PAVING THE WAY FORWARD
HOW WERE THE TWO DAYS OF THE 62ND NGF? I think it was slightly better than what we had anticipated. Because of the current market conditions, we were definitely expecting a low turn-out, but, fortunately, by around afternoon today (the second day) we have exceeded the number of visitors of last January. So, this is a positive sign. As I was walking around and observing, the participants too, seem to be happy and busy writing orders. So, I think it is a good sign. The NGFs play the role of being ‘game changers’ when the market conditions are not so positive, not so encouraging. The glamour of the Fair, the overall ambience, and the mood which prevails, generally get dealers to place more orders. I think it is a positive response. From the perspective of the brands which do participate in the EOSS, I think it is inevitable. Unlike most of the MBO sales where retailers buy on an outright basis, the large format stores typically deal on a sale or return basis. At the end of the season, goods that are not sold, are left in the brand’s account. What do you do with those stocks? You have to get rid of them. So, you have to have a discount at the end of the season to sell the stocks. I don’t blame the brands for participating or having the EOSS. Where the disconnect comes in, is perhaps the length of the discounts that are being provided and the period for which the discounts are provided. The more discounting there is, the more it encourages the consumers not to buy at full prices. In the long run, the overdose of the EOSS will be harmful. From the MBOs’ perspective, I think, the average MBO will definitely find it difficult to persuade the customer to buy at full prices, when at the next door, it is being sold at a 50 per cent discount. Though I think that the MBOs do develop their own Mr Rahul Mehta, President, CMAI, speaks to Kashmira Mirza on a wide range of Topics, expressing his Views on the 62nd NGF, the upcoming Budget, EOSS, E-Commerce, new Brands from Creative Lifestyles Ltd., and what he Foresees for the Apparel Industry. Read on... Photograph: Rajesh Terekar. WHAT DO YOU HAVE TO SAY ABOUT THE ORGANISING AND PLANNING OF THIS FAIR? The organising and planning, as usual, has been exceptional. What particularly pleased me was the effort on the part of the Fair Sub-Committee and the response to the blood donation drive. Over 200250 people have donated blood, which, for a start, is very encouraging. It shows that even hardened businessmen have social commitments. It was a very good idea and I hope they continue this the next time also. It is an excellent idea which cropped up when we were discussing ideas at a meeting and somebody suggested, ‘Why not blood donation?’ We went ahead with it. The response has been excellent. THERE WERE MIXED RESPONSES WHEN WE ASKED PEOPLE ON THE GROUND ABOUT EOSS. WHAT WOULD YOU HAVE TO SAY ABOUT THE SAME, IN THE CURRENT SCENARIO?
special relationships with clients and client loyalty is indeed a reality. They may not have the sophisticated systems of CRM, etc.; they might not use the same jargon. But, I think, that the kind of relationship that an MBO has with its customer is far stronger than what a customer has with a Large Format Store. They can definitely sustain themselves. IS THE E-COMMERCE WAVE HARMING THE APPAREL INDUSTRY? WHAT ARE YOUR EXPECTATIONS FROM THIS BUDGET? We have a one-point agenda—GST. Keep the textile industry in the lowest possible slab because if the ‘neutral rate’ of the industry is about eight per cent, anything above that will increase the prices, create trouble and will definitely encourage the fringe to move from the organised sector to the unorganised sector. We are fighting very hard to persuade the Govt. to make sure they put us in the lowest possible slab. HOW IS YOUR NEW BRAND, MYSTÈRE PARIS, WHICH WAS LAUNCHED IN THE LAST NGF, DOING? It is doing very well. We have not chosen the route of heavy advertisements and promotions and we are going about it slowly. It will take time. The product is good, we have got a very good distributing system, the right kind of retailers, and the product category is a very interesting one, there are not many players in this particular category, it will definitely do well in the long run. CAN YOU TELL US SOMETHING ABOUT O2XYGEN? This brand was launched by us just a month or so ago. Essentially, to address the problem I mentioned earlier about the MBOs selling products at full prices and EBOs and Large Format Stores selling at discounted rates in the EOSS. This is one brand that we have launched which is going to be available exclusively only in MBOs. We are not going to have any EBOs and we are not going to sell it in Large Format Stores. It will be a pure MBO-brand and this is where we believe that our prices can be sharper. The product is right, which is the most important factor. I believe that the MBOs’ interest in the product and the brand will be much more because they will not be facing any competition from the EBOs or Large Format Stores. I think it is an interesting category. I am eagerly looking forward to its progress. I think it is an amazing campaign, an amazing thought. My regret with that campaign is that it is more looked upon as a campaign aimed at bringing higher investment into the country rather than increasing the employment opportunities. The Govt. has to pay more attention to industries which generate employment. We are not a labour-scarce society, unlike the West. Our need, as much as that of economic development, is the development of the poor and marginalised. I think enough attention has not been paid to the Apparel Industry which is the highest employer of the workforce, after the Agriculture Industry. However, I have a feeling that with our constant badgering and discussions with Govt. officials at various levels, from the signals that I am getting, there is some realisation of this and you will see that in the coming months, there will be more focus on how to include the Apparel Industry in the whole ‘Make in India’ campaign. WHAT DO YOU FORESEE FOR THE APPAREL INDUSTRY FOR THIS YEAR? As I said earlier, I don’t think it will be a gamechanging year. I don’t expect it to be a boom year of the industry nor do I share the pessimism of people who feel that it will be a terrible year for the industry. I THERE WAS ENTHUSIASM ABOUT ‘MAKE IN INDIA’; DO YOU THINK THE APPAREL INDUSTRY HAS BEEN REPRESENTED ENOUGH IN THE CAMPAIGN? Yes and no. Again, my views are very clear. You cannot wish away E-Commerce. It is here to stay. Perhaps, what has happened is that the E-Commerce companies in India focus only on the one advantage of E-Commerce—lower prices. E-Commerce has many advantages: ease of purchases, convenience of purchases, and also, E-Commerce sites do not have to buy and physically stock goods, everything is available virtually. There is a lot of variety in terms of styles, sizes and designs. In India, however, these two significant advantages are not being pushed. The focus is on the pricing advantage, that it is more economical because you don’t have the expenses of physical retail space, of planning inventories. These factors put together, E-Commerce will definitely tend to be cheaper than offline. The model that they have selected now, of very deep discounting and the incredibly high ratio of advertising to sales, is not a sustainable model. They cannot sustain such losses, and at some point or the other, the ‘sins’ will catch up with them. I do not feel that the kind of 70-80 per cent discounts they offer today can be sustained for a very long time. They will have to change track. A business has to, at some point, make profits. The legality of the model is another issue which should be left for the experts to debate. think it will be a decent year. My own expectation is that the domestic market will grow between eight to 10 per cent. I am not too worried.