Too Many Retailers to Spoil the Cloth

It's been called hot, hep and happening. The much-hyped Hyderabad, being seen as the hottest retail destination, especially in ready-made branded apparel, is drawing manufacturers and retailers alike in hordes. The latest entrants into town include DCM Benetton, S Kumar's with their Tamarind brand, and prior to that ITC Wills opening a lifestyle store, and apna textile cooperative APCO launching the ready-made line called Vastra.

All seems hunky dory with the burgeoning middle class and their spending power. The readymade apparel market, estimated at anywhere between Rs 1,000-1,500 crore is said to be growing at 20-25 per cent per annum.

Older professional apparel retailers of the organised sector say their joy ride is coming to an end with too many manufacturers setting up exclusive stores and multi-brand retailers setting up ambitious malls. But, the newcomers are gun-ho about the market.

Even DCM Benetton, which had come into town and closed shop about two years ago. "Hyderabad has always been a big market in the South. Benetton closed shop in order to relaunch with new concerted strategy. Our line selection from our international collection for South takes into account the specific needs such as climatic conditions here," says Richa Puranesh, manager marketing services. An aggressive Benetton is expecting to make Rs 3-5 crores annually from Hyderabad alone, with a presence in five outlets, both multi-brand and exclusive, in the twin cities, according to Mr Natalino Duo, managing director.

Benetton hopes to cash in on the brand crazed upmarket segment, by offering "vibrant, trend setting colourful and young clothes, with an appeal that cuts across ages, genders, cultures and countries." The customers highly conscious of the price-quality-style equations and therefore ready for our label would be wearing styles in line with those in high streets of Tokyo or Milan, says Puranesh.

"There is a lot of hype about the city, and the concept of brand loyalty is on the rise, but people are looking at value for money in the long run, which we expect to cash in on with our range and pricing," says Darayas Cooper, Total Wardrobe Solutions which has launched its Tamarind brand here.

The exclusive Tamarind Flavour Zone, the first in the Southern region and second in the country after Ahmedabad, offers men's dressing -- formals, casuals, semi formals, and the company plans to add two more in Hyderabad and Secunderabad by Dusshera.

But, the upmarket Life Style multi-brand mall, part of Dubai-based Landmark group, is a bit apprehensive about the new competition, and is bracing itself with strategies to retain customers.

"The boom is definitely there, but the joy ride of early players is going to end with so much competition. Hyderabad has more of an inquisitive customer than the rest of the country. With even Mango, Ebony, Globus, Walmart etc hoping to come in, everybody has to do up their act," says V Mohan Kumar, Business Manager.

But, he is confident that though Hyderabad is still not a fully mature market compared with Chennai, which however is saturated, it has potential to take 5-6 more players, but the first movers such as Shoppers' Stop and Life Style will definitely have the advantage.

"The future is bright but competitive. Only those who are extremely professional will stay in the race," he says, adding that the store which offers the one of the best shopping ambience, convenience and a range of about 50 brands to choose from, will be introducing loyalty programmes.

The market is definitely in the value-conscious middle class with an increasing spending power, which is converting to brands. Who has the time to source fabrics and get them stitched? On the other hand we have fashion oriented young customers, who spend an average of Rs 950 to 1,000 per customer per visit.

The store, which has walkins of around 3,000 a day, with 60 per cent being apparel customers, has a three-pronged pricing -- budget, core and premium for both in-house and other brands.

Though we initially targeted the rising middle class, they stayed away due to the glamour, the look, the image created by the world-class facilities and shop fittings within the store. But, people soon realised branded products are available at the same MRP as any other store and have begun coming in, he says.

Life Style, spread over 50,000 sq ft and claims to have achieved profitability, however, wants to focus on the upper segment, and hopes to cash in on the customer shift toward convenience shopping.

As does Pantaloons, which however claims it's secret of success has been "value for money."

"The fact that more players are coming in only goes to show the maturity of the market. The tendency will however be towards convenience shopping. But, the actual retail growth lies in the burgeoning middle class and not the upper segment. But, who gets hit in the process is the small unorganised retailer," says Rasool Ali, head of Hyderabad operations, Pantaloon Retail.

"Retail has become very professional here. Hyderabad is a B-Class city compared with Calcutta which is A class, yet so many retailers are coming here instead of going there because they recognise the potential. But, different retailers are trying to tap the highest share of different baskets," he adds.

Hyderabad is still price conscious, and we offer not just value for money, but a wider choice, and a family oriented showroom, so we are comfortable. With lower margins, and lower overheads, the chain with three stores spread over a total of 22,000 sq ft in the twin cities, is sitting pretty, Ali says.

The ultimate ballgame is going to be that of customer retention, he adds. Agrees Shoppers' Stop's senior officer marketing services, YVK Pavan Kumar.

Almost a pioneer in the segment, the store, which has had its share of trials and tribulations in operational problems, is getting aggressive with its marketing strategy.

The store has re-launched Madura brands, and is repositioning the in-house Stop brand to be a value-oriented segment.

Stop has been relaunched with Life, and added a niche segment brand Carrot, and the Kashish brand of ethnic wear for women. "In fact, the response to private labels has been extremely positive. Abroad, it goes up to an average of 40 per cent of the total sales, but Hyderabad with its value sensitive customer has surpassed expectations.

The city customer has come a long way in brand consciousness, four times than what they were three years ago. The percapita spend has increased with socio-economic betterment and good employment rates. They shop for clothes nine times a year compared to the national average of six, spending an average of Rs 12,500 annually, according to studies by the store three years ago.

"The city has the strongest base of middle and high income levels of 8,000 to 10,000 pm and above, at 2.5 lakhs in 1998, which has grown since then," he says.

Being the earliest players, Shoppers' Stop was the first to realise competition. We are equipped in the basics of store service, ambience and merchandise, and are ready to battle it out. We are prepared for competition. We are at the consolidation level, and will be ready with a CRM technology soon, he adds.