Eighteen months after opening its first store in India, Esprit is all set to accelerate its growth plans for India.
'We have decided that we will speed up expansion because we are, in terms of economics, much better off than we expected when we started,' Esprit Executive Director and President, Thomas Grote, who was in Mumbai recently, told BrandLine.
Esprit is currently sold across five continents and 44 countries and has a turnover of approximately $5 billion. The brand currently operates 14 retail outlets in India in partnership with Madura Garments; a partnership that Grote says has been a huge success thus far.
'I think the brand has been built in an excellent way, he says. 'We were not intending to give a diluted product to India, to produce locally and change the product ... it was important that with Esprit in Mumbai, Delhi and Bangalore we provide the same experience as we do in New York, Amsterdam, Hong Kong or Shanghai.' While not revealing details, Grote says there will be many more stores coming up in the next 36 months. The company has identified 22 locations but the key will be the availability of real estate. 'Any new shopping mall that is going to be developed or any new High Street location, we try to get real estate,' he elaborates. 'As soon as we get real estate we will open.'
Make that prime real estate. Manjula Tiwari, the Brand Head for Esprit at Madura Garments, adds that as the brand is being positioned as a triple A brand, the company needs to choose its partners wisely. Grote quickly seconds Tiwari, saying, 'Our concept requires that we be in the right neighbourhood ... Everything has to be built with priorities. We go according to the most interesting retail spaces.'
And the demand for international brands like Esprit will be driven by India's large young population, according to company chairman and CEO, Heinz Krogner. 'Young people are keen on new things and they want the same things as their counterparts in New York and London,' he says. 'They don't want to be different.'
Esprit recently announced that it will launch two new divisions: The Kids World Collection and the EDC, as part of its expansion plans. The Kids collection is aimed at boys and girls between the ages of two and eight while the EDC will be a younger lifestyle brand with exclusive stores in various cities.
Krogner has set a target of $1 billion in revenue from India in the next seven years. But he admits that figure depends on how fast India can fix its infrastructure problems. 'If real estate is available, we could manage $1 billion in seven or eight years,' he said. 'But maybe it is a bit unrealistic because you have to fix your roads first.' Krogner also stressed the importance of making sure Madura Garments makes money in the process of expanding the brand's presence in the country. Expansion costs money, so the quicker stores are opened, the longer it takes to make money. Esprit stores in Europe typically break even in their second year and start making profits in their third year Krogner explains. Madura Garments President Hemachandra Jhaveri expects the operation to see cash profits this year, having registered a turnover of Rs 20 crore over the past 15 months. Krogner also offers to help educate Madura Garment employees about the Esprit brand, citing the example of the company's Chinese manager, who improved his growth rates from eight per cent to 30 per cent after spending six months in Europe.
'If they [Madura Garments] want to send someone for education about Esprit, they can send someone to Europe to work there, not just words and talk but work there,' he said. Esprit has helped educate its employees in China and is very happy with the result. The Chinese employees are happy because they learn about the brand and management is happy because it learns about China. Moreover, employees around the world become familiar with one another, making it much easier to communicate within the organisation.
As far as advertising goes, Esprit believes in a personal approach to the end-consumer rather than traditional means of mass advertising. 'We only do the minimum [mass advertising], Grote explains. 'We don't think it is so efficient nowadays. We think it is more vital to go directly to the consumer.' So the brand intends to spend more of its money on building well-designed stores and stocking them with friendly, knowledgeable sales people.
'There are so many ads that when you flip through a newspaper you can't remember what you have seen,' Krogner declares. 'I think it is better to spend that money on the end consumer, give him a decent store, give him friendly service and put your money there.' 'We have to look to the modern world. The traditional stuff doesn't work anymore,' he adds. The brand also plans to be careful about not selling dreams, with Krogner saying 'dreams cost money and don't deliver very much.' What counts most is the experience the customer has in the store. The customer needs to have a fun shopping experience, which is what the brand promises to deliver.
'India deserves a Fifth Avenue and a Regent Street,' says Krogner. 'Where is your Fifth Avenue? I don't see it. But you will have it. I guarantee it to you ... You will see it because the young generation will not be happy to go into a dirty little retail store. If the malls set the standard, then everyone around will die. It is hard. But it is life. It has happened everywhere ... Shopping does not become a necessity if income rises, it becomes fun. And the fun factor will change India.'
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