Branded clothing has the ultimate business model, or at least that is what many foreign companies believed they did. It is simple: Manufacture in the cheapest markets in the world (India, China etc), and sell them in the same markets but with a price tag used in the most developed markets (UK, US, Canada etc.) of the world.
Marks and Spencer, an iconic brand in Britain, has pursued this model in India, with exclusive showrooms in many cities, but that model may have just died.
Dockers, the men’s trouser brand from the house of Levi’s, has decided to
exit the Indian market after years of toiling to build a strong brand. To be fair, Dockers was not as egregious in pricing as M&S. What undid the US company was stiff competition from Indian brands, notably Color Plus, for long an independent brand built by a startup and now owned by Raymonds.
Besides matching, and arguably surpassing Dockers, Color Plus gained an edge through innovations. For example, it offered odd-numbered sizes in a market that traditionally hangs out trousers with even-numbered waist sizes. This conceivably won the loyalty of many men wearing ill-fitting trousers. Innovation, among others, established Color Plus as a formidable high-end brand, putting in the shade not only international brands such as Dockers but even Indian brands such as Park Avenue and others. Eventually, in 2002, Raymonds, a dominant domestic player with a rainbow of strong brands, bought Color Plus.
Dockers is not the first foreign retailer to be defeated by the Indian consumer, though it might be the biggest. In the mid-1990s, I Can’t Believe It’s Yoghurt, a US brand, believed it could sell good old dahi in the land of the lassi. It predictably failed. Several others have established their presence for over a decade. Among them, Baskin & Robbins icecreams, Pizza Hut, Domino’s, Coca-Cola, Pepsi, Nike, Reebok and several more. Some of them might still be vulnerable to strong domestic competition, especially those whose product doesn’t depend a whole lot on R&D. Pizza Hut, which charges a hefty premium (without quite adding adequate toppings, if I may say) and Subway, whose healthy sandwiches can be easily replicated by competitors, are on top of my list of good but overpriced foreign brands.
In the 1990s, when many foreign brands flocked to India, they discovered the middle class market had been vastly overestimated. Now, the market has grown but so has competition. It will be interesting to watch how some of the foreign brands seeking a broader, not niche, market fare in the years to come.