VIP Clothing may hike prices by 15%, says CMD Sunil Pathare | INTERVIEW

Innerwear manufacturer VIP Clothing may hike the prices of its product range by 15 per cent in the coming months. “There is a high chance of price hike for our products. The increase in the rate of yarn and paper cost used of packaging material which changes on a daily basis are the two major factors leading to price hike,” Sunil Pathare, Chairman and Managing Director, VIP Clothing Ltd, told FinancialExpress.com. Even as there is an increased inflationary pressure on the brand, VIP Clothing Ltd is betting on the demand for branded innerwear among consumers. “We hope to increase our revenue by 30 per cent this year, mainly by expanding to new tier-I and tier-II cities,” he said. The brand retails mainly through its distributor channels, followed by wholesale channels and also modern trade. VIP Clothing recently opened its first franchise store in Kerala and plans to open 100 franchise outlets in the next 5 years. Here are edited excerpts from the interview.

What are evolving consumer behaviour and new trends in the industry? How is the company adjusting to this?

Since today’s world is all about social media and everything is online, consumers have become more conscious about their choice and very aware about the trends. They are very particular about the product details, what they want to shop and from which brand. Hence, we are coming up with products that satisfy all the needs as well as fulfill the trends of the industry. We are launching new products with a claim-forward approach where the functionality of the product will be the USP. Our focus has always been on the need gap hence we are introducing a new category for Youth. We are present throughout the spectrum of the innerwear industry with products in the budget, economy segment to mid- market and luxury segments. We have also introduced novel products like antibacterial vests and have added fragrances like sandalwood and lime to provide a new intimate experience to customers and their life partners.

How is the intimate apparel and innerwear segment performing currently? What kind of growth are you witnessing in the segment?

After the pandemic, comfort and convenience are increasingly becoming important to customers because of their lifestyles and work schedules. Brands today are providing more options to consumers. With the increase in preference for branded products among consumers, the importance of organized retailers carrying branded lingerie wear has also increased. This is a competitive market with the presence of both global and regional players. We, at VIP, are also trying to inculcate a new range of products to give the customer a variety for a better shopping experience. According to a market analysis by Technopak, the current size of the innerwear market is growing at a CAGR of 10 per cent over the next few years and is slated to reach around Rs 74 crore by 2027. The growth opportunity for the Indian innerwear market is beyond imagination. Brands are widening their reach and extending their product range while elevating the fashion quotient each time.

What percentage of sales for VIP Clothing comes from rural markets as compared to the urban markets? Are you strategising any plans in order to increase the share in either of these markets?

Urban market contributes to 80 per cent of our sales whereas rural market contributes 20 per cent. We are expanding our reach by getting associated with local distributors and wholesalers in both the markets.

What is the most preferred channel for retail for VIP Clothing? How do you see franchise as a model for expansion for a brand like VIP Clothing?

In terms of preference, in the first place it will be our distributor channel followed by wholesale channel and modern trade. The franchise model is a strategy that we as a company have recently implemented. We launched our first franchise model in Kochi, Kerala last month and are planning to have 100 franchise stores in the next 5 years.

Tell us about your expansion plans. Are you waiting for inflation to cool down for category expansion and other plans?

We are currently present in 25,000 retail stores across India and we are planning to expand to 40,000 stores in FY’2022-23. We have six regional offices with a sales force of over 150 highly motivated individuals marketing its products throughout the major towns of the country.

VIP Clothing intends to reach its customers by setting up exclusive and franchise stores along with online sales through e-commerce websites and promotions on social media.

We have planned a couple of categories in outerwear and innerwear products which will be launched this year. All of our new products are in the pipeline and to be launched as per timeline as earlier the need gap is addressed the earlier the issue is resolved.

What are your strategies to improve margins to tackle the inflationary pressure?

We have introduced new machinery in our factory which helps to reduce production cost and have also lowered the scheme percentage which is given to channel partners.

How do you see competition from other brands in the category and even from new age brands in the intimate apparel and innerwear segment?

The competition is increasing day by day. Its not only the major known players but there are many local brands that are dominating in their particular region in their specific market. Although there are many competitors, all of them have their own target markets. Each brand has their own taste of design and target audience. We focus on standing out from our competitors by bringing in a new range of products with innovations and USPs and by fulfilling the gaps in the market.