Less than two months after filing for bankruptcy, which followed 13 consecutive months of losses, US teen retail major Aeropostale opened its maiden store in Mumbai. With global sales of $1.5 billion, the brand is going to be aggressive with its expansion plans, sensing a massive appetite for branded apparel from its target customers in the age group between 15 and 25 years. Aeropostale is being brought to India by Arvind Lifestyle. J Suresh (JS), managing director and CEO of Arvind Lifestyle and Kenneth Ohashi (KO), senior vice-president, Aeropostale told Priyanka Ghosh about the brand’s India strategy and expansion plans. Excerpts:
We have seen a series of fast fashion retailers setting up stores in India lately. In particular, Forever 21, which also is a young adult fashion brand. In terms of products and prices, what are your thoughts on competition in the segment?
JS : The apparel segment in India is estimated at $40 billion and the most major competition that Aeropostale has is no more than $200 million at the moment so there is room for a number of brands to enter the market. The more pertinent issue is how to lure consumers and not on how to tackle competition. Besides, the USP of the brand is that it is logo driven, it has equal offering for both men and women and the price points.
Could you elaborate on the prices a little more?
JS: We are not at the bottom of the pyramid — I think R599 and R699 are considered real attractive entry prices — Aeropostale prices will be about R899 and R999 but it is less than R1,399 and R1,499, which are the more luxury brand prices.
How critical is the India strategy, given the financial crisis that the company is in?
KO: We are present in 20 countries outside the US. Everywhere consumers are getting smarter about how to spend the dollar. What we see is that people are purchasing to a mix of global and local brands and then mixing and matching. We offer accessible price points so people get value for money. Our business outside the US is about $200 million and over a period of time, India can represent up to 20% of this segment. India is a major market for us along with Brazil, and we are sourcing locally in both these countries, which adds to the affordability of products. We think we can get the volumes from India, China and Brazil.
Some brands have had to tweak some of their products to suit the weather and color palate. What kind of customisation can we expect from Aeropostale?
KO: There will be uniformity in products so you will find the same products in Europe, Mexico and in the United States. In addition there is a percentage exclusive to the geography, so for instance, linen is an important fabrication here, so overall, the line will be cohesive and seamless. Every country has a slightly different pricing but in general, we have the positioning of a lifestyle brand, with a strong focus on our logo business, which contributes 25% to our total business.
Could you elaborate on your expansion plans?
JS: We are planning to open 15 to 20 stores and grow the brand to R500 crore over a period of five years. We are definitely accelerating our pace of expansion. In many countries we had to go through the exercise of first educating people about our brand from scratch but here, because people are well traveled and so many go to the US for higher education or have families there so the initial awareness was there and we are building on it.
What would be your strategy on omni-channel?
JS: At the moment Aeropostale products are available on nnnow.com so consumers can click-and-collect, we have algorithms for check for sizes and a number of other services. We are also available on Amazon. So our initial reach will be through these two mediums as well as our stores. The shop-in-shop in departmental stores will happen but in the next phase of expansion.