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Rediff.com  » Business » Corporatisation: Fashion's new mantra

Corporatisation: Fashion's new mantra

By Sangeeta Singh & Samyukta Bhowmick
April 16, 2005 12:15 IST
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Already, news channels are gearing themselves for catfights over allegations of stolen designs, green room backbiting and poaching of models.

Next week, as the annual Rs 5 crore (Rs 50 million) India Fashion Week juggernaut lumbers up the ramp, 63 designers in tow, editors and reporters are anticipating a frisson of excitement.

Who'll be the new discovery of the year? Who'll bag the maximum orders from stores overseas? Who'll laugh and have fun; who'll do the naughty shows; who'll be at those (nudge nudge, wink wink) parties that begin well past midnight?

But they might as well pack up their barbs and their poison pens. This year, though only six editions old, the Fashion Week is already showing signs of approaching middle age.

The queues outside Rohit Bal's studio ("the bad boy of fashion") are thinning down; Malini Ramani and Rina Dhaka are only as good as the legs and cleavage their models will flash, and are being booked for viewings by zit-scarred teenagers looking for a "reality" experience.

But the real show, away and off the ramps as ever, is getting serious. Even as they go through last minutes tucks and fittings, the designers are concerned less with the outrageous statements that had characterised the incestuous fashion trade till recently.

For a change, their concern with "foreign buyers" is less hysterical. Couture -- their term for jhakmak embroidery on fitted trousseaus -- is no longer the priority. Instead, what they're all echoing, almost as a parody, is fashion's new mantra: "corporatisation".

And well they might. For well over a decade, the industry has been indulged by the media, which has given it space that is at odds with its size -- Rs 250 crore (Rs 2.5 billion) according to one study, and growing at a pace of 20 per cent annually.

But increasingly, it isn't the media as much as the designers themselves who've grown disenchanted with the coverage they've merited as vacuous, partying people having fun at the expense of their few customers who shell out big bucks to keep them in champagne.

The Heights Of Fashion
  • The organised market for designer apparel is over Rs 250 crore
  • Designer wear accounts for less than 1 per cent of the apparel market
  • The global market for designer wear, however, is 5 per cent of total apparel market
  • The gloabl market for designer wear industry is largely in the small-scale sector
  • Consumers for designer wear have an annual household income of Rs 10 lakh-plus. There are 3 lakh such households growing at 40-45 per cent
  • Designer wear industry is expected to grow to Rs 1,000 crore by 2015.
  • More than 81 per cent of the population is below 45 years, who are the fashion conscious

The growth of the branded apparel industry in the interim has been a humungous Rs 25,000 crore (Rs 250 billion), in which the fashion industry as we know it has played little part, to its dismay. Even as it has partied on Page 3, the labelled market has grown without hype or overstatement, leaving the fashionistas with sour, morning-after breath and empty coffers.

What's more, the "couture" the industry prided itself on -- the zardozi and the embroidery and embellishments  -- are now just as easily acquired at mega-showrooms such as CTC Plaza at a fraction of the cost, and with none of the tawdriness and tackiness that characterised its Chandni Chowk equivalents. And since a lehenga is a lehenga, what's to tell a JJ Valaya gown from one at CTC, apart from the price?

A few years ago, conscious of this change, designers had started chanting "prêt" as if it were manna from heaven. But prêt requires a huge volumes business -- and while the middle classes were happy to watch the designers do their bit to show skin in the colour supplements, they weren't about to start subsidising their nights out on the tiles.

Besides, India has the likes of Fabindia, Anokhi, Sewa and W that more than capably handle the market's prêt requirement. "They are India's answer to prêt collections and are doing very good business among India's aspiring middle class," agrees Rathi Vinay Jha, director general of the Fashion Design Council of India.

The designers, disappointed that they weren't being welcomed to the bosom of middle India, where their role was being increasingly marginalised, have since switched to "diffusion" -- that point between prêt and couture where they hope to find fewer rip-offs in Lajpat Nagar, but which will appeal to people's daily and party wear sensibilities at a price point that's between affordable to high.

The disenchantment with the overseas buyer has also shed some of its glamour because no fashion designer has the set-up to supply stores in the West with the kind of volumes required.

In fact, for a notoriously partying industry, there's surprisingly little money to be made in it (and the space is getting increasingly crowded with younger designers): the very idea that a designer would have the machinery or the wherewithal to pay salaries or purchase the raw material to meet the requirements of overseas prêt stores is laughable.

In fact, the Rs 250,000 that designers have to pay to participate in Fashion Week is one of the few costs they pay themselves and not through a sponsor, having otherwise made a habit of looking for sponsorship as a standard practice of marketing their own labels.

No wonder fashion has been considered by many to be entertainment. Or, as Puneet Nanda of Satya Paul defines it: "It's drama, it's theatre, it's art, it's design." Everything, that is, other than something related to the clothes you wear daily.

Corporatisation -- the very idea that somebody else will put the money into their creative design bank, market their work, create factories, hire workers, and regulate the trade -- now appeals greatly to designers who, till a few years ago, were unwilling to sell their "creative soul" for lucre.

"But will people in India invest in a designer company?" asks Valaya. He says he's open to the idea of raising money through private placement, a joint venture with a foreign partner, or even an IPO -- anything that will help him tide over financial constraints to deliver what India has indicated it wants: prêt.

Certainly, designers have begun to take the slow route to that path: Valaya has a factory in Manesar, Haryana, where he employs six designers and 300 people (though even a fraction were not in evidence during this reporter's visit to the factory last month), Nikhil and Shantanu have a factory with 18 machines in Noida, UP, and Manish Arora and Abraham & Thakore have recently moved into larger factories, also in Noida.

"What used to be a backyard business is becoming an industry," prophesies Rohit Gandhi of H2O, which has 60 machines from which it churns out its prêt wear. "All this hullabaloo over foreign buyers and overseas markets is undermining the potential of the domestic market, which is booming."

He's right, of course. In the last decade, the skin shows on ramp only succeeded in creating a short-term NRI market for wedding trousseaus that got designers labelled as mere darzis in the trade.

But the trend is changing with designers now hiring junior designers to work with them and CFOs and CEOs whose job it is to make sure their labels get to the racks of neighbourhood malls and stores. "The modern world is about the bottomline," says designer Narendra Kumar, "so corporatisation is a move we're definitely going to make."

Bangalore-based Deepika Govind can't help but feel it's the industry's healthiest move so far, considering creativity and business know-how in the same person is a rarity. "Corporatisation would put the industry into a business module so that designer labels would function like any other company in terms of marketing and branding," she says.

The Buzz About Retail
  • The retailing industry is estimated at Rs 9,30,000 crore to grow at 5 per cent annually
  • Organised retailing is a Rs 35,000 crore market
  • It is projected to grow at 25-30 per cent per annum and is estimated to reach Rs 100,000 crore by 2010
  • The fashion sector in India commands a lion's share in the country's organised retail pie
  • Investments into the sector are estimated at Rs 2000-Rs 2500 crore in the next 2-3 years
  • The size of the "shopping" middle class is to the tune of 30 crore
  • Over 2.2 crore people form the super-rich class, expected to grow to 3.5 crore in the next three years
"It's the way to grow," agrees Payal Jain, who is also part of the growing tribe of designers who say they've been getting such offers but haven't found the right synergies yet! (For a designer not getting such offers might indicate being less than trendy in the market.)

For Raghavendra Rathore, one of the founder members of India Fashion Week who was also among the first to experiment with corporatisation, the reality is that "the industry is in a state of utter confusion".

And because he feels designers are poor communicators, "The financial community is under the impression that it's not worth investing in."

What he's mooting are in fact some of the guiding principles of the FDCI: "We need to bring the whole industry together under one brand, have organised labour laws, and designers and corporates need to meet every month."

Organised labour, in fact, is one of the reasons the industry remains unregulated -- many of the workers are women who do the labour-intensive embroidery at home, and probably also children -- though no designer will admit this.

"A shift from karkhanas to modernised factories is one indication that the industry is maturing," says Jha. But the process of outsourcing and sub-contracting, she admits, is built into the current structure of the industry. And cash transactions are a reality -- in fact, the size of the industry might just turn out to be much larger than its current size indicates if there were to be a way to monitor sales in cash.

In fact, what designers are looking for is the international Louis Vuitton Moet & Hennessy model of being picked up by a luxury products promoter for marketing and branding.

In India, it has been attempted to a certain extent by textiles brand Raymonds through its Be: stores, and at Shopper's Stop (where Raghavendra Rathore's Kasbah label is sold off the rack, for instance), but the closest LVMH model in India is being aped by Satya Paul, which has tied up designers Puneet Nanda and Deeepika Gehani as brands under its umbrella.

"It's attractive for me," says Gehani, "because they concentrate on the business side of things while I can get on with the designing."

Because Satya Paul takes over the production too, it means Gehani is saved the trouble of outsourcing production, which is the current millstone around the collective neck of the fashion industry.

"It has its pros and cons," says Tarun Tahiliani of attempts at corporatisation, "it can provide investment resources, achieve economies of scale and stability to fund market expansion, but it can shackle a designer's creativity through its focus on the bottomline."

But Wendell Rodricks argues that the industry -- and therefore the designers too -- "need a greater emphasis on the quality and pricing, and this will lead designers to develop appropriate business practices, more efficient systems, and refined distribution channels".

What it all boils down to eventually is prêt and its size of the market that, according to Valaya, "will mature in three-four years". For traditionally mid-market, prêt designers like Nikhil and Shantanu, or Rahul Khanna and Rohit Gandhi, it was always this segment that they had targeted.

"Prêt is the way to grow if one has to do any decent business in the industry," agree Shantanu and Nikhil, while Rohit Gandhi predicts that prêt could grow at the rate of 35-40 per cent, if taken seriously.

Finally, of course, there's the complaint by an independent fashion consultant who gripes, "It's a very hush-hush industry."

That's unlikely to change till the sleaze of the back alleys where work is outsourced, or the drugs and skin of Page 3 parties gives way to the industriousness that is the other, hidden face of the industry. It's that face the industry needs to present, and not the body, if it is to attract serious money into the trade.

"The fashion industry is still to consolidate," says Nikhil, "for which the right breakthrough has still to come." No wonder Rathore says, "Today, big investors are just not interested in fashion."

Bye-bye buyer?

Payal Jain says she was told by a buyer at the Toronto Fashion Week that the India Fashion Week is one of the biggest shows of its kind in the world.

That's difficult to believe because under all the hype and hoopla of fashion as entertainment, there are, in reality, only 60 international buyers and 90 domestic buyers -- and as we've seen in the past, even the numbers don't add up to much if the stores they represent aren't too big, or serious about Indian fashion.

In fact, like most things in the past, it's only now beginning to dawn on the industry that it is the gigantic Indian fashion consuming public that will set the growth trends for its fashion industry.

"We need to identify our buyers," Rohit Gandhi is categorical, and Puneet Nanda insists that "servicing the West is not the same as India being on the fashion map".

In fact, if anything, India has been known for providing back-room services for international fashion houses, doing their embroideries and their inseaming because there's money to be made as outsourcing agencies.

Over the years, even this has come under attack for poor adherence to delivery deadlines. Raghavendra Rathore insists that "the real business takes place in the studio, not on the ramp".

That's not to say that the international buyer isn't important. "A decent representation of foreign buyers helps raise awareness of Indian designers internationally," says Tarun Tahiliani, while Deepika Govind says, "We need to get more corporate to attract foreign buyers; the market needs to be more professional."

Away from just Fashion Week, Valaya says the interest from international buyers in Indian designers has grown from "just 20-30" in the past to "600-700" now. "Indian designers are taken much more seriously now," he insists.

But having burnt their fingers by concentrating on only international buyers, designers this year are bound to be setting more stock by their domestic fraternity. The wooing of the Indian buyer has begun.
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Sangeeta Singh & Samyukta Bhowmick
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