Regional apparel retail chains book profits despite odds

Economic slowdown, low consumer sentiment, high inflation, these words have kept the Indian apparel retail industry under continuous pressure for the past two years. Most leading apparel chains such as Shoppers Stop, Pantaloons, Lifestyle et al have not been able to report buoyant results.

But regional and smaller size chain stores based in the north and west, have been able to buck the slowdown blues owing to their loyal customer base.

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Mohali-based Kapsons, which retails global brands such as Nautica, Tommy Hilfiger, Gant, FCUK, Gas, Benetton and Calvin Klein Jeans to Ahmedabad-based Jade Blue, famous among the political and industrial personalities have been able to register a strong same-store sales growth in the December quarter.

Good performance at the regional level

While Kapsons having six formats under its fold, including a kid’s wear chain, Kapkids, youth wear chain Krome and online store Kapsonsonline recorded same-store sales (SSS) growth of 6 to 8 percent in the December quarter of 2013-14. It made a turnover of Rs 290 crores and a net profit of Rs 10.5 crores.

Jade Blue, known for its 'Modi kurtas', worn by BJP’s prime ministerial candidate Narendra Modi, saw a same store sales growth of 14 percent in December 2014. It posted a net profit of Rs 4.2 crore on sales of Rs 147.8 crores in 2012-13 and expects Rs 180 crores in 2013-14, 22 percent more than the previous year. Lucknow-based fashion chain Kohli Brothers registered 13-15 percent same stores sales growth.

In comparison national level chains like Raheja-owned Shoppers Stop posted same store sales growth of 5.5 percent in the December quarter of 2013-14. It posted a net profit of Rs 39.65 crores on net sales of Rs 2,227 crores in 2012-13. Kishore Biyani's Future Lifestyle Fashions, which runs chains such as Central and Brand Factory, posted same store sales growth of 7.3 percent in Q3 of 2013-14 and 15.2 percent in Q2.

Success only in their own bastion

Jade Blue, which holds fashion shows to announce the opening of bigger stores, has 18 stores in Gujarat, Andhra Pradesh, and Maharashtra. It also offers its entire range at no shipping cost through an e-commerce site and a strong tailoring section. Besides Modi, Jade Blue's high profile clients include: Adani Group's Gautam Adani, Nirma's Karsan Patel, Zydus Cadila's Pankaj Patel and hospitality czar Narendra Somani of Bhagwati Group.

Kohli Brothers runs two multi-brand outlets and four exclusive brand outlets in Uttar Pradesh. Kapsons tried taking its kids’ wear chain to cities such as Mumbai, Surat, however, they have seen success only regionally. Kapsons boasts of the largest assortment of international brands - around 30 - in Punjab, higher than competition.

Suppliers/distributors also see these chains as a major trade channel because sales contribution coming from them is much higher. For instance, about 10 percent of sales of Arvind Brands, a unit of Arvind, which has brands such as Arrow, Flying Machine, Gant come from regional chains such as Kohli Brothers.

Out of 34 shop-in-shops of Italian jeans brand Gas, 20 are in Jade Blue and another local chain, Jai Hind. US-based footwear and apparel brand Timberland has six shop-in-shops in Kapsons. These brands believe a local retailers’ ability to understand and cater to consumer preferences is much higher than the national level retailers.