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MBOs hold a lot of promise for fashion retailers

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With the organised retail developing rapidly in India, domestic and global brands are looking for the right formula for their market expansion. Exclusive brand outlets (EBOs) create the right image statement and offer a controlled environment, but with skyrocketing real-estate and other costs, the questions remains: Do the EBOs offer the best way ahead? Many brands have tasted success by expanding through MBOs where footfalls are higher. Customers have a strong connect with the retailer, and local marketing efforts are more effective.

The session on “Multibrand Retail – The Route to Successful Growth in the Indian Fashion Market” on the final day of the IFF 2012 at Mumbai discussed which of the existing retail formats in India is going to be the key to profitable retail growth in the fashion business.

A panel discussion moderated by RS Roy, Editorial Director with the IMAGES Group, included industry experts such as , Executive Director, Puma; , Owner, Kapsons; , MD, Spykar; , Chairman and MD, Jade Blue; Viren Shah, MD, Roopam; and Kartik Ramaswamy, Director – Wholesale (Multi Brand Channel), Levi Strauss India, all of whom shared their experience and knowledge.

Shah of Roopam pointed out that the low mark-ups of brands and high rentals are the biggest drawbacks in MBOs. Endorsing this thought, Kapoor of Kapsons said that MBOs cannot go the franchisee way. Ganguly of PUMA suggested that industry players may look at multi-brand stores selling only sports shoes, apparel, and other accessories. He said that concept MBOs may be the next step ahead.

Adding to this, Kapoor spoke about arranging pockets within the store. Citing an example, he explained, he said that a store can have a pocket dedicated only to one product category such as jeans. He stressed on attention to detail such as the proximity of trial rooms from the product shelves. Kapoor highlighted the importance of the store layout and visual merchandising in attracting international brands, noting that international brands do not compromise on interiors of a store. “Through our distribution channels, we know the potential of a particular city. Through our Krome stores, we realised that SIS is a much better option for us, while an EBO has limited choices,” he added.

Ganguly and Vakharia echoed similar sentiments and stressed that MBOs are the route to wider reach and more revenues. Ramaswamy of Levi’s cautioned against this, saying that MBOs need involvement from both the brand and the retailer. He advised: “Retailers need to forge a strong relationship with brands to create success stories for MBOs.”

A common thought across the panel was that revenues from a MBO are three times more than from an EBO in the same retailing space.

-Madhumita B. Sinha and Shweta Jain