“A cold start is not possible without a strong local partner”- Managing Director, Scotch & Soda
The Dutch clothing brand Scotch & Soda is making an international advance. Their clothing is now sold in almost 90 countries, including India. The goal of Scotch & Soda was to open two new stores a year. The counter stands at eight after three years. “It’s going very fast,” says managing director Richelle Eijkens. “That’s because we’ve found a very reliable partner in Reliance. We couldn’t have wished for a better collaboration in India.”
It is not the first time that Richelle has worked with the retail giant Reliance. As International Franchise Director for Hunkemöller, she already sat down with the Indian company to talk about the entrance of the Dutch lingerie brand into the Indian market. But for Scotch & Soda, Richelle is now working intensively with Reliance and that’s going well. “It surprises me sometimes how controlled the management of our brand in India is, at first you would expect otherwise. All kinds of prejudices are still attached to emerging Asian countries. That it would be disadvantaged, that communication would be difficult, but nothing could be further from the truth. Reliance is very professional. We really are partners.”
How it was for Scotch & Soda to work with the retail giant of India
Reliance is India’s largest company and ranks 106th in the Fortune Global 500. Reliance was originally involved in the production of polyester, but now the multinational is moving in many areas. For example, it has a telecom branch and is one of India’s largest oil companies. Furthermore, it has been one of the major players in the Indian retail market since 2006. And in that market it is rapidly rolling out new concepts. These include, the new chain of department stores ‘The White Crow’ and the recently announced e-commerce platform, with which it is fighting Amazon.
“Their business model is to get good concepts from abroad and introduce them to the Indian market. They have a special subsidiary for that purpose. They are specifically looking for interesting, international brands and they also saw potential in Scotch & Soda”. According to Richelle, this is also one of the reasons why Scotch & Soda described India as ‘a crucial market’ in an interview with Forbes. “In Asia, India is our most important market, and that’s really due to the quality of our partner. We see the potential and it is being exploited. We also see that potential in Japan and China but our partners there are not yet fully exploiting it”.
“The price can’t go any further up, it can always go down”
But Reliance’s ambition has also resulted in challenges, says Richelle. “We are positioned higher in the market in India than in the rest of the world. Similar to a brand like Tommy Hilfiger. That’s mainly due to our higher production costs, but Reliance wanted to take that gamble with us anyway. Take the polo shirt as an example, which is much more popular in India. But the Indian man wants something more than a simple shirt. Our clothing has something extra, for example a different collar or it’s made of a more special fabric. That’s why Reliance decided: we’re going to try it on this higher level, the price can always go down”.
And that step has now been taken. After comparing, testing and analyzing, the conclusion is that with a lower price, sales start to rise visibly immediately. “One of the reasons is our production route. We partly produce in India, but those products are not specific to the Indian market. Everything first goes out of the country to our hub in Hong Kong and is then imported back into India. That results in high costs that other brands do not have. We are therefore re-examining our business model.”
Handing over strings
Meanwhile, Scotch & Soda continues to grow steadily in India. This year the eighth physical store will be opened. Further, Richelle expects to add three or four more in the coming years. “We are always very involved in setting up a new store from the Netherlands. This is because the experience of our brand in that store is extremely important. But in India we have made some exceptions. Reliance is very good at local sourcing, which is why almost all materials for the stores are produced locally”. According to Richelle, this was preceded by quite a process. “We want to control everything ourselves, they didn’t find that easy in the beginning. But now that we’ve met all the suppliers and looked at each sample, we can give them more freedom”.
Reliance gets that freedom in more areas like in marketing and online sales. “Normally we don’t give away e-commerce rights to partners. But, Reliance understands the market so much better than we do and also has a very good distribution network. In addition, their contacts are unrivalled. We hang out in the best shopping malls, are supported by important influencers and are featured in influential magazines. The amount of attention they have for us is special”.
Scotch $ Soda believes that the right local partners are crucial for a successful start in India
Having a good and reliable local partner is therefore the most important tip Richelle wants to give to companies that are starting out cold in India. “I have already had my first appointments made by a consultant who has put me at the table with the right people. The shop floor is still very hierarchically organised in India. Therefore, if you meet a manager who doesn’t have the authority to make a deal with you, you can have a nice conversation, but you won’t get any further”.
The fact that the same consultant was able to guide Richelle quickly through the city between appointments, knew where to eat and where it was best to stay, also made working a lot easier. “I’m always wrong about the amount of work I can do when I’m there. Everything just takes a lot more time. Besides, it’s always a question of whether they will come back to the appointments made. But that’s part of the culture, you don’t have to snoop about that.”