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Going is tough for global brands in India

By Meenakshi Kumar

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Foreign retailers are embarking on ambitious expansion plans in India. But with many Indians still fiercely loyal to traditional dressing — and with less purchasing power than their counterparts elsewhere in the world — commercial success for foreign brands is not easy. Progress has been slow. The ones that succeed are those that understand the Indian consumer psyche. Consumers don’t have that euphoria about foreign brands anymore.

Initial challenges mean foreign retailers’ presence in India is still more sparser than in China, another fast-growing market. Inditex has 18 stores in India, compared with 607 in China, while H&M has 12 in India, compared with 444 in China. Early entrants such as M&S struggled because prices were too high as a result of costly import duties. This changed for M&S after it partnered with Reliance Retail and developed a domestic supply chain.

Inditex and H&M, which both have garment factories in India, have aggressively cut prices and taken a lead among foreign fashion chains targeting urban Indian women. H&M plans to open 50 stores by 2020, targeting middle-class shoppers in smaller cities. Meanwhile the internet has catapulted foreign brands into the mainstream by reducing distribution costs. The number of middle-class households in India is expected to increase by 5.6 per cent by 2020.

H&M
Inditex
M&S