KOUTONS GETTING IN TO BIG RETAIL OF APPARELS INDIA.
The koutons touch.
One of the few brands with over 200 exclusive outlets, Koutons sells a lot more than many popular global brands. This Delhi-based brand has created a buzz in the market with its offers of heavy discounts and ad splash across media. Vishnu Rageev R follows the Koutons trail as it takes a leap forward with big plans on the anvil.
Two roads diverged in a wood, and I / I took the one less travelled by,/ And that has made all the difference. " These concluding lines from Rohert Frost's famous poem The Road Not Taken, perhaps exemplify the story of the Koutons brand".
The Koutons story reveals how much a regional brand can grow in a short span competing with major corporate brands. It has just opened its 225th exclusive outlet, which is still a far-off dream for many national brands, and again, it hopes to touch the magical 1000 number by 2008 end, even as it ventures into the rapidly growing womenswear segment. With immediate targets set to clock in a turnover of Rs 500 crore during 2006-07 against Rs 168 crore last year, it is also expecting to raise about Rs 120 crore and for this it will file the draft offer documents with SEBI soon. The proceeds of the IPO will be used for capacity expansion plans, strengthening the distribution network and opening company-owned stores.
New Delhi-based Koutons Retail India has more than a pocketful of plans, a discussion with its team led by DPS Kohli, MD, Koutons Retail India, revealed. "Think of us not as a business but as a movement," Kohli would have us believe.
Elaborating on the company's retail thrust in the country, he said that the Koutons EBO story will see a web of stores coming up from Kashmir to Kanyakumari. Koutons recently entered south India with the launch of its first exclusive store in Hyderabad and it aims to open more stores in Bangalore, Chennai and other cities soon. The brand is also eyeing an international retail strategy with the launch of its first exclusive store in the Middle East and further west in Africa by mid 2006.
Currently, the brand has a presence in smaller towns and cities in Uttaranchal, Uttar Pradesh, Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Bihar, Orissa, West Bengal, Chhattisgarh, Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh. Further, it hopes to take its business network to more smaller towns and cities across the country.
"With substantial business coming from not-so-popular markets for national brands, quantum-wise, the Koutons brand sells more garments than any other apparel brand in the country," claims Kohli.
Speaking about the performance of the brands, he revealed that if taken up zonewise, north India is the best. In the west, Mumbai tops in selling denims and in Kolkata the market is picking up. "Currently we run 23 stores in Kolkata and expect to take it to 100 by October 2006. Especially in states like Punjab and few others you will soon find a Koutons store at every 50 km. We are moving towards that."
Category growth.
While allotting more franchises, Koutons is in search of new opportunities to thrive. The company recently introduced Koutons Les Femme for the women consumers on an experimental basis. The western casual wear line is available only at select stores.
"We are examining the possibilities of further growth by introducing the line for women as an add-on and in standalone shops. Also, under consideration are the possibilities of launching brand variants for better segmented product classification such as denim and active wear for teenagers and 20 year plus," he said.
Every year the brand uses new techniques and experimentations in fabrics. The 2004 winter saw the introduction of informal winterwear in the form of jackets while in 2005 summer the brand launched the world's lightest trousers. For 2006, the brand has already set its eye on bright coloured linens, specially woven pleatless trousers.
"The company keeps itself geared up for growth and ahead of competition by planning product ranges two seasons in advance. It is this advanced planning and research which is making high growth with new products a way of life at Koutons," Kohli claimed.
With a team of in-house designers, Koutons offers shirts, trousers, denims, t-shirts, sweaters, jackets, suits and accessories. The company outsources fabrics from Italy, Korea, Japan, China, Hong Kong. Except knits and woollens, the entire range is manufactured in-house. “We have dedicated third party production facilities, which produce knits and woollens for us," Kohli informed.
With eight manufacturing units operational in Gurgaon, the company has a production capacity of 15,000 shirts, 10,000 non-denims and 5,000 denims per day. The units are equipped with state-of-the art plants with German, Japanese and Italian machinery. The company is also adding a new warehousing facility, which will come up in a 2.5 lakh sq ft area.
"Constant quality control checks are performed right from inspection of the fabric to production, packaging and distribution. Our manufacturing units are monitored by latest quality checking computerised machines that ensure weaving comfort, durability and elegance of each garment," Kohli said.
Biz model.
Explorers try many routes before they find one that works. The Koutons story dates back to 1991 when it started its operation under the name Charlie Creations, selling mostly denim wear. Finally in 2001, the brand Koutons came into existence.
Now, imagine from 74 stores in March ’05, it took only a year's time to take it to 225 stores till date. Asked about this retail stratagem, a candid Kohli admits, "In 2002 we got into the franchisee model and this turned out to be a major retail chapter in Koutons' history."
In franchisee mode Koutons supplies goods on credit, as franchisees are unwilling to block cash. The company bears the risk on the choice of products stocked by the franchisee, the sale and return of products and, sometimes, even the operational cost. But at the same time Koutons takes all the decisions regarding pricing, promotions, products, etc.
"As we know the quality of our garments, we are willing to take the risks rather than passing on to the franchisee. For retailers there is no cash block while for us the franchisee margins are lower at 15-20 per cent and we have full control over what is stocked," Kohli added.
At present Kohli plans to redesign the existing model and make it comfortable for new partners that come on board. "It's going to be a win-win story for both," he added.
Asked about its success in tackling competition from national and international brands, Kohli pointed out, "We have a huge customer base, who is satisfied with our offerings, dealings and services, and no MNCs can break this trust."
The Koutons stores known for heavy discounts and free gifts, pulls crowds in major locations on weekends. Asked about the rising trend of providing garments free with each purchase, Kohli explained: “The Indian customer wants the maximum out of what he pays. We have studied their pulse, and a majority are satisfied if they are provided a free item while shopping."
"Kouton's management is successful in handling all the incurring expenses. Due to our expertise in management, we are able to provide the best quality products even in discounts or as free gift for our loyal customers. The freebie concept is not new in the country. It also does not mean that we compromise on quality. Our sales figures and the 40-50 per cent increase in the number of outlets proves that we are loyal to our customer," he stated.
Explaining the role of ads in business expansion, Kohli said, "For the last few years we are covering all mainstream media, which I think is one of the reasons for Koutons growth. Our ad campaigns are helping to keep us ahead of our competitors."
The ad campaign for 2004 focussed on the technical innovations and product qualities as its differentiator whereas in 2005 it was shown as a lifestyle-enhancing brand. Last year the company spent Rs 10 crore for advertisements and this year it plans to increase it to Rs 20 crore.
To build up further business momentum, recently Koutons launched a new TV ad campaign with the punch line – The Way Ahead… Always. The ad, being aired through major TV channels across the country, is doing well in positioning the brand and speaks for the route it has undertaken to beat the competition.
Minister of Textiles Govt of Sri Lanka.
Mr.Jayathissa Ranaweera.
Minister of Textiles Industries.
Govt of Sri Lanka.
Contributing significantly and dynamically towards country’s overall economy, Sri Lankan textile industry has grown over the years to see itself as primary foreign exchange earner and largest single employer in the realms of manufacturing sector. After its modest beginning in seventies, the industry today represents 43 percent of the country's total exports and contributes 39 percent towards industrial production of the Island Nation. The apparel and textile industry at 46 percent, is the largest single contributor to the export revenue. Sri Lanka is the ‘only outsourced apparel manufacturing country in Asia’ to signup 39 ILOs (International Labour Organisation) Conventions. Mr Jayathissa Ranaweera, Honorable Minister of Textile Industries - Government of Sri Lanka, has been representing the Parliament for past 13 years. Youngest son of a village headman, Mr Ranaweera, after completing his education, worked in the Plantation and Gemming Industry, and became popular among youngsters offering social services for the overall development of the regional youth group. Few years later, he was duty-bound to engage in political activities representing the youth. Finally in 1993, Mr Ranaweera was nominated to contest the Provincial Council Election by the current ruling political party and got elected as a member of Sabaragamuwa Provincial Council. A year after he was nominated as a contestant for General Parliamentary Election 1994, representing the Kolonna Electorate in Rathnapura District of the Island and with a considerable majority, he was elected to be entrusted the duties as a Deputy Minister developing irrigation, community settlement, allocating lands for agricultural matters. Subsequently, he was also appointed Deputy Minister with the local Government and Land Development organisation. In recognition to honest and efficient accomplishments of duties entrusted, Mr Ranaweera was appointed Minister of Textile Industry Development with effect from November, 23, 2005. Since then, in co-ordination with national and international bodies, he is proactively engaged in the welfare of Sri Lankan Textile sector. He has targeted uplift of rural poor, generating self employment opportunities, thus advancing the aspirations of the vibrant Sri Lankan textile industry, in the international fora. Mr Jayathissa Ranaweera speaks candidly about the factors that helped Sri Lankan textile industry to reach new horizons. Speaking to Face2Face team, he explains the steps mooted by his Ministry to enhance this sector's performance and talk of the town campaign – 'Garment without Guilt’. fibre2fashion: Since mid – 1980s, Sri Lanka’s textile industry has dramatically emerged as a strong sector boosting country’s economy via exports. Credit goes ofcourse to your Ministry. Can you explain how this happened? Mr Jayathissa Ranaweera Since mid 1980’s, it is the apparel industry in Sri Lanka which has grown rapidly emerging as a main foreign exchange earning industry for the country. At present, the apparel exports account for around 44 percent of the industrial exports from the country. Apparel industry grew mainly under the quota system and opening of free trade zones. Many foreign investors arrived in Sri Lanka to take the advantage of quotas, and gradually, the industry developed with local entrepreneurs entering into garment manufacturing. High technical competency of our technicians and easily trainable work force, were two main factors behind our success. The successive governments also have provided several facilities for investors to join this industry. Manufacturers were able to develop very cordial relationships with internationally renowned retailers from the USA and the EU. High standards of quality maintained, was another factor for the success.
fibre2fashion: What after effects are the textile and apparel sectors of Sri Lanka facing post - MFA (Multi Fibre Agreement) and expiry of quota system?.
Mr Jayathissa Ranaweera The GSP + has shown positive results with a 17 percent increase in sales to the EU during 2006. The Government is promoting backward integration to increase value addition and draw maximum benefit from such schemes.
fibre2fashion:
What prospects do you foresee in case of post-GSP + scheme and launch of Free Trade Agreement (FTA) between Pakistan and Sri Lanka? Mr Jayathissa Ranaweera The results of the FTA with Pakistan are yet to be realised. There has been a considerable increase in the import of fabrics from South Asian region during the last year. Growth of fabric imports from Pakistan increased by about 99 percent during the period 2003 to 2006.
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