Apparel makers are discovering good margins in accessory stores.
Ties, handbags, scarves, watches, sunshades… India’s upscale consumers are no longer being judged by the clothes they wear but how stylishly they accessorise too. Which is why apparel makers from Mumbai-based Raymond to Ludhiana’s Madame are setting up specialised accessories-only chains to cash in on the trend.
Raymond, for instance, has set up over 20 stores called Neckties and More all over India, the most recent being at the newly-developed Bangalore airport. The company plans to launch about 100 stores in two years.
“Not too long ago, men’s accessories meant only neck-ties and tie pins. These days, men’s accessories are perceived as an extension of a man’s personality and are as important as his other possessions like his watch or car,” a Raymond spokesperson said, adding, “Over the last 10 years you can easily argue that men accessorise more.”
Spykar, a well-known domestic jeans brand, agrees. The company is planning to roll out a chain of kiosks in high-footfall areas for travel gear, innerwear for men and deodorants.
The desire for more accessorising is also true for women. In February, women’s-wear retailer Madame launched its specialised accessories store chain christened NYCITI.
What’s prompting apparel brands to open specialised accessories stores is better margins and faster growth in the segment. For instance, accessories contribute 5 per cent to Raymond’s revenues and the company expects this to go up to 10 per cent in the next two years.
Added Akhil Duggar, creative director, Madame: “At present, this segment accounts for about 5 per cent of our revenues. But with the launch of NYCITI and a better product addition to the existing stores, it is expected to contribute over 12 per cent by the next fiscal.”
Madame plans to roll out 40 NYCITI stores by the end of this fiscal to add to the three that are already operational.
The size of the accessories market ranges from Rs 1,500 crore to Rs 3,000 crore and has been growing at 15 to 18 per cent, according to Anand Ramanathan, manager, business performance services, KPMG. Within this, he said, the branded accessories segment is growing 25 per cent, against a growth rate of 35 to 36 per cent for apparel. Margins, however, are 10 to 15 per cent higher on accessories than apparel.
The reason accessories are a more lucrative business than apparel is that purchases are largely impulse-driven and mostly made by people on the move at airports or at malls (places that combine high footfalls with high visibility).
Duggar, however, said the business model works if the accessories are manufactured by the company rather than outsourced. Both Madame and Raymond make their own accessories.
Besides fatter margins, accessories provide a handy marketing tactic in terms of providing greater visibility to the mother brand. “Foraying into accessories allows brands to capture a higher share of mind and wallet. It is a smart tactic employed to leverage the brand’s awareness for apparel products,” said Pinaki Mishra, partner and industry leader, retail and consumer product practice at Ernst & Young.
Meanwhile, other domestic brands are increasing their accessory offerings within their apparel stores. Aditya Birla Retail’s luxury format “The Collective” houses 20 accessory brands besides its 35 apparel brands.
Arvind Brands has also added a range of accessories such as belts, socks, caps and so on. The tactic has helped Arvind Brands increase the average money a customer spends from Rs 1,200 to Rs 1,600.
As for prices, they’re premium but nowhere near the humungous amounts that brands like Hermes or Chanel charge for the same products. For instance, Raymond’s products range from Rs 599 to Rs 16,000 and Madame’s between Rs 450 and Rs 6,000.