Although fashion player Benetton entered the Indian market 25 years ago, way ahead of many of its competitors, the Italian brand has not been able to cash in on the early mover advantage. Brands like Gap and Levi have grown much faster. Benetton India’s profits fell a sharp 79% to R2.3 crore in FY16 with sales rising by just 2.2% to R735.3 crore, data from the registrar of companies shows. In contrast, Levi Strauss reported net profit of R79.4 crore in 2015-16 up 64% over the previous year with sales growing at 18.5% to R752.7 crore.
Moreover, Pepe Jean’s net profits were up 83% in FY16 to R65.78 crore on the back of a rise in net sales of 29.3% to R348.43 crore. Apparel brand US Polo crossed the R1,000-crore sales mark in India in 2015-16, less than five years after it entered India. Zara now clocks over R1,000 crore in retail sales. Compared with brands such as Louis Phillipe and Van Heusen, Benetton has grown at a slower pace.
Benetton attributed the drop to stiff competition and adverse weather conditions which had resulted in slow sales growth. In 2015-16 Benetton shut 98 stores. The company said FY16 had been a tough year due to poor market sentiment and the launch of several new fashion brands which had led to keen competition.
Retail experts pointed out Benetton had relatively less visibility than peers since it did not advertise too often. The lack of adequate effort to build the brand was probably impacting business, they said. Rajat Wahi, head, consumer retail, KMPG, said Benetton’s slower growth was probably due to their focussed on strengthening the current operations and improving profitability, rather than expanding.
“Till 2015, they were growing steadily. Bentton’s focus on tier 2 and tier 3 cities and apparel for men, women and children would help the company grow,” Wahi said. US-based Levi Strauss entered India 15 years back while London-based Pepe Jeans entered India 28 years back. According to a Technopak report, the Indian apparel market has seen growing inclination of consumer towards western wear and casual wear.