(Source: Inside Retail Asia | 16 February 2017)
Global brands like Gap, The Body Shop and Zara are slashing Indian retail prices to stay competitive in the heavily price-sensitive market.
UK cosmetic brand The Body Shop slashed prices across categories in India by 20 to 30 per cent last week, and US fashion brand Gap is looking to have up to 40 per cent of its products made locally, which should allow prices to drop by 10 to 15 per cent.
“The process has started,” says CEO J Suresh of Gap’s India franchisee Arvind Lifestyle Brands. The Indian-made items will be introduced next year.
The Body Shop India COO Shriti Malhotra says its price cuts will make its products more accessible.
Spanish fast-fashion brand Zara is also looking at slashing its prices to bring them closer to Swedish rival H&M, says the Economic Times.
It quotes experts as saying price cutting is one of the most effective ways to boost sales and market share in India, particularly in highly competitive and fast-growing segments.
“Most brands strategically lower prices for the value-conscious Indian consumer,” says CEO Devangshu Dutta of retail consultancy firm Third Eyesight.
Inditex-owned fashion brand Zara reduced prices by up 15 per cent when H&M entered the Indian market in October 2015 with its global strategy of aggressive pricing. The move helped Zara record 17 per cent sales growth last year.
When Arvind Lifestyle Brands took over the business of beauty and wellness retailer Sephora from former franchisee DLF Brands in September 2015, its first move was price correction. “We looked at pricing in Dubai and Singapore and kept it in the band of 5 to 10 per cent lower than that,” says Sephora India CEO Vivek Bali.