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Recently, Italian jeans brand GAS tied up with Mukesh Ambani’s Reliance Brands, after a failed alliance with Raymond. Claudio Grotto, chairman of the iconic brand, in an interview with Raghavendra Kamath, talks about the company’s strategy in India. Edited excerpts:
The rupee has depreciated and the economy is going through a slowdown. How would these affect your plans?
I have seen this situation---high inflation and slow economic growth---throughout my life in Italy, Yugoslavia and Russia. But it will not affect our long-term plan. It is a way of life. We have to survive and not lose money.
During tough times, you buy and sell quickly; do not have big warehouses. Cut excess flab in people, costs and real estate. During 2007-09, when Europe was in a crisis, it helped us educate ourselves to take corrective actions, which we didn’t forget. Today, I switch off the lights and the tap before I go out. You may spend on expensive goods, which help you to save more.
Earlier, you had a failed partnership. Is India a tough market and partners tough to handle?
About 12 years ago, I came to India to get a sense of the market. I visited places such as Delhi and Mumbai. In 2005, we tied up with Raymond. After three to four years, we discovered we had a different vision and game plan.
They wanted mass production and lower-end products, which carried lower margins, while we felt we should have a similar position in all our markets.
After we cut ties with Raymond, we came on our own. I continued wondering which companies could help us launch the brand with the correct positioning. So, we signed a master franchise agreement with Reliance Brands. They helped us expand the stores.
What are your plans for India? How many stores do you plan to open here?
Earlier, we had individual franchisees. As master franchisee, Reliance Brands is taking over the three to four franchisee stores in Mumbai and Delhi. Now, they are creating a detailed strategy.
We are also opening five-six stores between fall-winter this year and spring-summer next year. These would come up at Thane, Mumbai, Delhi, Pune and Bangalore. There would be a total of 12 stores.
We are also going through the department store channel. We are present in 18 Shoppers Stop and Kapsons stores. We are also growing through the e-commerce channel.
How is the Indian consumer different?
There is no difference. They understand our quality. It is not as if you produce when you see money. You produce what you want. Customers understand that is the difference between us and others.
What is your vision for business in India?
I think our future in India is rosy. People are motivated and energetic here. Europe is depressed. In India, we have large young population. In 1999-2002, in Europe, we saw 60-70% growth. I think we can do that kind of business in India. In Europe, growth is flat now. India, China, Russia, Indonesia and Brazil have huge potential for growth.
How important is India in your global plans?
I launched this brand in Europe 40 years ago. For many years, I introduced this brand in many countries, including India, China and Japan. India is an important market for us. It is different from China, as everybody speaks English here. In the UK, many of our shoppers and employees are Indians.
We are already catering to Indians abroad. They pushed me as to why didn’t we go to India. Italy has population of five million, while my town has 2,000 people. India has a population of 1.2 billion. So, there is a huge opportunity.
How do you stand out among hundreds of other brands?
GAS is accessible luxury that lasts long. GAS jeans can be worn for three years, and the quality would remain the same. There are many brands with which you cannot identify. GAS lets you be yourself; it is meant for cosmopolitan global customers.
A lot of sophistication has gone into it, but it is a timeless product. It is for mature people who understand quality.
