A very commonly used saying ‘The world is round’ has proved itself true again, as three ladies who were together at Singh Exports, the earliest buying office of C&A as young entrants to the industry way back in the 1980’s, are together again at Solitaire Plaza in Gurgaon, but as Country Heads of three relatively new Buying operations in India. Devinder Singh, GM-India Operation, Charles Vögele; Leela Kanuga, Country Manager, Contempo (India) Pvt. Ltd.; and Ritu Thareja, Country Manager, Sun Fortune (NKD, Germany) are happy to be working in the same building, which also houses other buying operations like – Kappahl, Auchan and Times International. The low rise four-storey building, bang opposite Guru Dronacharya Metro Station, is just perfect for a buying office with a very quiet and serene atmosphere and good infrastructure. “All we need now is a common room serving coffee to reunite and exchange ideas,” says Devinder.
The AO Team thoroughly enjoyed interacting with these three ladies who have been associated with the industry on the buying side for such a long time… the past, the present and the future formed an interesting backdrop to the discussions. “There was a time when buying operations were basically involved in ‘policing’ orders given by the buyers to ensure that the quality was maintained as per requirement and that the order was shipped on time,” recalls Leela. “This policing role was because the buyers did not trust the exporters to deliver as promised, but now with the confidence level of the buyer increasing on the performance of the exporter, our role is more of a partner to develop business and also support the vendors in creating collections that appeal to the international buyer so as to increase sourcing opportunities,” adds Devinder.
Recalling an incident, which happened when she was working at Li & Fung, Leela felt that the efforts of buying operations have substantially increased the ‘offerings’ of the country. “In 96-97, when I was sourcing for Fruit-of-the-Loom, they wanted to buy undergarments for around 60-70 cents and never expected that India was capable of offering the same, we took them to Tirupur and there they not only found what they wanted, but were so impressed that they eventually bought around 10 million pieces,” reminisces Leela. Undergarments is a full year business and not much product development is required, it is mostly the colour which changes, so the business added a new dimension to the India business and today undergarments is one of the key businesses out of Tirupur with all leading brands from Tommy Hilfiger to Hanes manufacturing from the region.
Another change that all three were unanimous on was the growing professionalism in the industry, which had reduced the margin of error and given India a much more respectful position in the buying strategy of many leading international retailers and brands. “Today, exporters are investing back into the factories and those joining the industry are coming from professional colleges; in our times we joined a job, today youngsters are looking for a career,” says Leela.
“The approach to business is more upfront than reactionary and buyers now realize the potential of the country as a reliable sourcing centre, it is up to us as a country to build on it,” adds Ritu. Yet she warns that there is no compromise and even the smallest of mistakes can result in loss of business. “Though NKD opened its buying office Sun Fortune, which is the independent buying arm of NKD nearly three years ago in Bangalore, the garment business could not be developed much because the company could not put together a team that could deliver products at a price that was a must buy,” informs Ritu. Currently, the garment business, which is a small portion of the total sourcing, is mostly knitwear from Tirupur. The newly opened office in Gurgaon with a completely new team is an attempt to take the business from the current level of Euro 15 million of which a majority is home textiles, basically bed sets to around Euro 25 million in two years time with focus on ‘affordable fashion’.
While Leela and Devinder feel that with growing professionalism there has been an increase in the transparency, with both buyers and exporters more open to discussions and sharing of experiences, Ritu is more guarded in her opinion. “Though on the surface there is a transparency in operations, but if we scratch the veneer the industry is still largely ‘closed’ and only among a few players who have risen to a level where competition is ‘healthy’ and there exists true transparency. To say the industry as a whole is transparent would be misleading,” she reasons.
Yet, the industry has certainly matured and exporters are no longer ‘spying’ on each other’s buyers. “I remember when I started going to Tirupur and Vellan was the only decent place to stay, I would be awakened at any time of the night by perspective vendors begging me to meet them before placing an order. On enquiry I was told that these exporters were bribing the staff and were informed immediately when any buyer was checking in with details of the room number,” recalls Devinder. Leela also agrees that with improving tools of communication and stronger relations between the buyers and vendors, transparency has certainly come in and exporters are now surer about their capabilities.
Of course, India’s strength in product development is something that all three stressed on. “Though NKD is a discounter in Germany, where price is very critical, yet fashion at Euro3-4, is what they are looking for. But then again the volumes they give compensates for the tight prices,” avers Ritu. She claims that the capacities are big enough to feed a factory around the year with 20,000 pieces per style in three colours a norm. Charles Vögele, is known for its basic product range of fashion that has already received a thumps up from the customers, and which offers an excellent price-performance-ratio. More than half of the turnover is generated with women’s clothing.
Indeed, offering customers the ‘right’ product is the mantra for success for all buying offices. “The competition is fierce and it is important to work on our strengths to get that extra mileage as not only exporters, but buying offices are also competing within the company to increase sourcing from their region,” argues Leela. Working for three decades with European customers from C&A to Karstadt Quelle to Charles Vögele, Devinder felt that the importance of product development cannot be undermined. “One of the best things about working for a company like Karstadt for almost two decades was the involvement that their design and buying teams had in developing a new product range from local resources,” she says. In fact, though most companies still give the final tech-pack for manufacturing, buying offices are increasing, offering local capabilities and inputs in union with export houses for consideration as a value-added service.
Yet, they all agree that the one area, despite all the changes, which still plagues the industry, is timely delivery. “I feel the industry has done wonders in changing their image and opportunities of increasing business is definitely huge, but more effort is required to plan the operations better to do away with the many excuses that exporters make for delayed shipments,” says Devinder. Adding, “I remember when I was working for C&A, the buyer asked me very candidly… How is it that every time an exporter wants an extension there is a new reason?… That incident has remained etched in my mind and whatever the circumstance we try and pull through on time.” In fact, Leela and Ritu both point out that the track record of an exporter on deliveries is an important criterion when selecting a vendor.
As ‘business developers’ for the industry all three are looking to increase sourcing over the next few years. “No doubt the business environment is difficult, but we are only a year old and there is so much for us to explore, it helps that as a company we have only started the journey and with the wide product range that we deal in the potential for growth is immense,” says Leela. With 16 buying offices around the world Hong Kong based Contempo is providing services to a wide range of customers including retail specialty stores, catalog houses, TV direct sales and importers both in the US and Europe. Some of the customers include T.J. Maxx, Marshalls, QVC, Dress Barn, PPR, Jones Apparel Group, One Girl Who, Hampshire, Kate Spade to name a few.
Explaining the choice of Delhi as the new base, Ritu says, “The location of the city is strategic as all our major sourcing destinations are nearby and we also want to develop our woven fashion business, which is Delhi’s Strength.” The company is sourcing shoes from Agra, home textiles from Ahmedabad and Panipat, and Brassware from Muradabad. “As a company NKD with 1800 stores is sourcing a very wide range of products. Also the company is among the few in Germany which is seeing consistent growth,” informs Ritu. In fact, over the last six months the company has opened 200 new stores and the vision is to have around 4000 stores in Europe by 2018. To support buying operations in a more dedicated way, the NKD subsidiary Sun Fortune was created in 2010 in Shanghai.
This part of the world is no doubt the garment factory of the world and for Switzerland based Charles Vögele within the Group’s vertically organized, global procurement strategy around 90% of its stock is manufactured in South East Asia and only 10% in Europe. The purchasing operation is centralized at head office in Pfaeffikon, feeding more than 850 stores in 9 countries with own procurement offices in China, Hong Kong, India and Bangladesh. Local procurement activities were integrated into the Group’s organization between 2006 and 2009, which created a significant competitive advantage for Charles Vögele as a vertically integrated company, giving it control of an additional link in the value chain making processes more efficient and improves quality control at the manufacturers. Despite challenging conditions on the procurement markets, the system means that security of supply and cost efficiency can be maintained. “It has been two-and-a-half years since we started the India sourcing office and over the first two years we saw significant gains, but with the general market conditions down we are more cautious this year, and have been asked to cut down cost of operations, though Spring/Summer 2013 is projected as a big season” says Devinder.
It has been a very long and fruitful journey for all three and looking back the three of them have no regrets. “The industry is in my blood and has become an important part of my identity, in fact, at the time of my second child I was taken directly from office for delivery,” says Devinder. For Leela the most rewarding part has been the opportunity to build teams and see people grow. “It is very satisfying to see people who worked under you now leading operations, when the career building was happening, we never realized it but now when these youngsters meet us with such respect, it is very humbling,” she says. The ultimate compliment according to Ritu come from a buyer a few years ago, “One of my customers from Finland after working with us for some time said, “Now I know I can give you an order and go to sleep”, this was like a life-time achievement award,” she says.
Indeed, with women like these three committed to give retailers only the best of India… exporters can only support and ensure that all buyers think of India as a reliable sourcing destination with little cause for worry…
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