"Consumer engagement is the key" - Financial Express
March 31, 2009
Wills Lifestyle, the premium lifestyle retail arm of ITC Ltd, is in a combative mood these days. The combat is not against competition but against a slowdown that has dampened the consumption appetite of the great Indian buying class. The seven-year-old apparel brand from the Rs 22,000-crore ITC Group is looking to keep pace with its record of 25% plus compound annual growth over the past few years.
The man in-charge, Atul Chand, divisional chief executive of ITC's Lifestyle Retail Business, who has been with the Group for almost 21 years (he joined as a management trainee in 1988) and has seen ITC's gradual transition from largely tobacco to the non-cigarette FMCG space, is finding it challenging to engage the discerning consumer in the times of a global meltdown.
On a visit to Delhi for the Wills Lifestyle India Fashion Week, he spoke to FE's Radhika Sachdev about the lifestyle brands' makeover in 2008 through new-look stores, the launch of short-cycle product lines and tie-ups with a slew of architecture and store management firms.
How has Wills Lifestyle shaped up over the years especially in the context of the branded apparel industry in India?
At present, the branded ready-to-wear industry in India is worth Rs 20,000 crore, within which, the premium segment (in which Wills Lifestyle operates) is estimated at Rs 2,000 crore. The mid-market segment (in which sub-brand John Players is positioned) is Rs 4,000 crore.
The average year-on-year (Y0Y) growth for the industry was around 15% for menswear and 25% for womenswear - growing from a much smaller base - for the past few years. When we launched into this market in 2001, it was highly fragmented, there were numerous players and there was nothing that could remotely be called a 'premium' range.
We did three things when we entered this market. First, we positioned ourselves firmly in this emerging 'premium wear' category. Second, realising that customers buy fashion for various occasions, we introduced sub-branding into this category. We expanded our portfolio from Wills Sports (relaxed wear) in 2001 to Wills Classic (work wear) in 2002 to Wills Clublife (evening wear) in 2003.
Third, to strengthen ourselves as an 'aspirational' fashion brand, we became the title sponsor of FDCI's (Fashion Design Council of India) Wills Lifestyle India Fashion Week, a pan-India event that entered its seventh edition this season.
We are glad that over the years, this property has evolved into a major B2B platform for the fashion fraternity and has built equity for the Wills brand as well.
Our focus in this area has been of growing the womenswear market, the share of which in our portfolio has grown from 20% to 35% in the last few years.
The contract with FDCI was renewed recently. Did you have any second thoughts about this?
The three-year contract was drawing to a close and after careful deliberation we decided to extend it because we take a long-term perspective on relationships and associations. We figured, there are tremendous synergies between the brand and the event. This association strengthens the business of fashion.
One major outcome of this event is the Wills Signature range, launched in 2006. It's our own line of designer wear sourced from leading designers - Manish Arora, Rajesh Pratap Singh, Rohit Bal, Rohit Gandhi and Rohit Khanna, to name a few - at price points that make the collection affordable to a larger consumer base.
Every year, we appoint a key designer for the Wills Lifestyle India Fashion Week grand finale. Last season, it was Manish Arora and this season, its JJ Valaya and he, along with other designers on our panel, created a collection to match the demographic profile of our customers. The Wills Signature collection is subsequently retailed through Wills Lifestyle stores across the country.
What is Wills Signature's contribution to your total sales?
It's around 15% of total sales and growing every season. We see tremendous potential for growth.
There were rumours that FDCI had trouble-finding sponsors this year?
Fashion is a nascent industry in India. It requires serious commitment to promote and strengthen the design and creative industry. Nonetheless, most of our sponsors are back with us. I would say that the current season has been able to attract more sponsors than the last one. I am confident that our collective efforts will strengthen this property.
Has there been a significant drop in your sales due to the slowdown?
The year 2008 witnessed a decline in the footfalls and the frequency of shopping across all retail formats. We were no exception. Footfall in our stores went down by about 20% but January 2009 on, we have seen some buoyancy. We are providing customers more reasons to shop with us.
And what could those reasons be?
A number of them, actually. To begin with, we have realigned our marketing spends to activate demand and convert footfalls into sales. We are now doing a lot of below-the-line (BTL) tactical spending to shore up volumes. If earlier, the ratio of above-the-line to BTL activities was 70% to 30%, it is almost the reverse now.
We are doing more retail activation, direct marketing, in-store promotions and also strengthening our customer loyalty programme, Club Wills. About 55% of our sales come from 60,000 Club Wills members.
To give our target consumers more shopping options, we have decided to synergise with ITC-Welcomgroup, our hotel chain, for setting up boutique stores. We have opened a 1,500 sq ft store in ITC Maurya, New Delhi, and are planning similar stores at other ITC hotels.
We are investing heavily in visual merchandising; we have tied up with the UK's Elemental Design, the US-based FRCH and The Friedman Group to improve our store design, train staff and to enhance consumer experience. This has enhanced store productivity by 10%.
In addition, our range is being refreshed every four to eight weeks. We hope that a faster supply chain and shorter product life cycle will keep customer interest alive in our brand.
We heard you have shut down some stores?
Let me give you the larger picture. Retail is about constant transformation. It is about expanding, relocating to where your consumers are or want to be, revisiting the rental model, revenue sharing, franchisees etc. We are looking at all that.
Another critical component is realty. Since realty prices are witnessing rationalisation, we have been able to get rent reduction of 30% to 40%.
We are also in talks with developers about a revenue-sharing model and are exploring the franchisee route with a few others in emerging markets such as Nagpur, Coimbatore, Guwahati.
As of now, Wills Lifestyle has a presence of 55 exclusive stores in 30 cities and the target is to expand this to 100 in the short term. Nearly 2 million customers walk into our stores every year.
Where are the sales higher - on high street or in malls?
The conversion is always higher on high streets (30%) than at malls (15%). That's a worldwide phenomenon. A customer who shops at an exclusive branded store is already exhibiting some preference for the brand, while in a multi-brand store you have the opportunity to build equity with a new customer. Eventually, both channels feed into each other.
Last year, you rolled out your first television commercial. Any such plans for this year?
Now, our media mix is aligned more towards print and outdoor. Therefore, no immediate plans of a new television commercial.
