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Who has the trump card? - Manish Pandey - The Sunday Indian
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Thursday, July 19, 2018

Who has the trump card?


Despite its appeal as a high-end fashion garment, the branded market for saris has only picked up in the last few years. But the metamorphosis is quite phenomenal, and a few fairly recent developments promise to further up the ante
MANISH PANDEY | Issue Dated: August 30, 2013, New Delhi
Tags : Manish Malhotra | sari marke | Indian clothing market | Satya Paul |

Okay, so what’s common between Mukesh Ambani and Manish Malhotra? Well, both have recognised immense business potential in tapping the market for the Indian woman’s most favoured attire – the sari. And they join an interesting coterie of established incumbents who are inculcating a strong brand culture into this hitherto unorganised market.

In fact, the intervention of branded players in the sari market has made a much more powerful impact than it seems apparent. According to an old study by KSA Technopak on the Indian clothing market (conducted in 2002), with about 197 million people buying saris on an annual basis, saris were the largest selling apparel item. A little over a decade later, in 2013, the sari market is extrapolated to reach an astonishing Rs.289 billion; with 40% of it to be taken over by branded saris (according to the KSA Technopak report, branded saris covered only 2% of the sari market in 2002). In fact, a decade back, branding of saris was done by a few national-level manufacturers such as Roop Milan, Garden, Parag and Nalli’s. But extensive branding or creating large retail chains was not a regular phenomenon.

However, now marketers are gearing up to create their individual sari brands and even getting into exclusive tie ups with craftsmen and weavers. Leading designer Satya Paul, for instance, has already created a strong national brand and players like Nalli Silk, which also has plans to rope in an advertising agency like JWT to come out with a slogan, are looking for newer ways to establish exclusivity. “A proper positioning is a must to convert a fashionable commodity like the sari into a brand. The existing unbranded market has not done that so far,” feels Sumeet Nair, Managing Director, InCube Fashion, who’s working with designers on branding. According to CII, designer branded saris are now growing at a rate of 30% every year. In this increasingly dynamic market, two significant developments in the last couple of years promise even greater upheaval in future.

The first is the well known and acknowledged disruptive influence of India’s most profitable private company. In 2011, Reliance Industries Limited re-launched its Vimal brand and in 2012 the company announced its comeback into the branded sari market. Vimal saris first made its mark in 1970s India and were quite popular for the old tagline, “A woman expresses herself in many languages. And one of them is Vimal.” This has now been replaced by a theme that combine the traditional concept with a distinctly modern appeal.

The group is largely paying heed to corporate women as its target segment. But the biggest challenge in the corporate space is the largely unrivalled dominance of western prêt-a-porter. To combat those players, Vimal is resorting to ‘online marketing’ and is cashing in on all emerging media to market saris in metros, especially for corporate women. Like their other ventures, Reliance is definitely playing the volume game here. Hence, Vimal saris are not limited only to metros, but are also being marketed in smaller towns and cities across the country. "Even today, people can recall Vimal as a sari brand and it has enough strength to make a comeback in the category,” claims the company spokesperson.
The second disruptive change for the segment is the entry of a global luxury brand. The $29 billion Paris-based Louis Vuitton or LVMH Group announced last year that it will roll out branded saris in India in the near future. While the financial model that LVMH’s private equity arm L Capital is following is a bit byzantine, the business model is reasonably clear. The ritzy retailer would be investing $650 million for a 25.5% stake in Gurgaon-based Genesis Luxury Fashion. Genesis will scout for craftsmen and weavers to manufacture exclusive saris.

According to Bernstein Research, India’s spending on luxury haute-couture was around €600 million ($777 million) in 2010 and out of this, a mere 2% was spent on high-end exclusive designer saris. LVMH, whose portfolio of brands includes Louis Vuitton, Parfums Christian Dior, et al; has the marketing skills and the know-how to pitch its products in the Indian high-end market (it entered in 1996, and all its brands are present in the metros). The company firmly believes that the stark absence of high-end branded saris is indicative of the massive potential. "High-end designers in India are missing out on the real growth story in fashion by focusing on couture. Hence, LVMH plans to offer capital to entrepreneurs and craftsmen who have great products like saris and a very differentiated DNA, like the expertise of certain region. For instance, Orissa has at least five handloom saris, which are very well-known but nobody has ever helped the weavers brand their products," says Ravi Thakran, Managing Partner, L Capital and Group President South & South East Asia and Middle East at LVMH. Besides, LVMH’s saris would not be limited only to the domestic market. “Our investment and knowledge will connect craftsmen and weavers with the global luxury market and help them grow faster more profitably,” adds Daniel Piette, President and Managing Partner, L Capital.

So with two major disruptive influences in the last couple of years – one at the mass end and the other in the premium segment – the branded market for saris is expected to expand by leaps and bounds in the near future. In the upper echelons, the market is only getting built and the challenge for LVMH is to establish distinctive portfolios that attract premium audiences. In fact, french luxury goods maker Hermes International has already launched a line limited edition saris to tap into the Indian market.

In the mass segment, a player like Reliance will seek to leverage its brand value and also bring in attractive pricing terms. According to Confederation of Indian Textile Industry, the branded sari market accounts for Rs.15 billion and is concentrated only on metros and tier I cities. While non-urban markets open up a virgin opportunity, market penetration in these areas will definitely stretch Vimal’s resources to the hilt initially. Besides, some degree of exclusivity (for instance, by providing saris sourced from various locations), would help the brand win some higher margin business, apart from gaining a well diversified customer base. A dual focus on value and volumes will be critical to go those extra six yards.

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Issue Dated: Feb 5, 2017