The Tommy Hilfiger Group has announced buying a 50 per cent stake in Arvind Murjani Brands (AMB), which has a sub-licence for its products in the country, and also acquired the Murjani Group’s licence for Tommy Hilfiger trademarks in India. In a emailed interaction, Fred Gehering, chief executive officer of the Group, talks to Raghavendra Kamath about plans for India. Edited excerpts:
What is the idea behind this acquisition?
The new agreement is in line with similar actions that the Tommy Hilfiger Group has taken in other international markets, in support of its strategy of consolidating brand management and approaching markets in a more coordinated manner.
How much will Tommy pay to buy the trademarks in India and 50 per cent interest in Arvind Murjani Brands?
This information is confidential and not for public disclosure.
What will be the focus and strategy of Tommy Hilfiger in India, when economic growth is on the decline here?
We are one of the most successful players in the premium apparel sector in India. Our business in India has grown by around 50 per cent every year for the past few years. The new agreement will help to strengthen our brand. For instance, in the next two years, we will be investing in the growth of the childrenswear market, where we see great potential.
The market sentiment and talk about a second wave of slowdown seems to have not affected the Indian consumer sentiment so far. As with all markets, we will monitor the situation closely but believe that emerging markets like India have many positive factors that should bypass a slowdown in consumer demand. Further, our positioning is firmly in the premium -- not luxury -- sector, which has been less impacted by the financial downturn of the past several years.
How is Tommy differentiating itself when a plethora of global fashion brands have entered India and customers are spoilt for choices?
We were one of the first premium international designer brands to enter India (in 2004) and we believe we have a deeper understanding of the Indian consumer than many of our peers. This has helped us to shape a growth strategy that will build on our current position in India.
What are your expansion plans? Will there be any change in the merchandise, store sizes, offering when you open new stores?
Direct involvement in the Indian market will better enable us to leverage our capabilities in merchandising, store design, sourcing, etc. We believe that the Indian consumer will benefit from the increased synergies. We have an ambitious retail store roll out planned for tier-1 and tier-2 cities over the next few years. The retail real estate landscape in India is somewhat challenging, with many international brands vying for a fixed number of locations. However, we are focused on securing leases in the most upscale, highly trafficked locations in the most important cities across India.
We have an established and successful business in India and see great potential for growth. This new arrangement will enable us to add efficiencies, better align the sub-licences with the master brand and provide additional funding for retail development. We will continue to offer the Indian consumer the full Tommy Hilfiger lifestyle, while looking at future opportunities for retail growth. Currently, there are 80 Tommy Hilfiger stores across major Indian cities, including several in tier-II and tier-III cities.
What is the kind of revenue Tommy has posted in India in FY2011 and what kind of growth are you looking at in the current year?
We are one of the most successful players in the premium apparel sector in India and our business in India has grown by around 50 per cent every year for the past few years. This new agreement will enable us to make additional strategic investments to strengthen our brand.