After nearly two decades of operations here in India, British retailer Marks & Spencer (M&S) has launched Rethink, its first India-specific marketing campaign. It seems like the brand has done a bit of rethinking itself. The retail major has launched a revamped product range at competitive prices, and also brought in a service proposition by introducing in-store stylists. M&S India has identified womenswear and lingerie as its key focus areas, with an eye on tier II markets for expansion.
“India is the second largest market outside the UK with 71 stores. It is the only market where we have a dedicated approach focussed solely on the Indian consumer, rather than repurposing any products launched elsewhere,” says James Munson, MD, Marks & Spencer India.
Globally, M&S faces stiff competition from fast fashion brands such as H&M and Zara. In India, both H&M and Zara have crossed the Rs 1,000-crore sales mark, while M&S claims to have done so, too, in February this year. Will M&S’s revamped efforts help it create impact in a highly competitive market?
Devangshu Dutta, chief executive, Third Eyesight, says that Zara and H&M have clear audiences in the bigger cities — the young, fashion conscious lot with high disposable incomes. “Marks & Spencer’s pricing strategy is to focus on the upper-middle-class consumers, not limited to the metros. There is growth opportunity there.”
According to company filings, Marks and Spencer Reliance Retail India’s revenue has shown a steady growth of around 10% CAGR from Rs 620.82 crore in FY15 to Rs 899.93 crore in FY18. This growth has been attributed to price restructuring, local sourcing and a strong focus on women’s fashion.
“Womenswear and lingerie are our fastest growing businesses. In fact, the lingerie business has seen 40% growth in the last two years. At present, menswear and womenswear contribute equally to our business,” says Munson.
Currently, M&S has 10 standalone lingerie stores in key metros and tier II cities like Lucknow and Jaipur. It plans to open six stores in the next two months, of which three will be lingerie and beauty stores.
Rationalising the price tag
Getting the pricing right has been vital to M&S’s India story. “When M&S entered India, it merely duplicated what it was doing in the UK. It was out-priced in the market. The local sourcing supply chain was not developed, while sizing was a big issue,” says Ankur Bisen, SVP, retail and consumer product division, Technopak.
However, today, a t-shirt for women could be priced at Rs 599, while a dress could cost Rs 1,499. “Around 65% of our range in women’s tops is below Rs 2,500. Last year, we reduced the prices of kidswear by 20% across the range,” Munson informs.
Sourcing locally has helped cut prices further. Almost 30% of its products are sourced from India itself. In fact, India is one the top five sourcing hubs for the company’s global business. It works with 111 factories in India, with over one lakh employees.
With rising competition in metros from other global players, M&S is strengthening its e-commerce play and also expanding its footprint beyond the metros. A fifth of its turnover is from the non-metro markets, such as Ahmedabad, Bhubaneswar, Guwahati, Kochi and Coimbatore. Munson shares that upto 44% of the company’s online sales (via Amazon, Flipkart, Myntra, Ajio and Jabong) comes from tier I and II markets. In fact, M&S is seeing online sales growing at 75% y-o-y.
At present, it has 22 stores across 19 tier II cities; each store reflects the local trends and needs. For instance, at M&S Kochi, linen clothing is on offer all year round, given the climatic conditions, Munson shares.
According to experts, M&S needs to work on its product range and positioning to drive growth. “Unlike fast fashion brands, M&S’s global positioning is core fashion and basics, with a gender-neutral positioning; it is a family store. Therefore, it will see growth in small cities,” says Bisen.
Bisen believes that M&S will also need to connect with the millennials — the cohort H&M and Zara appeal to — with relevant products. Besides, he says, “the casualisation of fashion and online integration” could pose challenges for the brand.