Fossil plans to set up 25 stores in 5 years
Bangalore: Watches and accessories maker Fossil Inc. will open 20-25 stores under its namesake brand in malls in India over the next five years and will also start selling jewellery as it seeks to increase its presence in the country.
After Fossil India got approval to open fully owned stores in India in February 2013, the company opened its first outlet in Mumbai earlier this month. India allowed 100% foreign direct investment (FDI) in single-brand retail in 2012.
“Currently, we’re focusing only on malls for the Fossil brand till we establish the brand to a certain level. High streets typically get dedicated traffic whereas in malls there’s a lot of brand exposure. There are some 400 malls in India out of which only a handful are relevant for our brand,” Nangia said.
Fossil, which sells watches mostly priced between Rs.5,000 and Rs.25,000, started operations in India in 2005. It sells its products through more than 500 stores, including Shoppers Stop, Lifestyle and Helios. For the year ended 31 March 2013, Fossil India reported a 60% increase in sales to Rs.95.6 crore. The Indian unit reported a profit of Rs.8.4 crore compared with a loss of Rs.6 crore in the previous year, according to documents available with the Registrar of Companies.
India’s watch market was worth Rs.5,000 crore in 2012, out of which organized retail accounts for 40%, according to a 2012 study by the Associated Chambers of Commerce and Industry of India.
Though Titan Co. Ltd owns the largest-selling watch brand with more than half the share of the organized market, it generates a majority of its sales from lower-priced products. While the availability of luxury watches such as Omega and Rolex is improving, they are still out of reach for a majority of Indians.
“There’s a big gap between the low-to-mid segment on the one side and luxury on the other side. That’s where the growth is going to be for us. We’re also introducing Fossil jewellery for the first time, but only in our stores,” Nangia said.
He said Fossil had benefited from the weaker rupee last year as the company, which makes some of its brands in India, held prices while its rivals were forced to raise prices because of a high quantity of imports.
Fossil will likely find its task cut out in the Indian market.
“Fossil will have to aggressively advertise and market themselves in terms of TV ads to get noticed in India because it’s a very cluttered market, and I don’t think they are doing that,” said Abneesh Roy, an analyst at Edelweiss Securities. And even though Titan is not that strong a brand in the over Rs.5,000 range in smaller cities and towns they are the preferred brand even in this price point because of their distribution strength and servicing ability.”
“However, in the large cities, Fossil is a well known international brand and has an advantage over Titan.”
Fossil is also looking to launch its e-commerce website in India—if the government allows FDI in e-commerce.
“We’re waiting for the FDI laws to change to launch our own e-commerce website. Not only as a selling medium but to also reach out to a wider customer base, do market research and to improve our customer connect,” Nangia said.
Mint reported on 16 March that some fashion and accessories brands are in discussions with e-commerce firms to reduce discounts on websites after wholesalers and brick-and-mortar retailers, the worst hit by the boom in online shopping, put pressure on brands.
Nangia said Fossil, which sells on Flipkart, Myntra and three other sites, too would take up the matter with its e-commerce partners.
“We’re going to talk to the sites to try and stop discounts. It’s fine to give discounts on older stock and when you’re trying to liquidate stock but it’s unfair give discounts on new products,” he said.