‘Homes will have ‘Italian’ dishes, glasses, towels made in India’

It has been three years since the €1.7 billion Gruppo Coin, a market leader in fashion apparel in Italy, owner of large chains like OVS, Upim, Coin and Excelsior, and with a presence in 29 countries, first announced its plans for the Indian market. It signed a joint venture with Brandhouse Retail, part of SKNL, to start Oviesse (OVS) chain of stores in India. While Brandhouse continues to hold a majority stake of 62.5% in the venture, Gruppo Coin has now taken over full control of operations and sourcing in India. Stephano Beraldo, managing director of Gruppo Coin, spoke to DNA on the road ahead, fashion in India and the scope for foreign styles.

How is the Oviesse brand faring in India?
Our first store opened in 2010. We interviewed many consumers to understand their perception of our brand. I had a concern. What in Italy is affordable could have been considered too expensive in India. The answer has been surprisingly positive. The consumer is ready to pay the price for the quality we offer.

How much are you sourcing from India?
We were and we are sourcing locally. We are sourcing even in Bangladesh at a group level. We have people in Delhi and Bangalore doing sourcing since many years. And we are ready to increase our sourcing from India for the domestic business. From India and Bangladesh together, we source about 40%, the rest from China and even from Turkey for fast fashion. And 5% from Italy.

Single brand retail has been given the go-ahead in India. Are you excited?
Well, our present partnership with Brandhouse is based on the fact that they can help us in looking at different markets from the retailer perspective. They are a financial partner. But, to be honest, since the last few weeks, we started managing operations on our own, even if we didn’t change the financial structure of our joint venture. We wanted to commit more to India than in the past, so we decided to run the operations. The majority stake (62.5%) is still with Brandhouse but all the sourcing, merchandising and managing of local operations is in our hands now.

Are you planning to launch Coin Casa, your departmental format, and other brands in India? 
I don’t know enough about how Indians live in their homes. When the trend of people moving from rural areas to downtown continues, consumers will need more and more opportunities to dress your house, to dress yourself. We already source from India more than 50% of products in home decoration. Around 80% of the hard goods and wooden goods are made in India while 50% textiles are made in India.

Prices of our products are so attractive that sooner or later Indian people will appreciate the opportunity to have in their homes a set of Italian dishes, Italian glasses and Italian towels, all made in India with an Italian flavour. We are, however, keen on some of our brands like Oviesse Kids, Grand & Hills and Baby Angel to be exploited through multi-brand or departmental stores in India.

How much have you invested in India for Oviesse so far?
Between €4-5 million (Rs 26-33 crore). There will be other investment as we open more stories. We have six stores here and have signed for another 13 already. By end of 2013, we will have 25 stores in India. Say, in another five years, with another 50 stores, we can expect revenues of €200-300 million (Rs 1,300-1,960 crore) from India.

Are rentals a concern?
Definitely! Rentals in India are unbelievably high. In Rome, where the per capita spend is ten times higher than Mumbai, rentals in the best shopping malls are much cheaper than in Mumbai. The space cost in Mumbai is too high to justify our size. This is a major problem for retailers in India.