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of 30-90 days. There have been many bad experiences on this failed credit system.“ Domestic players are not good paymasters and don’ t even commit. It’ s always a risk with domestic players as it is difficult to know if they are in a healthy financial position or not,” opines Kingshuk Pandit, who after many years as a sourcing person with leading brands, is now working as a sourcing agent for some domestic brands.
For the international brands, sourcing for Indian retail stores is pretty much similar to the sourcing procedures followed by the brands on a global basis. The buying team in India decides what products to buy from where, based on the understanding of what will work for Indian stores. The buyers look at collections from local sourcing team and sourcing teams in other countries. Once they decide on the products to be bought, the same is handed over to the sourcing team for details like price, delivery schedules, which vendor to place orders with etc. If the brand / retailer has a local sourcing office in any country, that is used for the sourcing process, otherwise the India office directly or through an agent does the needful. But decision to buy and place orders lies with the India office buying team.
Further, with the advent of Arvind, Madura, Reliance, and other big names that control sourcing for many international and national brands, the domestic landscape is changing for the better, so more and more exporters, who shunned the domestic market, are now interested in working locally. Also, the volumes being offered earlier have also increased significantly, creating competition at another level.“ With volumes in Indian retail increasing substantially, it is becoming easier to place orders more competitively,
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whether with Indian vendors or at other locations like Bangladesh,” says J Suresh, MD and CEO at Arvind Lifestyle Brands and Arvind Retail. The company is home to many international brands like Gap, The Children’ s Place, IZOD, Ed Hardy, Aéropostale, Gant, Hanes, Arrow, Flying Machine, Cherokee, US Polo, Elle, Excalibur, Nautica, Calvin Klein, Sephora, Unlimited, Geoffery Beene and Ruggers.
Arvind Brands has a Global Sourcing Division, headed by Anindya Ray, supported by Ramesh Ramalingam as Merchandising Head. There are 200 people working within this division, which sources both for the local brands and international brands.“ We are sourcing 95 per cent of our products directly. From which countries we buy depends upon the product. For bottoms, light wash bottoms, denims, we go to Bangladesh, for specialised fabrics, we go to China. Variety is amazing in China. For my international brands, I have to go to China. The volume of sourcing that we do is 25-30 per cent from China and Bangladesh and the rest is done from India,” shares Chaitra Ramamurthy, Sr. Manager Sourcing, Arvind Brands Ltd.
Over time, Indian sourcing office of international brands are placing orders in Bangladesh for practically all products except fashion items for women that have value additions. T-shirts, jeans, men’ s shirts, undergarments and even kidswear are coming from Bangladesh. Companies like Reliance Retail have their own liaison office in Dhaka to support their sourcing operations from the country. Proshanta Kumar, Senior Sourcing Manager, Reliance Retail( Bangladesh Liaison Office) overseas operation for all reliance brands. The international brands
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FACTS
• Aditya Birla Retail Ltd. is the retail arm of Aditya Birla Group, a US $ 41 billion corporation. Fashion brands of Aditya Birla Fashion and Retail Ltd.( ABFRL) include Louise Philippe, Van Heusen, Allen Solly, Peter England, etc., including India’ s first fast-fashion youth brand, People; India’ s largest fully integrated fashion multi-brand outlet chain, Planet Fashion.
• India is expected to become the world’ s fastest growing e-commerce market, driven by robust investment in the sector and rapid increase of internet users.
• A major player in e-commerce platform, Bangalore based Myntra is expected to touch an annual turnover of US $ 1.6 billion in 2017-18 surpassing all major bricks and mortar retailers.
• Global leader in e-commerce, Amazon is making quick investments to capture a larger pie of this market followed by Reliance Ajio.
• The cash & carry format is considered among the fastest growing segments.
• The Rs. 6,800 crore cash & carry market has been growing at 13 per cent annually.
• Walmart India plans to add 50 more cash & carry stores over next four to five years.
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that they handle include – Scotch & Soda, Brooks Bros, DC, Diesel, Dune, Ermenegildo Zegna, Gas, Quiksilver, Steve Madden, Kenneth Cole among others.
Reliance Retail sources a wide range of products from Bangladesh in woven and knits with denim being the largest category. The current volume sourced from Bangladesh is about 3 million units / annum this year.“ There are three reasons for going to Bangladesh: it’ s a low-cost manufacturing destination; and secondly, it’ s a scalable production capacity nation. Also, it’ s easy to import fabrics; we use the Chinese supply chain into Bangladesh to bring the goods in India. We procure lot of yarn dyed shirts from China via Bangladesh as the country is still very competitive in this category. The advantage here is that you get differentiated fabric and of course there is cost benefit compared to other Asian countries,” says Rajesh Lalla – Senior Vice-President, Reliance Retail.
The H & M India office is buying huge quantities of undergarments from Bangladesh for its India stores. The Swedish global fashion giant, which has committed Rs. 700 crore( US $ 96 million) towards FDI in India, has 31 stores in India and last year, H & M, which is also available online, did a business of Rs. 940 crore( US $ 129 million) in India.“ Indians are aware about global trends and they want products at very competitive prices. So, we source from wherever the products are better priced, especially in basic products,” says Dhatri Bhatt, Head – Communications at H & M Hennes & Mauritz India Retail Pvt. Ltd.
Most retailers are sourcing from Bangladesh for the price advantage that it offers, but with‘ Make in India’ becoming a matter of pride and fast delivery for fresh stock a necessity, local sourcing is picking up.“ We were earlier sourcing about 40 per cent of our products from Bangladesh but we have reduced it to 10 per cent,” claims Rakesh Biyani, JMD, Future Group.
As the Indian domestic retail gets competitive, every manufacturer, whether a local supplier, an Indian exporter or a Bangladeshi manufacturer will have to offer their best in all areas of the business … after all, the apparel retail sector has always been about the survival of the fittest.
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