Product through own stores


In the six months since the Government of India decided to allow foreign brands to enter the Indian retailing market in a limited way, the government has received eight applications. Only one case of Moja Shoes which tied up with Tano India for selling Nike footwear and apparel has been approved, a proposal from Sikora Aktienge sellschaft for retailing of measuring and control technology was rejected. The rejection was on account of the company proposing a 100% arm in India.

Single brand retailing seems to have finally caught the fancy of foreign investors and the list includes the likes of Benetton, Louis Vuitton and Lladro which want to sell through their own stores rather than hawking their wares through Indian franchisees.

The venture to sell Nike products will have only 20% foreign holding. Louis Vuitton Malletier wants to hold 51% stake in the Indian venture proposes to sell pens, leather products, shoes, watches, sunglasses and umbrellas through its own stores.

Fendi too is calling on Indian shores to sell similar ware and with 51% stake in a venture, with the Indian partner Fun Fashion holding the remaining stake. Similarly, Damodar Lal and Ashok shewakramani have tied up with La Moda fashions for selling Benetton, Sisley and Segue garments accessories and luggage in India

The retailing bug isn’t limited to Europe. Sri Lanka’s Damro Exports is seeking government approval for selling knock down furniture. There is a group of non resident Indians (NRI) too which has tied up with local partner Hassan Gems and Jewellery to sell precious gems and jewellery through a 50:50 joint venture.

The interest shown so far could prove critics wrong, who expected curbs on local sourcing to dampen the spirit of international brands. The centre allowed single brand retailing as a first step towards opening up the retail space to international players like Wal-Mart and Tesco.

The retail chains, which have been knocking on the country’s doors for a while, have not managed to get an entry due to political opposition.

The above is not something new for India. Going back to a few decades our own Indian companies like Godrej, Bata, Ayurvedic products Zandu, Dabur and automobile manufacturers like Premier and Hindusthan Motors all had single brand outlets. They have done/are doing very well in their businesses.

Single brand exclusive outlets are possible if the organization is manufacturing a variety of products under the same brand name and has established a good market reputation. Otherwise it is advisable to follow the conventional distribution channels as they would be economical and practical because goods can reach the customer much faster as the channel outlets can be located at a number of places than single brand outlets at limited places.