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Rediff.com  » Business » Provogue's three-pronged strategy for growth

Provogue's three-pronged strategy for growth

September 20, 2003 17:17 IST

What excites Nikhil Chaturvedi, managing director of the Rs 41 crore (Rs 410 million) Acme Clothing (makers of the Provogue brand of clothing), more than anything else? It's the dream of turning his small brand into a world-class brand.

"The difference is that I want to create the largest brand in clothing, not the largest company in clothing," he says.

That may seem like a tall order for a brand of its size, that is operating in a cut-throat Rs 5,000 crore (Rs 50 billion) branded readymade menswear segment -- of which the premium casual wear segment is a roughly Rs 450 crore (Rs 4.50 billion).

But if Chaturvedi has his way, in about seven years time, Provogue will be a Rs 300 crore (Rs 3 billion) national lifestyle brand setting its sights on the international market as well.

Currently however, the commerce graduate from Rajasthan University is concentrating on ramping up production, product lines and expanding the network of exclusive Provogue Studios across the country.

Apart from this, Chaturvedi is also experimenting with another way of selling his brand of clothes.

Drawing from fashion houses like Prada and Armani, which introduced the fashion lounges-by day-bar-at night concept to the world, Chaturvedi unveiled the first Provogue Lounge in central Mumbai in July this year.

The idea? "I think our customers should not only wear our clothes but also take the Provogue experience back with them. Experiential marketing is the biggest seller," he says.

Clearly Chaturvedi is doing his best to stitch a strategy that will help his brand stand out in a crowded market. The readymade menswear market is growing at an estimated 15 per cent annually.

In fact in the early nineties the market grew as much as 30 per cent, which led to an influx of brands like Van Heusen, Louis Philippe and Allen Solly.

Raymond acquired Color Plus and Indigo Nation and Scullers -- by Indus League to name a few. With each of these vying for a piece of the same fabric, the competition has become tougher.

Moreover, in order to cater to all the price segments in the market and garner more volume, larger companies like Madura Garments and Raymond introduced brands for consumers in the premium, mid-priced and economy segments.

Whereas Provogue which started in the premium casual wear market (shirts retail for Rs 700-Rs 1,500 while trousers retail for Rs 1,000- Rs 1,800 at par with most competing brands) still remains in that segment only.

"I want to exploit the full potential of one market before looking elsewhere," says Chaturvedi.

This when competing brands like Allen Solly, Blackberry's, Scullers are all looking at wooing female customers through their western womens' wear collections.

"We have launched a womens' wear line, but it is very small. Let someone else create the market and then we'll think about it in a big way just like the menswear market," he says.

Chaturvedi teamed up with his brothers back in 1994 to make a modest start in the manufacturing and export business. Their initial investment was a mere Rs 5 lakh (Rs 500,000).

The change in strategy came when the menswear retail scene began to look more attractive. That's when the family started Acme Clothing specifically to manufacture garments and sell in the domestic market.

Provogue started with a range of shirts, selling out of one multi-brand outlet in Mumbai in 1999. Today, it retails out of 40 exclusive studios across 16 cities, 40 national chain stores like Shopper's Stop and more than 30 multi-brand outlets in the country.

This apart, the product range has expanded to include shirts, trousers, sweaters, T-shirts, accessories and a line of womens' wear in the premium casual wear segment. However, accessories and womens' wear account for less than 10 per cent of turnover currently.

Now, Chaturvedi, plans to follow a three-pronged growth strategy. He is hoping to be available in more retail outlets and in more cities. Also, he will be offering more products.

As far as the products are concerned, on the anvil are ranges of shoes, watches and sunglasses that will be produced by third party licensing.

Then after establishing a presence in the metros and mini-metros, Chaturvedi plans to increase penetration to the country's larger cities. And once the model of the lounge is tweaked, it will be duplicated in other major cities as well.

"Currently, the management, doesn't know how to run a bar. So we're still learning the ropes," he says.

By the end of the year, he plans to increase the number of exclusive outlets to 60. Till now the company has spent about Rs 7 crore (Rs 70 million) to set up the exclusive studios.

This year he plans to invest another Rs 5 crore (Rs 50 million) to expand. Chaturvedi is also banking heavily on setting up outlets in the proposed mall developments across major cities.

The growth and sustainability of which, say some industry observers, is still a big question mark.

"Retail will change drastically very soon. Then the way the business operates and grows will also change," he says.

Apart from this, Chaturvedi has just shifted his factory from Mumbai to Daman in order to get a five-year tax holiday and bring down costs.

Also, production capacity has been ramped up by 60 per cent for shirts to 70,000 shirts per month and 40 per cent for trousers. With the tax holiday, expansion plans and promotional efforts, Chaturvedi expects to reach his targets.

Currently, the brand is endorsed by Bollywood star Fardeen Khan with a spend of Rs 4.5 crore (Rs 45 million) last year.

This year, Chaturvedi is hiking adspend to Rs 6 crore (Rs 60 million) out of which 25 per cent will be spent on below-the-line activities centered around the target audience -- youth -- like fashion shows and such.

"One wonders why such a small brand is spending so much on advertising and whether the hype created is so that they can get a good valuation if and when they sell the brand," says an industry observer.

But Chaturvedi denies any such intention. "We haven't even valued the brand and look at growing and changing the perception of our brand drastically in the next two years," he says.

But the fact remains that the sustainability of smaller brands has come under question. According to market sources, brands like Indus League's Indigo Nation and Scullers, Indian Terrain, Dockers to name a few are still not doing too well while Color Plus has been taken over by Raymond.

Brands like Arrow and Allen Solly have also tried to reinvent themselves to become more contemporary. It remains to be seen whether Provogue will also have to follow suit or continue stitching the same pattern for growth all alone.

Arti Sharma