"We are competing with Indian, not Western brands"

Written by Malabika Sarkar | Malabika Sarkar | Updated: Aug 25 2009, 06:59am hrs
With over 885 stores in more than 40 territories around the world, Marks & Spencer, a major British retailer, is aggressive about setting its footprint across India. The company tied up with Reliance Retail last year and plans to open at least 50 stores in the country over the next five years. The joint venture, Marks and Spencer Reliance India, which was set up with an initial investment of 29 million pounds (Rs 2.3 billion), has, in a way, set the scene for major foreign investments in the lucrative Indian retail sector. In this interview to FEs Malabika Sarkar, Mark Ashman, CEO, Marks & Spencer Reliance, India talks about how the company plans to give the brand a totally Indianised look and feel.

Since you stepped into the country, what has happened that you have to rethink the product and try and Indianise the whole offering

It is not about Indianising the brand, but about understanding the myriad subtle changes that you can make to localise the product and ensure that it is relevant to the consumer. Its about expanding the colour pallet of core products, polo shirts, t-shirts. Its about putting a pocket on mens shirts (only 25% of shirts in the UK have a pocket). Its about expanding ranges in fabrics more suited to the local climate, such as cotton and linen. Its about smaller pack sizes too. I believe that it is this detailed understanding of the India market, when combined with Marks & Spencers International product ranges and quality standards that will enable us to become a major retail brand in India.

What is that unique way in which the Indian consumer is different vis--vis those in the Western markets

They are certainly more value conscious and those consumers newer to organised retail are still driven by need rather than want. This is changing and will continue to develop.

When Marks and Spencer first hit the Indian shores in 2001, there was hardly any competition in terms of international labels in the market. The scene has changed now with many foreign brands having established their footprint across the country. Any reason to feel threatened

If I look around the high street and malls, with the exception of the sports brands, I see very few Western apparel brands in India today. Many have talked about coming and havent, others came and have left. Marks & Spencer entered initially through the franchise route, which was at that time the only permissible route. We formed a majority joint venture (51:49) with Reliance in 2008 because we are confident of achieving significant growth for the Marks & Spencer brand in India.

Broadly speaking then, what is the profile of the competition you are facing here

Because we sell a broad range of apparel and home products we have different competitors in each category. We want to offer good value for money to our customers, which for us is a combination of price-times quality. Today we are competing with Indian brands, not Western brands; our customers should have confidence that they can buy Marks & Spencer quality products at a price that compares favourably with mid-market Indian brands.

Dont you feel M&S might be slightly late in trying to crack the Indian market

No, organised retail is still very much in its infancy. The global recession also brought a much needed reality check to the likely growth prospects for retailers in India. Marks & Spencer is well placed to expand at a pace that matches the markets growth.

Did your iconic stature in home country Britain give you an early advantage when you were setting up shop in India

Yes, clearly the Marks & Spencer brand has resonance with the Indian consumer, who recognises the quality of our products and understands the principles of our business that have not changed for 125 yearsand they are quality, value, service, innovation and trust.

What do you see in India beyond the fact that it is a big opportunity What could India offer beyond just garments in terms of sourcing

Marks & Spencer has sourced products successfully from Indian suppliers for export for a number of years. We are accelerating the proportion of made in India (and Bangladesh) products for sale in India. We are currently just under 40% and we plan to achieve 70% as quickly as possible. We will only work with those suppliers who meet our quality and ethical standards and Marks & Spencer (UK) have a sourcing office in Bangalore who are managing this on behalf of the JV business. We will create both retail and manufacturing employment in India.

The company recently announced in the UK that it would pass on higher business costs to consumers by raising prices by 3% later this year. Any similar plans for the Indian arm

In India our objective is to reposition the brand from premium to middle market and our pricing strategy is driven by the same. Therefore, we will not be passing on higher business costs to our customers here. On the contrary, for the summer season, the average selling price of our products has been reduced 12% overall versus last year, and by 20% in menswear.

You said you are cutting prices in categories such as menswear to woo buyers. How important is pricing in establishing the brands presence in the country What are the other areas that you are working on

Getting our prices right for the market is only one plank of our strategy. Selecting the right product for the market and developing new ones are also critical. We have been busy in all these areas. We have also been developing the size format and layout of our stores, along with the style of brand messaging. In the UK we have been around so long that we dont really have to explain the brand and our principles. In a new and developing market like India, we need to do sowhether it is the history of the company, the colorful brand wall, the explanation of our business principles such as innovation and trust that you will find in our latest stores. We also recently launched a loyalty programme, your M&S Club, which has been incredibly popular and as we open further retail space, we will be able to market the Marks & Spencer brand more extensively in India.

You entered into an agreement with Reliance Retail last year. How has this joint venture helped in establishing Marks & Spencer as a major retail brand in India

Moving from a franchise model to a JV model is all about accelerating our expansion in India with larger stores, a larger range of products and lower prices. Your mindset changes when you start to invest your own money in a business and when you have your own team on the ground.

Combine this with ambition and pace of our partner Reliance and you have the opportunity to significantly scale up the Marks & Spencer brand in India.

What are the other products that you are planning to launch from the global basket in the Indian market and in which categories

We have the opportunity to select any product from the Marks & Spencer UK range of apparel and home categories for sale in India.

Opening larger stores has enabled us to offer a broader selection in ladies and menswear and to introduce childrens wear and homeware. In addition to expanding our ranges we have launched new categories, for example, ladies swimwear sold very well this summer. We will launch a range of childrens books and toys in September.

How much does India contribute to the companys global sales What kind of growth are you expecting in the coming year

We do not disclose the individual contribution from any of our international businesses. In India, we are looking to become a major retail player, so in the mid to longer term India will play an important part in Marks & Spencer achieving 15-20% of revenues outside of its UK home market.

Many people have been expecting you to move into the food segment especially through the JV with Reliance; what is your thinking on that front

We have an amazing range of foods in the UK, which we retail globally. If it is in a packet, jar, bottle or a can we could be selling it in India, and I know our customers would really like the opportunity to try our food range. But regulations for food retail in India are complex and as you know foreign direct investment is not allowed. We will continue to watch the food space with interest.