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Shanthi Venkatraman

Madura Garments, a leading player in the domestic readymade business, sees interesting times ahead. While opportunities open up on the export front, changes in the retail landscape have spurred demand for branded apparel on the domestic front. In an interview to Business Line, Mr Hemchandra Javeri, President, Madura Garments, shares his outlook for the industry and outlines some of the company's plans.

Excerpts from the interview:

What is your outlook for the domestic readymade garments market, after 2005?

For us, the post-January situation is, very clearly, an opportunity. Now, there are various levels of what that opportunity can be, both on the domestic and the export side. On the domestic side, the good news is that there will be greater competition.

The branded apparel or the ready-to-wear segment — depends on which way you slice it — is so small vis-à-vis the total apparel market that there is plenty of opportunity for players to grow.

The branded apparel market is supposed to be worth about $5 billion, which is not very large for a country of India's size. If you look at the ready-to-wear market, it is even smaller because people continue to stitch trousers. The barriers to entry are retail and advertising and branding. Today, if you look at the size of India's garment business — the size of the business may be small, but the costs of creating a brand are large, because the Indian media, the cost of creating retail, is very expensive.

Somebody who enters the market would need a lot of resources and patience.

On the domestic side, if competition increases, that is good. But I do not see anything dramatically changing immediately. The opportunity for us (Madura Garments) is that we have this great branded business and we own these brands. So we can take these brands overseas. We have a sizeable presence already in the Middle East. So we see a good opportunity.

The growth of the apparel business is closely linked to growth of organised retail. But there is also the argument that there are not enough brands to fuel an explosive growth in apparel retailing...

From the brand owners' point of view, there is not enough retail space. Only recently have we begun to see the explosion of malls. But which mall will succeed, nobody knows. So there is a bit of uncertainty. For retailers who claim that there are not enough brands, it is not entirely true.

Everyday a new brand is being launched. There are a plethora of brands. But retailers are right in that none of these players has done anything serious to build brands, which we, as a company, have done reasonably well. Barring a few of our brands and a cluster of others, nobody has done any serious brand building because it needs commitment, investment and long-term planning.

In the past, apparel manufacturers set up their own shops because of the dearth of retailers. As various retail formats emerge, would manufacturers continue to expand their own retail outlets?

We see retail expansion as an opportunity. And we are already on that path. Having said that, putting up retail stores is a function of where the consumer is going. If the consumer goes to Forum Mall in Bangalore, and you are not there, you have lost an opportunity.

So in many ways, it is about accessibility. In Bangalore, even though there is Forum Mall, Brigade road, the high street, is still flourishing.

So we are there as well. So we need to find a balance between the different channels. I think we are reasonably well-positioned on that.

You have "Planet Fashion" outlets where all Madura brands come under one group and "Trouser Town", which showcases your trouser brands. What has prompted you to adopt these formats?

Planet Fashion was opened at a time when there was not enough good quality retail stores. If you went to a particular retail location, you would find that the space availability is 3,000 square feet, which is too large for one brand. We had the unique advantage of putting together three-four brands, branded under the Planet Fashion concept.

So Planet Fashion, in many ways, is the Madura Garments way of dealing with the distribution inadequacies that exist. And then we found that the model worked. So we would take that concept wherever it is applicable.

Trouser Town was started as a category killer concept. That is, when you thought of trousers, come here. So that is what it will continue to be. In addition to this, we have exclusive stores. So we have this combination of exclusive stores, Trouser Towns and Planet Fashions.

Does this format limit a customer's choice to only products of Madura Garments and, in that way, also limit footfalls?

There are different kinds of customers. There are some who have made up their mind on what brand they want to buy, before they set out to buy. For them, we need to have the exclusive brand outlet. Also the exclusive store allows us the opportunity to showcase the brand.

If you look at Planet Fashion, a consumer who wants choice will come to Planet fashion. If he/she wants choice that is broader than Planet Fashion, then they would go to Shoppers' Stop or Lifestyle, where also we are present.

So depending on who the consumer is and what he/she is looking for, we find that each of these (formats) comes into a play. Those who want broader choice go to the large departmental stores, and we are there as well.

There is a growing demand for brands at lower price points. What impact does this have on brands that cater to the upper end of the segment? Are they likely to lose market share or the premiums they command?

I think if those brands at that price (that cater to the upper end of the segment) don't offer value, then they would suffer. My view is that consumers in India are not price sensitive but are value-sensitive.

If you look at Louis Phillippe or Allen Solly, there is no resistance when we increase the price, if we give value. We have some shirts that sell for Rs 4,000 under Louis Phillippe because consumers get Italian fabric, very high quality stitching and styling. I feel that price will help, but it will not drive business.

How has the women's apparel of Allen Solly done? Why is it that women's clothing under private labels has managed to get a better response?

Allen Solly women's wear has won the Clothing Manufacturers Association award for the best women's apparel brand. As a brand, I think, it is clearly the best. Private labels in women's wear do well because the Indian woman is now looking at trying out western wear. She is not, however, comfortable with paying a high premium, which a brand would command. So, the departmental stores are giving her access to Western wear at a low price. But once she buys that and gets used to Western wear, she would also eventually upgrade to a brand. So I see private labels as helping us.

What is the size of the women's apparel market in India? Rs 300 crore? It is nothing. It is growing rapidly, at 35-40 per cent. But it is so small. Even if it multiplies 10 times in the next five years, it will still be a very small market.

Are you still looking at increasing your thrust on this market?

Women's wear is a priority for us. And the results have borne out. But the point is that it is still a small part of the overall pie.

What would be your company's main focus in the next couple of years?

We are very clearly focussed on the fundamentals of our current brands — create a good brand and good merchandise. This is nothing new but the key is how to do it. You have to create good retail, good merchandise, and a good advertising campaign.

In many ways, we have become wardrobe and lifestyle brands. We need to complete what the customer needs and bring it under one brand. So we want to complete each brand.

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