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M&S India to increase local sourcing

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Marks and Spencer Reliance India (M&S India) has said it will increase its sourcing of local merchandise to 70 per cent in the next two years for its Indian operations. It is also extending its business to Tier 2 cities to meet buoyant demand.

M&S India is a 51:49 per cent joint venture between the Mukesh Ambani-run Reliance Retail and the UK-based retailer Marks and Spencer. It was set up in April 2008. The joint venture sells products such as women’s, men’s and children’s clothing as well as beauty and homeware products.

“We have been here as a brand for the last ten years. Prices were prohibitive then because of high import dependence. But as we started sourcing locally, we have gained consumers. Today, 52 per cent of our stock is locally sourced and we intend to take this to 70 per cent by next two years,” Mr Martin Jones, CEO, Marks and Spencer Reliance India told Business Line.

M&S entered India in 2001 as a premium brand in a franchisee agreement with Planet Retail Holdings. During that period, the merchandise on offer was high-end as all the products were imported and the company had to pay over 40 per cent import duty.

The company gradually reduced its dependence on imports and began to source from the domestic market to save on import costs. It has also been able to bring down the average prices of its merchandise. At present, the price points available in M&S stores are in the Rs 300–4,000 range.

Relevant merchandise
Mr Jones said the company was also looking to make merchandise more relevant for the Indian market and consumers. “India is a high-priority market for us. We are competitively priced and are looking to scale up our presence significantly in the coming years,” he said.

The market for apparel in India is expected to grow to $25 billion this year on increased disposable income and the rise of organised retail, according to a report by McKinsey & Company.

Marks and Spencer India has 20 stores in major metros. “We plan to add nine more stores and are adopting a cluster approach for our expansion. Also, we are setting shops in towns like Amritsar and Ludhiana where our brand recall is extremely high,” Mr Jones said, without divulging details of the investment in the proposed expansion.

The company said operating on a franchise model had its limitations. However, the joint venture with Reliance has given it a leg up, especially in navigating the right retail space and ensuring smooth supply chain.

Source : The Hindu Business Line

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