Pepe Jeans, the Spain-headquartered denim and casualwear brand is transitioning from a denim-centric brand to a lifestyle one by widening its product range and retail presence, while also leveraging the reach of e-commerce. Manish Kapoor, managing director and chief executive director of Pepe Jeans for India, says, “We are constantly looking for avenues in the broader lifestyle space to enhance our value proposition to consumers. While our range of accessories currently brings a small proportion of our business, we expect it to contribute almost 10% of our revenue in the next three years,” says Kapoor.
Pepe Jeans is present in categories such as tops, shirts, skirts, footwear and other accessories, though over half its revenue comes from denim. India is the third-largest market for Pepe Jeans globally, after Spain and the UK contributing 16% of the firm’s business.
The opportunity in India’s western and casual apparel market is huge. As per data by Technopak, about 70% of the apparel market is western wear, and was valued at Rs 2,883 billion in FY22. Within this, denim is poised to grow at a CAGR of 22% from FY22 to FY27.
Pepe Jeans is eyeing a CAGR of well over 20% during the next three years given the company’s recent performance. “We grew around 55% last fiscal, which is a 42% increase over our pre-pandemic numbers. We reached Rs 1,180 crore in consumer sales last year,” Kapoor adds.
Price sensitivity of the Indian consumer remains a challenge, says Ankur Bisen, senior partner and head for consumer, food and retail, Technopak. That is why the market is flooded with fast fashion brands selling cheaper denim clothing.
He credits Pepe Jeans, along with brands like Levi’s and Jack & Jones for building the denim category in India. “Brands like Pepe Jeans will naturally not want to capture the mass market because it affects their aspirational positioning. They cannot go the Reliance way, and their premium positioning limits their addressable market,” points out Bisen. One way in which these companies are tackling this is by adopting a broader pitch in lifestyle accessories to create new growth opportunities.
Though Pepe Jeans operates mostly in the premium segment, priced between Rs 3,000 and Rs 6,000, there are offerings at slightly lower price points starting at Rs 2,500 on e-commerce. Its e-commerce offering is skewed towards entry-level price points, keeping the online consumer in mind. Moving from the 22-32 year cohort, it is targeting consumers aged over 28 years since they can afford to pay a premium for the brand.
The share of e-commerce has grown from 8-9% pre-pandemic to around 25% in the last fiscal. Kapoor is betting on the channel to bring in around 30% of its revenues in the next three years. Offline, Pepe Jeans has widened its footprint to reach 200 stores in 110 cities. It is present in 700 department stores and 800-odd mom and pop stores across the country. Smaller markets have played a key role in the brand’s growth, accounting for around 42% of its business.
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