Arvind Mills to tap kiranas for rural reach

MUMBAI:
Arvind Mills is trying to do in shirts what Cavincare’s Chik did for
shampoos. Make the product ubiquitous and affordable.

You may soon
get to pick up a shirt bit from a pan shop, or a petrol pump, across the
thousands of villages, which lie at the bottom of the growing Indian
pyramid.

The world’s third largest maker of denim fabrics and
supplier to Levi Strauss and Calvin Klein, plans to expand its retail reach in
India as the global markets get tough with slowing consumer spending and
currency fluctuations, said a senior company official.

It plans to
make its shirt bits available in thousands of shops across the country. The fact
that rural incomes have been rising is prompting a change in the thinking of
Arvind which has been mostly cities and export oriented so far. There would be
more shops in the country which may sell Arvind’s
shirts.

“With the increase in disposable incomes and awareness
about branded items, rural India is fast becoming a lucrative market,”
says Kulin Lalbhai, chief manager of group’s retail arm and the younger
son of CMD Sanjay Lalbhai. Arvind Mills will set up a distribution network
across the country with at least 1,000 — 1,500 points of sale per state
including non-textile shops like kirana (grocery) and petrol pumps, he
says.

Indian textile companies are turning to the domestic market as
exporting gets tougher with intense competition from rival Chinese, Sri Lanka
and Bangladeshi producers who could keep their costs low.

Also, the
ever-changing tastes of western consumers and slowing demand makes it critical
for textile companies to look out for an newer markets. It is not only making
the product available, but that it should be affordable in the rural areas where
many still can’t afford decent shirts.

“The range of the
shirting would be affordable, ranging from Rs 300 to Rs 800,” says Mr
Lalbhai. “The company can now offer much more variety to the retailers at
a much lower risk, like in the case of shampoo sachets, which radically reduced
the price to the consumer and increased the ease of distribution.” As a
step towards achieving this goal of a likely retail expansion it has already
started selling shirt bits instead of multi-metre long rolls which once
dominated the shelves of any textile retail outlet in the country. It is also
pushing for more retail outlets in cities which sell products of many
manufacturers, which are known as shop-in-shop format.

“We are
planning to increase our presence in shop-in-shop format outlets by more than
double from currently 500 to 1200 by April 2010,” Mr Lalbhai says. Mr
Lalbhai’s idea may be great, but it may not be as easy to come out
successful in a retail venture as many found out in the last few years.

“Even though the size of the rural market is growing due to
increased disposable income with farmers, for such types of network, setting up
a logistic supply chain till remotest area would be a very difficult
task,” says RK Dalmiya, president, Century Textiles and Industries. But
for companies struggling in their traditional markets, it doesn’t hurt to
explore new ones.

“Companies should also keep in the mind that
preferences and choice in rural market will be different than urban
market.”

“It makes sense for rural penetration for Arvind
Mills,” said senior retail analyst Indrajeet Kelkar from the broking firm
Dolat Capital. “Brand house retail has already planned this out and they
have started the rural market penetration with their S-Kumar’s
brand.”