ITC’s premium lifestyle apparel brand has scored on quick all-India retail presence. But what will make the difference is a match-winning strategy.
BY SHAILESH DOBHAL

FORTY-FIVE STORES IN 34 CITIES IN JUST UNDER A YEAR, SELLING AN EXPENSIVE FASHION brand of relaxed-wear. If retail swamp-out and brand salience were the goals, ITC’s Wills Sport would be on a victory lap already.

If the arena hasn’t quite exploded into applause, it’s because setting up a swank chain of stores should be easy stuff for a cash-rich Rs8,816-crore cigarette major. To be sure, ITC’s three-year-old Lifestyle Retailing Business Division (LRBD) can’t complain about resources; it has a war chest of Rs 250 crore till 2006 for the project.

For those unimpressed by the chrome-and-glass facades of the Wills Lifestyle stores that now dot not just Indian metros, but cities such as Belgaum, Ranchi, and Ernakulam as well, there’s also the power of the brand to consider. Wills, the ‘made for each other’ smoke, enjoys etched-in-the-mind equity as a sign of cool self-assured living, free of stuffy ostentation. True to form, even the apparel range bears no visible logo tags, with the designs left to do the talking, not to mention the presumably relaxed disposition of the very wearer – who’s expected to `enjoy the change’.

Ah, but just in case the brand synergies arouse any suspicion of surrogate cigarette salesmanship, the company is quick to outline its final business goal. Profit, that is, by cornering a serious slice of the fast-emerging casualwear market. "The very fact that we have not stopped at 10 or 15, and gone all hog to 45 stores, is proof enough of our seriousness in this business," says Sanjiv Keshava, CEO, LRBD, hoping to break even in the third year of operations, on sales of a projected Rs 100-150 crore – quite high, by industry standards.

Putting such an ambitious target on record changes the very nature of the analysis. ITC is playing to win in this market. And at Rs 1,200 crore, the branded premium men’s and women’s apparel market is nothing to sniff at. The question is, can’t it?

Real Scoreboard

Wills Sport’s sales figure for the first 10 months of real operations, since the time it opened its second store in Chennai in June 2001 (the first store in Delhi was on test for a year before that), stands at a respectable Rs 18 crore. The company claims some 20,000 walk-ins per month at its main Delhi store, and around 2,000 in Chandigarh, driven by a Rs 5-crore ad campaign.

Yet, everything isn’t hunky-dory. The company’s backroom operations, for example, are far from stable, with LRBD at the very bottom of the learning curve with its outsourcing business model (a rarity in the country and a big source of risk). Unlike any of ITC’s other businesses, this is a business of enormous variety and unpredictable shelf-lives. Wills Sport is reputed to have more stock-keeping units (SKUs) than almost all its rivals. This means that just putting the primary matrix of quality, cost and scale into place can prove a nightmare, despite each store being electronically hooked up for data sharing. And stock pile-ups spell cost.

Past outsourcing experience hasn’t been happy in India. World-famous players such as Benetton and OshKosh B’Gosh found themselves badly entangled in quality tussles. "No big player (here) outsources completely," says M. Vasanth Kumar, Vice President (Marketing), Madura Garments, the country’s biggest apparel company, "as some manufacturing competence is critical to not just success, but to very survival in this business." On the whole, though, Keshava claims that the model is "working great for us, for we had no historical baggage in textiles or manufacturing". Perhaps. Also, ITC’s competence lies in the customer interface rather than manufacturing. As the Indian market evolves, a brand that serves as a means of true self-expression could be hugely valuable in itself.

ITC DIVERSIFICATION

FOR ANY CIGARETTE MARKETER IN THE WORLD, PROFIT ON the year’s profit-and-loss account has little bearing on long-term profitability. In the US, for example, tobacco majors became food marketers long ago, but investors still think their future depends on lawyers rather than consumers. So relentless has the anti-tobacco campaign been. How long before ITC faces the heat in India? Safely lies in diversification, which has been on ITC’s agenda at least since the 1980s, with ‘agro’ being the key prefix (for edible oils and such-like). Lately, though, ITC has ventured into infotech with ITC Infotech, foods via Kitchens of India, greeting cards through Expressions and lifestyle retailing through Wills Sport. Each of these is intended to draw revenues of at least Rs 250 crore by 2005.

That Fashion Thing

So far, the brand seems to be playing safe on design, colour and fabric (particularly in menswear), which makes for low differentiation. To its credit, though, nothing on the shelves is tacky-looking.

"We’re the first to offer a wardrobe brand, and first to offer a proposition of fashion orientation in relaxed wear, even for women", says Atul Chand, Divisional Manager (Marketing & Retail). To be fair, Wills Sport is perhaps the only big national label that stretches across the entire price spectrum in the market, and that too, with complete lifestyle-led wardrobe solutions : bottoms, tops, jackets, knits & wovens, work, party and leisure wear. And nearly a third of its 8,000-odd SKUs are for women.

"Yes, selling a wardrobe brand is a challenge at the moment, but then we’re building the brand in a way the market is internationally, and will evolve even in India," says Krishnan Chatterjee, Manager (Marketing Services). For one, Wills Sport is segmenting the market not in bland product-group terms – a manufacturing mindset legacy – but in lifestyle terms, which takes the designers into the psychographic dynamics of attitudes as well. On this count, the company is following the global pattern – though it certainly isn’t the pioneer in India. Madura Garments’ Allen Solly, to mention just one, has already sold itself as a brand with a refined set of values.

Look closely enough, and it’ll be evident that LRBD is thinking ‘fashion’ in its attempt to woo the upmarket sophisticate. And Wills Sport seems to have attracted the attention not just of men, who see the brand as an alternative to Allen Solly and ColorPlus, but also women – many of whom are impressed by its fully-fashioned knits, for example.

Of course, catering to the identified segment requires another level of design skills. ITC started by outsourcing its designs from the American Design Intelligence Group (ADIG), a San Francisco, US-based garment and retail consultancy. Now it has its own six-member team, even as it continues a tie-up with Science & Designs, an Italian fashion design house – through which it keeps a watch on hot western labels such as Banana Republic and Armani Exchange.

"Now, denim is in, and we have bought it, but we wait close to the season before translating it into a style," says Rinku Kaicker, Head Designer. The idea is to offer the latest styles, such as cross-edged denim, a global rage that can differentiate. Wills Sport from denim specialists such as Levi’s.

Good going. But at the end, playing on fashion is about playing market-shaper rather than market-follower. Is Wills Sport really equipped to do this?

One can’t accuse Wills Sport of not trying. It is trying to nudge small-town youngsters up the sophistication curve, for example, by getting fashion leaders (such as Jas Arora, Dipanita Sharma, and Nafisa Joseph) to advise them on styles and the like.

Size And Scale

Experimentation is all very good. But as in any other such business, money is made on mega-hits. A few designs that rake up huge volumes and make up for thousands of duds. Even otherwise, ramping up the scale is critical. While around 200,000 units for the year (2001-02) may not seem too low, the fact is that LRBD needs much higher volumes just to justify the wardrobe proposition ... and to keep vendors satisfied.

The company has 15 vendors, five of them in places as distant as Nepal, Bangladesh, and Hong Kong. And they’d rather make just a few products. "The moment you outsource a fully finished fashion garment volumes-per-style becomes an issue with the vendor," says Avinash Goyal, Managing Director, Polki Garments, one of LRBD’s erstwhile vendors.

Keshava brushes aside any problem on this issue. To him, the consumer’s needs must take precedence. "We are currently only looking at adding accessories, such as leather goods, to the Wills Sport range within our Lifestyle stores", he adds, clear that the brand will not dilute its charm by either going to multibrand outlets or selling on discount.

The key challenge is to raise volumes while keeping every aspect of the operations in perfect synchrony, whether it’s customer preference detection, the R&D systems (based in Gurgaon, Haryana) or vendor coordination. Without that, there’s no question of optimising inventories, let alone crunching time-to-market. And success makes success. With brand size comes brand clout, and if it acquires trend-setting power, it shortens its cycle – leaving rivals panting to keep up.

"Like everything that ITC does, they’re confident of their processes. What they must be looking at now is captive vendors," says an apparel consultant who worked closely with the launch team.

For all that work, volumes could still elude the brand; remember, it’s a premium venture (with four-figure price tags) in a country where only a few million see clothing as offering anything more than basic protective utility. Might Wills Sport, like Benetton, end up going for volumes in the Rs 295-595 unit range ? "We’re in this business and we have to explore all possibilities. But nothing specific is planned at the moment," is all Keshava will say.

Market sources, however, expect a new mass-market brand from ITC later this year. Wills Sport will have to stay exclusively in the upmarket arena, where the consumer is perhaps a tad more change-happy.