Kitex sheds its nameless tag
India’s largest exporter of infant wear is expanding capacities and taking baby steps into the branded market
design, marketing and merchandising teams in place. The next step will be to register their own brand in the US and to tap into e-commerce channels whereby they plan to sell their brands. The American advantage The US market accounts for nearly 50 per cent of the $20 billion market. Kitex Garments Ltd (KTG) incorporated in 1992 entered this market as a supplier to mass market brand Gerber. Its client list has expanded several times since and around 80 per cent of KTG’s revenue today is from the export of infant garments. The balance is from the sale of fabric to Kitex Childrenwear, a company that it set up in 2006.
In the US, Kitex wants to target the mass market. Jacob said, “We are thinking 10-15 per cent cheaper than the market price.” The strategy is while the private label would cater to major retailers, the Kitex brand will cater to mid and small retailers. Kitex and the retailer whose name the company is unwilling to divulge have already signed a royalty agreement for their private label.
In the first six months the company hopes to clock around $5 million, while the target is to reach $50 million in five years. “My personal view is that it can be achieved in three years,” said Jacob adding that the company targets $25 million from its own brand. Both the brands will be available only in the US and will be sold across 1,0001,500 stores, owned or run by 5-7 retail brands across US. “We are taking a reputed private label brand along with our own brand and it will be easy to convince (retailers to stock them) and this will be the first step to strengthen our brand,” said Jacob. It has also lined up exhibitions, media campaigns and a social media blitz to announce the new brands.
What made Kitex seek the American customer over her Indian counterpart? According to Jacob, the company is better acquainted with The Asia club Kitex is the world’s third largest manufacturer of infant wear and India’s largest exporter. The largest manufacturer is China’s Wingloo with a capacity of 7.5 lakh pieces per day, followed by Singapore’s Gimmell with a capacity of 6.5 lakh pieces per day. Kitex has a capacity of 5.5 lakh pieces per day.
While Kitex says that it is number one in technology and infrastructure, capacity wise it is number three. In the next three years, it will be doubling its capacity and between 2014 and 2018, the company says it will increase to 1.1 million pieces per day. It also plans to increase capacity utilisation to 75 per cent in 2015-16 from 65 per cent in 2014-15. Analysts’ reports say that KGL plans to invest close to ~15 crore in bringing in advanced machinery and replacing sewing machines older than five years. The new machines would help to increase the speed from 7,000 stitches per hour to 9,000 and would need one-third the power consumed by old machines. Also KGL has invested heavily in robotic technology which is expected to improve efficiencies.
Kitex plans to label its brands carefully. Given the quality sensitive nature of the infant wear market, the company is not only making sure that it follows all safety norms, uses the best quality yarn and uses the right raw materials but is also stating it up front.
Over the next year-and-ahalf, as Kitex launches its own brand and a private label, it must hope these investments will pay off. And that the American buyer is ready for an Asian label.
The strategy is while the private label would cater to major retailers, the Kitex brand will cater to mid and small retailers.