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Apparel cos cut ad spends

Apparel cos cut ad spends

Author | Source: Business Line | Saturday, Feb 11,2006 10:18 AM

Apparel cos cut ad spends

The retail-led brand building, where a sprawling flagship store on a high street or in a mall becomes the best billboard, has seen lifestyle apparel brands pare advertising spend significantly. As retailing matures, apparel brands here too are following a winning international trend that pushed the Spanish clothes brand Zara to the top.

Zara is seen leading the iconic names like Armani and Levi's in the fashion apparel space in terms of worth pegged at $3.73bn last year. It is present in around 55 countries, with about 750 stores always set in commercial centres of every city.

Zara spends roughly 1-2% of its revenues on advertising, lower than the international benchmark of 3-4%. According to Madura Garments, the trajectory of advertising spend could swing down more towards global benchmark from the current 9% as retail investments go up over the next few years.

Madura opened 7,000 sq ft Van Heusen flagship store at Connaught Place in New Delhi late last year, and followed up with a 5,000 sq ft store for Louis Philippe at Bandra in Mumbai. A slew of bigger stores are in the offing as the company sets out to revamp the retail of its premium brands.

In the last two years, Benetton India, has seen its advertising spend drop to 2.5-3% of the approximate revenue from 8-9%.

Luciano Benetton, the chairman of the Italian fashion giant, has been vocal about building brand through retail assets. Benetton is working on 12,500 sq ft store in Bangalore after showcasing 6,500 sq ft store at South Extension in Delhi and 7,500 sq ft store in Bandra.

“Almost 38% of our marketing budget now goes into visual merchandising. Many apparel brands now spend a lot more on real estate, interiors, store staff salary and loyalty programs,” says Sanjeev Mohanty, director, marketing & sales, Benetton India. It is learnt that Van Heusen invested almost Rs 1.35 crore on interiors of its flagship store at Connaught Place.

“In the existing retail environment, it is important that the A&M opportunity includes a touch point to the brand experience. Exclusive stores are now being seen as brand ads in themselves. Hence, A&M budgets of apparel companies are getting not just bigger, but also well-spread,” says Shyam Sukhramani, head of Dockers, Levi Strauss (India).

As part of efforts to modify the brand name to Dockers San Francisco, it plans to launch 27 concept stores by '06-end, and is eyeing 1,50,000 sq ft of exclusive retail space in the next few years.

But adman Prahlad Kakkar seems rather unimpressed by apparel companies' bid for a wider A&M spread. “Advertising must lead the A&M efforts of premium brands. Both ads and exclusive outlets can work in tandem with each other. Or how would brands get people to their outlets in the first place?,” he asks.

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