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Pepe Jeans: Has around 25 % market share in India!

Pepe Jeans London has presence in 60 countries, has over 300 stores globally, and employs over 2,000 employees. The brand is devoted to create directional denims and challenging young fashion. Chetan Shah, Managing Director, Pepe Jeans London, India speaks about the Indian Chapter of the brand in a rendezvous with Varun Jain.

Varun Jain (VJ): Pepe Jeans London was introduced in 1989 in India. It has been long. How has been the journey so far?

Chetan Shah (CS): Pepe Jeans London entered the Indian market as the complete denim and casual wear brand, in 1989 and today is one of the top international premium brands in India in this segment. Pepe Jeans London has transcended from a jeans brand to a complete lifestyle brand today.

Pepe Jeans London has a distinct offering in comparison to its competitors. The brand has positioned itself as an International, fashionable, premium jeans and casual wear brand. Our three retail channels, EBOs, large format stores and MBOs, form the base of our strong distribution network across the country in Tier II and Tier III cities apart from the metros. Each one of these does not compete but complement each other and equally contribute to our overall growth. Pepe Jeans London has gone for extensive reach and availability across India.

VJ: Presently how many stores of Pepe Jeans London do you have in India? What is the size of an exclusive Pepe Jeans store?

CS: Pepe Jeans currently has 155 exclusive brand outlets, 90 plus large format stores and presence in over 1500 multi brand outlets. We realised that small towns are getting increasingly

brand conscious, and therefore we introduced a number of exclusive Pepe Jeans outlets in smaller towns of coastal Andhra Pradesh like Ongole, Vijaywada, Kakinada, Warrangal; as well as in other smaller towns like Aizwal, Itanagar, Dimapur and many more.

Any exclusive Pepe Jeans outlet is anywhere between 800 sq. ft 1200 sq. ft in area.

VJ: How has franchising helped Pepe Jeans London establish in India?

CS: The Franchising model has helped Pepe Jeans grow at a much faster rate. We have joined hands with our distributors who have strong presence in their respective regions and this has helped Pepe get a strong hold in smaller towns of India and have a vast distribution reach. Our franchisees open exclusive brand outlets of Pepe Jeans as well as supply to multi brand outlets throughout the country. With the help of our franchisees and aggressive expansion plans, we are now present in more than 80 cities across India.

VJ: What is the current Indian retail scenario with respect to the denim brands?

CS: The denim market in India is growing at a very fast pace. All the international brands in the market are catering to Sec A, A+ consumers and hence the competition is fierce as compared to other segments. Over the years Pepe has built a dominant foothold in the Indian market and is the market leader in the premium jeans and casual wear segment. The price points of these new entrants in India are well above the prices that an average consumer can afford and almost two and a half to three times of the price of Pepe Jeans for similar styling, quality and innovation. Hence, there is no short or medium term threat. In fact, the arrival of these brands will propel Pepe to faster growth in volume as consumers will increasingly recognise and appreciate that Pepe has a strong brand / value proposition vis--vis the new entrants.

VJ: What is the worth of total denim market in India and what is your market share?

CS: The total size of the denim market is estimated to be at Rs 2000 crore. The denim market in India is growing at the rate of 10 15 per cent per year. Pepe Jeans contributes around 25 per cent in the premium jeans and casual wear market.

VJ: Who are your close competitors?

CS: Any youth brand which is offering premium quality jeans or casualwear product line in the middle and premium segment is a competition to Pepe Jeans.

VJ: What challenges did the brand face initially and what was the mantra that kept it going?

CS: In the beginning, while entering the Indian markets Pepe realised that India was a place where trade was completely unorganised, that is, no modern trade format was prevalent at that point. Pepe Jeans globally has always sold through organised retail-- through departmental or exclusive brand stores. So, the Indian operation was a complete challenge as no international learning was getting utilised.

When Pepe Jeans began stepping foot in the Indian market, we observed that the western wear culture was mostly restricted to metros. The country had its own culture that drove the consumers. Mass Media options were restricted and Indian female sizes were different than international counterparts.

In order to tackle the issues and set foot amongst the core target audience we kept our designs and styles international in nature but modified the fit so that it fits the Indian women better. Also, we used stretch fabrics so that it hugged their body and they looked much slimmer and comfortable. On the trade front, we joined hands with distributors. Our business associates had very strong presence in their respective regions and this helped the brand to set its foot firmly in those areas and further expand into Tier II cities. Very soon, we realised that the future will be organised retail, so we concentrated on exclusive brand stores.

VJ: How have you determined the price point of your products for Indian consumers who are considered to be price-conscious?

CS: Pricing has been one of the largest phenomenon which drives Indian consumer behaviour. Over time we have come to understand that the Indian market is highly price sensitive. However, being an international brand, pricing initially was a matter of concern. To address the issue we went into providing the consumer a much superior product. Each of the merchandise produced by Pepe Jeans has a lot of detailing. We use the latest fabrics and accessorise for each garment so that consumers feels that the price they are paying is worth the value.

VJ: What was the companys turnover last fiscal? What is the targeted turnover, this fiscal?

CS: The annual turnover of the company, currently, is Rs 350 crore; and we hope to reach a sizeable Rs 500 crore by the next fiscal.

VJ: What is your marketing strategy?

CS: Our present strategy is to strongly focus on innovation and quality. At Pepe Jeans we believe that it has to be the right blend of both fabric and style to create the perfect product. Hence, our focus most certainly is both.

In terms of marketing communications Pepe Jeans aims to continue working on a 360 approach thus involving both above the line and below the line activities. Pepe Jeans advertises its brand campaigns heavily through hoardings & billboards across the country and most of the top fashion magazines. This medium helps us to create brand imagery by associating ourselves with the fashion space and being seen around the top international fashion brands. In order to reach a larger audience Pepe Jeans also advertises in leading English dailies across major cities.

All these aim at creating the visibility, top of the mind recall with the end consumers. These above the line activities are strongly backed by point of sales material, innovative window displays and larger than life visual images in the Pepe Jeans stores, reinforcing the communication received by the consumers through above the line initiatives. This also increases the consumer interaction with the brand and its product line.

VJ: Tell us about your expansion plans.

CS: We are definitely looking forward to having around 250 exclusive brand outlets by 2011. We also plan to set up stores in towns and cities with a population of above 3 lakh people. Currently, the brand has stores in 81 towns and cities and aims to double the number of cities and towns and to increase its geographical footprint within next three years.

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