The M&S case was discussed in an earlier post http://tiny.cc/o38it where my friend Vedant Sharma an ex-student from Tasmac had given the following interesting comment:
“M&S is well known lifestyle brand in the world. M&S entered in India with JV Planet retail pvt ltd but they were not able flourish brand in India. They have dissolved the agreement. Then, they have JV with Reliance Brands and the CEO is Mr. Darshan Mehta, COO of the VF Arvind Brands. In India, he is coming up with strategy of Pricing. They have two brands under roof of M&S i.e Blue Harbors & Autograph. Blue Harbour is affordable in nature and Autograph is Premium brand of it.”
M&S targets the Indian mid market segment
In an interview with Hindu Business Line, Mr Mehta strongly advocates the need to cater to the mass markets rather than the premium segment. M&S has long way to go in the market because people still do not know that they have slashed their prices in India.
Marks & Spencer is attempting to reduce its prices and be perceived as a mid-market retail brand as it is in the UK. Therefore building economies of scale into its sourcing operations will hold the key to its pricing strategy. Considering apparel commands steep duties of nearly 38 per cent, the UK-based retailer has decided to bring down its sourcing from abroad and source up to 70 per cent of its apparel indigenously. To expedite this process, the retailer has already set up its new sourcing office in Bangalore which would make apparel specifically for sale in India. Going forward, 70 per cent of its merchandise will be sourced in India.
India opens up to foreign retail brands
Under current FDI rules, entry is restricted to wholesale, license or franchise arrangements. The newly formed joint venture with Reliance Retail is a change in M&S entry strategy from the franchise model of the past. The 51:49 partnership between M & S and Reliance is likely to open 50 new stores in the next five years in India. While apparel will be its mainstay, it will continue with the existing categories such as toiletries, food and add home-ware as a new category.
Another expert in retailing Harminder Sahni, MD, Technopak believes “By forming a joint venture, M&S has shown its confidence in the Indian market. The fact that it has invested serious money goes to show that it wants to create value in this market. In any case, for a company of its size, it is not a good idea to exist as a franchise and it has taken the right step for itself in the long term.”
Our June 2010 Strategy batch at Tasmac reviewed and presented the M&S case a couple of weeks ago. Their special focus on M&S India was very enriching as one of the team members Darshan shared his observations based on his personal visit to the M&S store located at SGS Mall Pune.
(a) “Food might not be a huge turning point for M&S but will it be well received due to brand recall”.
(b) “Reducing prices will help fight the competition in a crowded market but should M&S also deviate from its global strategy and change its styling, color patterns and designs for India?”