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Consumers with premium-sized wallets flock to mid-level brands

Consumers with premium-sized wallets flock to mid-level brands
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First Published: Wed, Aug 22 2007. 02 02 AM IST
Updated: Wed, Aug 22 2007. 02 02 AM IST
In the city’s well-known Atria Mall, which hosts several high-end stores, the Spanish store Mango wears a slightly loftier mantle than in almost any of the 80 other countries in the world where it sells.
At the Indian outlet, Mango has little trouble getting customers to dish out more notes than in any other city worldwide to buy the latest styles designed by sultry international movie star Penelope Cruz.
“There are things that are expensive or even beyond my means, but I do still buy (them) because there are no similar Indian brands,” says Parmeet Arora, a Mumbai-based banker. Arora says she is extremely brand-conscious and dresses in Mango and FCUK among other high-street brands. “I do shop when I go abroad, but I have to shop here too because trends change and I would rather shop here than deviate from fashion or wait for my next foreign trip,” she adds.
Customers such as Arora are a boon for overseas brands, who are passing on the high customs and excise duties in India to shoppers without crunching their margins. In India, customs and excise duties can be as high as 30-40% compared with zero duties in Dubai. Duties are typically lower in Singapore and some other markets, too.
Mango’s Indian partner Major Brands Pvt. Ltd isn’t alone in finding better paying customers.
“People do seem willing to pay for it,” says Simrita Dhillon, who consults with international luxury brands. She adds that though people may be unwilling to pay really high prices for luxury brands, they do not mind paying a premium for brands seen as high-end.
In fact, since opening in 2001, Mango has done well enough for Major Brands to bring six more high-street brands to India, including Nine West, Promod, Aldo, La Senza, and Charles and Keith. Other chains in a similar segment such as Tommy Hilfiger, French Connection, Esprit and Miss Sixty have also entered the country.
People are willing to pay these prices “because they are getting products through the right channel,” says Suresh Bhatia, director of Major Brands. “Initially, women would ask why we didn’t have enough business suits because that is what women thought dressing to work in western formals was about. Now they come with exact style numbers, sizes and colours from our catalogues,” he adds talking about how the segment has evolved.
It isn’t just pricing. Some international brands could even be seen as more aspirational here than elsewhere, although their prices are the same. “The arrival of large international brands is very new in India, which means that there is not as much understanding of how international brands are positioned. So, often a brand like FCUK, which in the UK sits in a between a high-street and a designer brand, is mistaken for a luxury brand,” says Sujata Assomull, spokesperson for the Murjani Group, which is the Indian partner for French Connection and Calvin Klein Jeans.
But as the segment grows and more players enter, the positioning is changing. Major Brands, which has 14 stores in Bombay and one in Bangalore, is currently spending Rs14 crore for an expansion to set up 25 new stores in Delhi, five in Hyderabad and two in Pune. It could also enter the Chandigarh, Chennai and Kolkata markets. Zara, Mango’s international competitor known for its fashionable but inexpensive clothes, is also said to be in talks to enter the Indian ­market.
“There is a market in smaller towns, but it may currently not be very big,” says Hemant Kalbag, who heads the retail practice at AT Kearney, a management consulting company. “Some of these companies are still a few years away from profitability but they are looking for an early-mover advantage. They want to get a critical mass before the others come,” he adds. And the prospect of a wider set of customers in smaller towns and others who have more choice has meant that Mango’s premium pricing may be about to change—it has dropped prices by 20-25% starting this season.
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First Published: Wed, Aug 22 2007. 02 02 AM IST