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French menswear company Celio International is planning to take the franchise route and increase local sourcing in the country.
With 41 stores and 130 shop-in-shops, Celio had entered the country six years ago through a joint venture with Future Lifestyle Fashion. Since then it has steadily increased its stake from 50 per cent earlier to 97 per cent.
Rajiv Nair, CEO, Celio Future Fashion, said: “We need a franchise model to penetrate smaller cities and high streets as there are plans to open 8-10 stores every year. As a company we become less capital-intensive with franchises who can make the business run profitably.’’
Celio is the largest selling menswear brand in France with a 18 per cent share. Almost two years ago, the owner of Celio International, Marc Grosman, had visited India to apply for higher FDI, which is allowed for single brand retail. Since then the French company has been steadily increasing stake and hence bringing in capital to build the business in India.
“There has been capital infusion from Celio International as we have increased our stake to 97 per cent while the balance of 3 per cent is still held by Future Lifestyle Fashion,’’ added Nair.
However, it took almost two years for Future Lifestyle to scale down its stake as differences in valuation took it toll in delaying the deal between the two JV partners.
Celio is now gearing up for competition as international brands have been steadily entering the market with companies like Zara, Gas, Gap and now H&M making their way to India. “Today, we have 18 per cent growth among our like-to-like stores but have to wait for another year before we can make money in India,’’ said Nair.
E-commerce is also a channel being explored by the retail company as almost 9 per cent of sales currently come from this channel.
“We still cannot do e-commerce directly but once we get FDI complaint we may look at a payment gateway from our company site,’’ said Nair.
Also local sourcing is expected to increase from 60 to75 per cent as certain products cannot typically get made in India. Celio continues to outsource from places such as Tirupur, Bengaluru and Ludhiana.
As Nair adds, “While we have to follow the norms for local sourcing, there will continue to be imported items like jackets which are best made abroad.’’
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