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Indian high street gets a fillip with Gap, H&M and Uniqlo coming soon

In the wings are Swedish behemoth H&M, and Uniqlo, Japan's answer to a large-format fashion store. Also in queue are Massimo Dutti, Abercrombie & Fitch and Topshop, smaller stores but with great fashion influence.

Written by Namrata Zakaria |
Updated: May 6, 2015 12:42:43 pm
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When Zara opened its first store in Delhi’s Select Citywalk mall five years ago, it caused a literal stampede. India’s fashion hungry bustled each other, packing in whatever they could lay their hands on. This story is oft repeated in the boardrooms of many western retailers with an eye on India. Being the world’s second-most populated country, that’s a lot of people to clothe. This month sees the first Gap store opening in India, in Delhi first, and in Mumbai a couple of months later. In the wings are Swedish behemoth H&M, and Uniqlo, Japan’s answer to a large-format fashion store. Also in queue are Massimo Dutti, Abercrombie & Fitch and Topshop, smaller stores but with great fashion influence.

At the Mumbai press preview for Gap last week, I expressed to its India CEO, Oliver Kaye, that Gap had arrived five years too late. He just smiled, not saying the words we both knew well. India’s ever-expanding retailscape still does not meet international standards in terms of size, quality, services or maintenance. Kaye has headed Calvin Klein India for two years and has been living in India for the last eight.

The country’s inadequate infrastructure is its biggest bugbear. Most big retailers — like H&M and Uniqlo — are the size of buildings in prime cities such as New York, London and Tokyo. Neither Delhi nor Mumbai can offer that. Here, 10,000-square feet (the size of Gap in Delhi) is considered huge. Yet, India is an attractive market and an important platform. The Indian middle-class consumer is quickly adapting to western-style casual wear. India’s apparel market is estimated to reach $60 billion in just five years.

Arvind Lifestyle, Gap’s India partner, is looking at opening 40 franchise-operated Gap stores in the first few years. Uniqlo’s chairman, who met Prime Minister Narendra Modi in Japan, reportedly stated that he wants to open 100 outlets across India. H&M, with its stylish designer collaborations, wants to invest $130 million and open 50 stores here.

But infrastructural lapses don’t pose the only challenge. India is notoriously price-conscious. Gap is more expensive than H&M, for example. Besides, much of their manufacturing is done in India. On the racks at their preview were their cost-efficient lines, in cheaper cotton, most of it made available at export-surplus stores across India. Gap will have to introduce their high-quality lines at extremely easy prices to crack the Indian market. It cannot bank on its denim and khaki trousers alone if it wants to meet its target of Rs 500 crore in three years.
Even Marks & Spencer struggled to sell, until it began to stock products that were made in India, thus avoiding high taxes and bringing down prices. Zara corrected its prices within a few months of its opening and is reporting enviable profits.

Zara’s success made Inditex (who owns the Massimo Dutti and Zara brands), and Tata’s Trent, its Indian partner, delay the launch of Massimo Dutti. Dutti is much more expensive and offers high quality silk, linen and cashmere. It stands to do well here — with a quieter investment and premium products.

The bottomline-chasing mass retailers will have to take a bigger risk.

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