Mumbai: India’s largest textile maker Arvind Retail Ltd is accelerating its expansion plans for the global brands it has introduced in the Indian market in the past two years after sales growth topped its own expectations.
Arvind, which sells foreign labels such as Tommy Hilfiger, Nautica and Ed Hardy, added four more brands to its portfolio in the year ended 31 March—GAP, Aeropostale, Sephora and The Children’s Place (TCP).
“Earlier we had said that these four brands would have revenues of Rs.2,000 crore in the next five years but now given the good response we have stepped up on our expansion plans and will achieve this (Rs.2,000 crore revenues) in four years,” said J. Suresh, chief executive officer of Arvind’s retail and brands business.
The plan initially was to open 12 GAP stores in two years. The company has already opened 10 and will now have 14 Gap stores in the first two years of operations. The company has already opened seven TCP stores and will beat its target of 12 stores with a total of 15 outlets by the end of fiscal 2017 and an additional 15 shop-in-shops as well.
Likewise, for Areopostale, the initial plan was to open 40 stores in 4-5 years. “This will now be achieved in 2-3 years,” said Sumit Dhingra, who oversees the Nautica, Gant and Aeropostle brands.
When the retailer opened its first store at Select CityWalk, a month after H&M, it did sales per square feet per day of Rs.293 in the first 30 days. Brands like Benetton, Louis Phillippe and Levis do about Rs.50 per sq ft per day, which is considered good, said Dhingra.
The cosmetics retail chain Sephora, which has been in India for over three years with three different partners, has already doubled its store count since it came under the Arvind fold by adding four stores in the last six months.
“We will add another six stores (for Sephora) this year,” said Suresh. Sales at existing stores have doubled.
India is the second most attractive market for global retailers to expand in after China, according to The 2016 Global Retail Development Index report by consultancy AT Kearney.
According to the firm, India has in the past couple of years improved the ease of doing business. Greater clarity on foreign direct investment (FDI) regulations have helped.
“India is one of the corner stones of BRIC (Brazil, Russia, India and China) and it is the first country in BRIC that we went into,” said Kenneth Ohashi, senior vice president, international and global licensing, Aeropostale, who expects India to contribute 20% of its international sales in five years.
Swedish fashion retailer Hennes and Mauritz (H&M), which opened its first store in October, is expanding rapidly. H&M will have 12 stores by end of the year-end, the company said on 20 June.
To be sure, challenges remain. India continues to be a complex market for foreign retailers, where understanding dynamics at the state level is important as the country’s 29 states have the power to opt in or out of foreign direct investment reforms.
Infrastructure bottlenecks, high attrition rates and limited high-quality retail space remain concerns for retailers, said the AT Kearney report.