Local retailers partner global brands to launch own labels

26 Jun,2012

By Sarah Jacob

 

Ramesh Tainwala believes that “women kindergarten teachers tend to be more confident mothers.” As analogies go, this one may border on the stretched but what the chairman of Planet Retail is attempting to convey is that retailers like him can pick up learnings by partnering with marquee brands, and then use them to boldly build labels of their own.

 

Planet Retail, which has brought brands like Debenhams, Acceorize, Nautica and Next into the country, has begun flying solo with handbags brand Lavie. It’s not the only domestic retailer following a learn-and-launch strategy.

 

DLF Retail, which has tied up with brands such as Claire’s and DKNY, launched in-house home decor chain Pure Home + Living a year ago. It is now set to flag off another format called Pure Kitchen Studio by November. Or take Lalit Kishore, master franchisee of sports footwear brand Lotto in India, who has launched his own brand of footwear called Globalite. And then there’s Devyani International, a franchisee for Pizza Hut, KFC and Costa Coffee in India, which has introduced South Indian fast-food chain Vaango independently.

 

“It is easy to open outlets on your own. But international partnerships help in understanding the economics, food preferences and processes for standardised delivery,” said Virag Joshi, president & CEO, Devyani International.

 

Alliances can provide the domestic partners with a slew of insights across the entire retailing process. Rohit Aggarwal, promoter of Lite Bite Foods, which started as a franchise for Subway, gives an example. “One takes for granted that the freezer or chiller is cold, but (working with an) international brand teaches you that the temperature needs to be checked every 30 minutes.” Lite Bite is now a Rs100 crore operation running not just Subway outlets but home-grown chains like Punjab Grill and Street Foods of India.

 

International partnerships also help build a sophisticated team with focused skill sets. “Skills that the management feels can be leveraged without an additional cost to build their own brand in parallel with the primary brands,” said Gaurav Marya, president of Franchise India Holdings, which helps brands partner franchisees in India.

 

There are plenty of synergies that can be availed of from sharing support functions and the supply chain. Economies of scale come into the picture on the advertising front, distribution, hiring and office space, too.

 

Devyani International, for instance, has a common production unit or commissary in Gurgaon for brands across its portfolio. And Mr Kishore’s Globalite rides on the wholesale supply chain that is used to retail Lotto across multi-brand stores.

 

Companies say that in the initial stages having international brands in the kitty helps with prospective trade partners. “A foreign partner carries a lot of weight,” said Mr Aggarwal.

 

Kanchan Lall, associate VP at management consulting firm Tecnova, likens this trend to the development of private labels by retailers. “Once you grasp the understanding of a business, you look for avenues with higher margins and decision-making flexibility,” she said.

 

The domestic brand builders rule out potential conflicts of interest, pointing out that the local labels typically operate in a different market segment. “Globalite would not matter to Lotto as the two cater to different price segments,” Mr Kishore explained. While Lotto retails at Rs2, 300 a pair on an average, Globalite is priced around Rs1,500 a pair.

 

The seven-store handbags chain Lavie gains by being bundled with international brands in Planet Retail’s portfolio. “At the same time, Lavie also helps refine the strategy for the premium and super-premium brands in the portfolio and supports them with assurance of higher footfalls when negotiating with a mall,” said Mr Tainwala.

 

Source: The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

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