John Miller - positioned as `the Great American shirt', who
has entered the fray at a lesser cost and targetted the MIG's forcing
established and leading brands to rethink its pricing policy and product
range. So the competition is left with fewer options. One would be a drastic
price cut, increasing retailer margins, establishing exclusive franchisees or
trying out new innovations. Attacking the LIG and MIG segments are retail outlets like
Saravanas, Jaychandra and Funtoosh in Chennai have launched shirts and
trousers at an amazingly low price of Rs. 20 to 25. 'Proline' the silent player for long has taken the lead in
innovative concepts in what is termed as the `Oxford Gift Pack (OGP)'. An OGP
consists of a shirt, a tie and a pair of socks in a single gift pack. The Rs.1000 crore Bombay based Modern Group hitherto
turning out fabric materials and terry towels is planning to enter the ready
made garments - exclusive showroom segment. A couple of other players like
Levi's and Mafatlal have gone one step ahead. They are now talking about a
multi-product shop rather than a exclusive showroom. Fallout of all this is
that today we get the same designs at lesser prices in lesser-known brands.
Then is the premium charged by the leading brands justifiable?, this is
something the end - consumer has to grapple with. Is it going to be just
"the look of a winner" or "the better-known look of a
winner?" Possible answers to the above queries could be had in part
with fashion designers. Today's fashion designer mainly targets the top-end
consumer and that too most of their designs have practically zero
applicability being restricted to just the ritzy and glitzy world of
catwalks. Thankfully, the change is already in the offing. Friday
Dressing from Allen Solly is set to change the way dreary company executives
dress nowadays. Or the other way out is like Arvind which has got a jean
catering to every segment. Newport for downmarket, FM for midmarket, Ruf and
Tuf for the ready-to-be-stitched. The reason for such large-scale
segmentation is the mega-influx of foreign brands some at mind-boggling
prices and some at reasonable ones. And what about the oft-repeated claims of brands being the
No.1 and having a national out look? The fact is no brand can be called truly
national in that it has a large market share in every region of the country.
Further, the dominant position in the market for ready-made garments is
within multitudes of regional and local brands, which account for 50% of the
total purchases of jeans, and over 80% of the purchases of trousers and
shirts. This may well be due to high taxes on branded products in the past
few years that could now change as aggressive brand marketing develops. The physical demographics of the country pose another
major problem for marketers. On one hand if it is the distribution and
transportation costs given the wide area that is to be covered, it is the climatic
conditions on the other. While Bombay remains moderate during the winter
season, the Northeastern region is very cold necessitating the need for
stocking different garments. So the question confronting marketers is how to
stick to an uniform pricing policy keeping in mind seasonal changes that
result in a change of assembly line. One solution could be like in the West,
wherein the entire years' production is planned based on the previous years
purchasing pattern in the process freeing the shopkeeper from the worry of
high inventories. The same NCAER survey also reveals that while shirts sell
more in the East (45.75%) in terms of quantity. Pants are more sought after
in the West (37.18%). The West too loves jeans more (41.49%). The rest of the
country being generally moderate in terms of buying ready made shirts, pants
and jeans. It is interesting to note that purchases of branded
ready-made products cut across income groups and the urban-rural divide but
they are far more relevant at the higher levels of income than at the lower
levels. So today we have a situation wherein the Indian male has
come a long way from his shirtless, dhoti-clad image to the one who display's
with aplomb that he too is wearing an international label and at the same time
not being ready to compromise on the quality factor which has actually
accentuated the demand for better stuff. To conclude we can safely say that the ready-made garment
scene is hotting up with more money being pumped into advertising and
innovations being tried out by leading brands. With more international brands
coming in the scene is really hotting up. Also playing a decisive role is the
MIG sector whose purchasing power is increasing with increase in average
salaries. So the writing on the wall is clear. No longer can the consumer be
taken for granted. His is a genuine demand for better quality at a more
reasonable price. Hence all manufacturers better pull up their socks or
someone will pull down their pants. |
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