In late January, Indian-born Bangalore resident Jessie Paul, chief marketing officer at Wipro Technologies (WIT), packed for her trip to the World Economic Forum in Davos, Switzerland. Several years ago her suitcase might have carried a salwar kameez, a dress-like top and long scarf worn over tightly pegged pants. But female executives at Indian companies are dressing differently now.
Her suitcase included a silk top—a modern take on the traditional, tunic-like Indian kurta—an elegant Salvatore Ferragamo scarf, and several Tommy Hilfiger shirts and pairs of pants, a staple of her wardrobe these days. Yet just a few years ago the Hilfiger label, known in the U.S. since the 1980s for its sporty, all-American clothing, wasn't available in Bangalore or any stores in India.
The brand didn't hit Indian cities until 2004, when apparel conglomerate Murjani Group first licensed Tommy Hilfiger items, selling them in three freestanding Hilfiger flagship stores across the country. Today there are 10 Hilfiger shops in India, and the Indian retail landscape is continuing to change. Myriad other big-name Western fashion brands, from Gucci to Jimmy Choo, are set to enter the market in 2007, thanks largely to Murjani, a privately held, 77-year-old apparel, manufacturing, and shipping business.
Watching the Trends
Although it is owned by an Indian family, the company has a history of helping to launch U.S. brands outside India. Hilfiger, in fact, was initially backed by Mohan Murjani, the Indian-born, Hong Kong- and Britain-bred chief executive of Murjani Group (which also has offices in New York) when the brand launched in the U.S. in 1984. From 1976, Murjani also helped to conceive, fund, and promote Gloria Vanderbilt jeans in the U.S. and Europe, one of the first designer-denim labels.
But around 2000, when Mohan Murjani started taking note of the increasing numbers of Indian call centers and the global rise of Indian IT companies such as Wipro and Infosys (INFY), he decided to tap into the growing numbers of Indian consumers with expanding paychecks and increased exposure to international brands. As he watched India's economy open up to foreign direct investment, Murjani says, he felt the time was right to "help retailing evolve in India."
In 2001, Murjani's son Vijay opened the company's Mumbai headquarters. His first task was to bring Hilfiger to India, but the ultimate goal was to establish a portfolio of leading global apparel and fashion brands. So far, Hilfiger is the first foreign brand Murjani has introduced to Indian shoppers—with seven more on the way later this year.
When the Rains Stop
This April, Murjani Group plans to open the first of 40 freestanding retail stores for Calvin Klein Jeans (PVH), ck Calvin Klein, and Calvin Klein Underwear, to be rolled out over five years throughout the nation. At the same time, the company plans to open stores for the trendy, midpriced clothing line fcuk, as well as non-apparel Build-a-Bear Workshops (BBW), a popular brand of make-it-yourself toy stores found in many U.S. malls.
After "a break as we hit summer and then monsoons," says Mohan Murjani, the group will open upscale boutiques for Tumi, maker of sturdy, jet-set-friendly luggage; Gucci, the status-symbol clothing-and-accessories label; Jimmy Choo, a chic line of stiletto shoes, boots, and handbags; and La Perla, maker of pricey lingerie.
There is no shortage of consumers with money to buy high-end global brands. With India's GDP growing at 8% annually, the ranks of wealthy, well-traveled executives with income to spend on fashionable clothing (see BusinessWeek.com, 11/9/06, "India Rolling in Rupees") are swelling.
According to a November, 2006, American Express (AXP) report, the estimated number of Indian millionaires is increasing by 13% each year. In 2006, according to the same study, the nation had approximately 83,000 citizens with liquid assets of more than $1 million, up from 71,000 in 2004.
Indications of Success
Naeem Khan, an Indian-born, New York-based fashion designer who presents his luxe embroidered dresses on the catwalk at the Mercedes-Benz (DCX) Fashion Week in New York on Feb. 4, says he has noticed more women dressed in European and U.S. designer clothes when he visits India (three to four times a year). "There's a big movement of Indian women wanting to 'catch up' with the world," Khan says. Glossy magazine publisher Conde Nast has taken note of international fashion's rise in India in recent years and announced recently that it will soon publish a version of Vogue aimed at Indian readers.
But will the newly affluent shoppers in a country that has embraced the global market without abandoning its cultural traditions want to buy the Western brands offered by Murjani? The Hilfiger test case suggests they will. Although Mohan Murjani won't disclose the private company's current sales figures, he's on the record in 2005 (speaking to fashion trade newspaper Women's Wear Daily) saying that the Tommy Hilfiger brand alone was bringing in approximately $20 million to $25 million in Indian retail sales that year.
For Gucci, Jimmy Choo, and other brands in the growing Murjani Group portfolio, the partnership with an apparel company already established in India was strategic. Forbidden by governmental economic policies from owning their own boutiques, globally recognized clothing and fashion labels have had to hawk their goods within local, Indian-owned stores.
Opening the Market
Giorgio Armani, for example, could be found in chic Indian stores such as Kimaya Fashions in Juhu, but for many foreign companies, the barriers to entry were just too great. Laurence Franklin, chief executive of Tumi (see BusinessWeek.com, 1/24/07, "Tumi's New Itinerary"), admits that his company "recognized that expansion into India was more challenging because there's not a lot of high-end, international retail development there." Partnering with Murjani, an Indian company, offered an easy solution.
But that situation could soon change. In January, 2006, the government announced that foreign-owned, single-brand stores could enter its formerly closed retail market (see BusinessWeek.com, 2/3/06, "One Brand, No Waiting in India"), and that such international outlets could make up to 51% of India's overall retail market. Now, Louis Vuitton and other luxury goods companies are starting to enter India on their own.
Vishakha Desai, the Indian-born president and chief executive of New York's Asia Society, a nonprofit educational and research organization, believes U.S. and European fashion brands, such as those soon to be distributed by Murjani, can face crucial challenges in India. What sets fashionable Indian women apart from shoppers in other nations, Desai points out, is their allegiance to traditional Indian clothing, such as saris, worn for formal occasions.
"I wear saris when I attend government meetings in India," says Desai. "But when in New York, I wear Western-style jackets in Asian fabrics, such as silks. I like to mix and match, rather than wear a full Armani suit."
All foreign fashion labels face a lack of brand history and brand loyalty in Mumbai or Bangalore, no matter how well they might be known in New York. "I first bought Tommy [Hilfiger] not so much because I knew of the brand," says Wipro's Jessie Paul of Murjani Group's first label launched in India. "But it was the first clothing brand I found in India to have many sizes, not just small or medium," Paul adds, pointing out that fashionable international labels do offer a wider variety of silhouettes and shapes than previously available in Indian stores.
East Meets West
Given its Indian roots, history of working with U.S. and European brands, and early entry into India's budding fashion scene, Murjani Group is well-positioned to help an outside brand connect with Indian consumers. And offering them what they want will eventually translate into sales for Murjani Group. "Tommy Hilfiger just fits great," Paul adds. "So I felt paying premium prices was justified."
Some observers think that as India continues to develop its identity as a player on the global economic stage, Indian shoppers will naturally be drawn to international fashion brands as symbols of wealth and worldliness. "I think it's fair to say that selling clothes by 'Western' designers in India would make sense in a time of globalization," says Desai. "But these brands will have to learn to adjust to the Indian market and not just sell fashion as they would somewhere else," even in other emerging markets such as China.
And that's good news for Murjani. Foreign investment policies may now allow foreign brands to go it alone in India, but you can't legislate away the culture gap. For fashion brands, Murjani is still the leading bridge to India.