India is a very price sensitive market, and even though the Indian consumer is following the latest trends, its value for money what they are looking for. And global brands have understood this very well. No wonder many global brands are streamlining their prices to woo Indian consumers. In fact, many are still finding it difficult to attract a loyal customer base. Most have entered with basic but quality products and are doing quite well but they face stiff competition from domestic brands when it comes to pricing. Having realized the importance of pricing it right most global brands are now forced to take a hard look at their pricing strategy – read, cut down prices -- to attract greater footfalls into their showrooms.
The reason being that the India consumer, in spite of shifts in attitude towards money and spending, still thinks long and hard before opening his wallet for brand name and image. Indeed they do want to wear top labels but they want it at a decent price. In fact, many are even willing to settle for copies just because they come cheaper. For instance a 22-year-old pulling in say twenty grand a month in a metro like Mumbai or Delhi would probable figure it makes more sense to spend Rs 1,500 on a homegrown jeans brand than four times that amount on an exotic name from overseas.
Of course brands like Zara, Diesel, FCUK, among others, have opened shops in India, but their success will be determined only after getting a positive response from their audience. Local outsourcing is the solution which global brands have come up with. Marks & Spencer, which entered India through a JV with Reliance India, sources clothes from local suppliers. As Martin Jones, CEO, Marks & Spencer says, “We have suitably adjusted and adapted our offering in terms of product, price and stores to suit Indian requirements. Local sourcing has helped us realign our prices; we currently source over 52 per cent of our range from Indian suppliers. In menswear, local sourcing has now reached 70 per cent. We aim to locally source over 60 per cent of our products by 2013.” Marks & Spencer has also made changes in selling strategy. While the retailer in the UK offers seven pairs of men’s socks, Indian consumers get to buy socks singly. Similarly women’s knickers are sold in packs of three compared to packs of five.
Moreover, international brands are focusing more on young consumers, a sizeable proportion being students who have not yet joined the workforce. To suit these pockets, brands have to adjust their pricing. Beverly Hills Polo Club retailed by Spencer’s Retail aims at precisely this section. Anurag Rajpal, Executive Director- Apparel (Brands), Spencer’s Retail, agrees, “We don’t face much competition from domestic brands as we offer a unique proposition to our customers. We have a customized pricing strategy for the Indian market. We are an affordable brand and our pricing suits our consumer’s pocket.” The brand also claims it can easily move out of Tier I and II cities where it is present and into smaller towns without having to make price changes.