Financial Daily from THE HINDU group of publications
Thursday, Sep 30, 2004
`India among top 5 growth markets'
The growth in the domestic jeans and casualwear market is attracting an increasing number of multinationals into the segment. In fact, the Indian jeanswear market is estimated at Rs 1,700 crore at present and is growing at 12 per cent per annum. In an interview with Catalyst, Duncan Wilson, Managing Director of the UK-based denimwear company Lee Cooper International, shares his view on the growth potential of the market, the factors that are egging it on and how significant the Indian market is for the $300-million company. He also shares his views on sourcing of textiles from India, particularly in the light of quotas being abolished next year.
How long has Lee Cooper been in the Indian market? What is your current market share and how do you see the domestic market shaping up?
We entered the Indian market 10 years ago. The experience has been good and we are a major player in the jeans and shoes category.
We are certainly among the top three players amongst international brands in India, in terms of market share and we believe that the difference between the top three is not much. It is a competitive market. We are targeting to grow by about 10-15 per cent per annum in the country.
The market has evolved rapidly, especially in terms of distribution. Originally the distribution was old style, through multi-brand jeans stores, and that has evolved towards shopping malls, towards Lee Cooper - only stores or store corners.
We distribute our products through department stores, exclusive stores and multi-brand stores. We have 11 exclusive stores at present and plan to increase that to 30 by the year 2005-06.
How does India figure in the global scheme of things for Lee Cooper? Do you see India as a key growth market for the company?
It is a balance between the growth in the market and also the complications. And one doesn't quite eliminate the other. However, the major factors are positive. For instance, youth constitutes a large part of the population in India, with the growth of call centres driving the spending power among them. They like spending money on fashion and probably leisure, and that itself is an area which is driving growth for us. Young Indian consumers are also exposed to the latest fashions and I see Lee Cooper responding to the demands of the industry. In fact, I would say India is among the top five growth markets for Lee Cooper.
Western Europe, for example, has an ageing population and has high disposable income, while in India it is just the opposite ... the potential for casualwear and jeans is higher here.
Also, Western Europe is a mature market and to grow there you have to take away the market share from some other player. I don't think India is a mature market yet.
Are you sourcing textiles/fabrics from India for your operations elsewhere?
We do source from India but not denim as we have a large jeans factory in Africa. We are still one of the few companies which does the manufacturing itself. We source a lot of woven shirts from a range of suppliers in India for international markets.
Apart from that, we do not source any other textiles, though we are looking for opportunities all the time.
What is the current level of sourcing? Do you see the figure increasing after the quotas are abolished next year? Which are the other areas for which India could serve as a sourcing hub?
Sourcing from India at present runs into several millions of pounds sterling per annum. The question of sourcing post quotas is very interesting.
Recently, I went for a textile event in the US, and this was one issue which everyone was asking about. I feel as the quotas go down, the prices will definitely go down when sourcing, say, from a country such as China.
The feeling, however, is that the US Government will impose special taxes which will reduce the impact of the price drop and maybe give five years to allow American and Central American manufacturing to catch up. And it could be the same thing in Europe. But right now this is unsubstantiated and I don't think any Government has made a definitive statement on what it is going to do.
We will adopt a wait and watch policy but it certainly is a big subject of interest.
Areas of interest for potential sourcing from India would include denim for sure.
Which product categories are you present in? Are the products being imported or produced locally in India?
More than 60 per cent of our apparel sales come from jeanswear. We are also present in shoes and will soon enter the eyewear and undergarments category. While the apparels are being manufactured here, the eyewear will be imported into India. Our exclusive licensee in the country, Indus Clothing, does most of the manufacturing of apparel. M&B Footwear in turn is the exclusive licensee for Lee Cooper shoes. In other words, while Indus is the clothing specialist, M&B is the shoes specialist for us here.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line