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Italian brand GAS freezes India expansion plans

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Italian fashion and lifestyle brand GAS is going slow with its plans for India, reeling under declining consumer spending coupled with joint venture (JV) issues with its local partner, Raymond. The brand has not only shut down three of its eight standalone stores in Bangalore, Mumbai and Delhi, but has also frozen its future expansion plans.

Owned by Grotto SPA, the $150 million brand, GAS, entered India through a 50:50 joint venture with Raymond in early 2007. The brand had plans of setting up 36 standalone stores in India by 2009-10 besides having 600 points of sales including large format outlets and multibrand outlets.

According to a person in the know, GAS is now looking at revamping its strategy for India. “GAS wanted to back out from the JV with Raymond as they had some issues, but it couldn’t exit because of certain clauses. Also, GAS couldn’t find any other local partner. Therefore, the two partners are now re-working on their JV. These issues, coupled with economic downturn, have forced GAS to go slow with its plans for India,” said the person close to the matter.

At present, GAS operates five standalone stores and is present in 18 multibranded retail chains in India.
Ashish Dhir, associate vice-president at Technopak Advisors, a retail advisory firm said, “Though the Indian partner still remains optimistic about the domestic market in any JV, international partners have become very cautious with their plans.

This difference impacts the growth plans of the international brand in India.” According to Dhir, most international brands present in India want to shift their focus to their home markets. The brands want to re-establish their presence in more mature markets instead of focusing on emerging markets.
Like GAS, other prominent international brands are either slowing their expansion in India or are exiting from the market.

Further some international brands have also deferred their plans. For instance, Chicago clothing company Hartmarx, which has filed for bankruptcy, has deferred its plans to launch Hart Schaffner Marx Suites, Pierre Cardin and Sansabelt in India. The company had entered into a licensing agreement with Arvind. DKNY, Laura Ashley and Burberry have also stalled their plans of entering India. Similarly Spanish casual wear brand Springfield has exited India, while Dockers is shutting down several of its outlets.

Source: Financial Chronicle

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