Fossil India, a subsidiary of American luxury brand Fossil Inc, which recently opened its first single brand retail store after being cleared by the Foreign Investment Promotion Board last year, is ‘bullish on manufacturing’ in India.
Among the first four companies to be allowed to set up wholly-owned ventures, after the government allowed 100 per cent FDI in 2012, Fossil India plans to ramp up its manufacturing facility in Himachal Pradesh to produce at least five lakh watches by the end of the year (both for exports and domestic sales).
In an interview, Fossil India Managing Director Vasant Nangia said that with this, the company would ‘more than exceed’ the government’s 30 per cent local sourcing requirement for single brand FDI.
“We started out as a small set-up but now we’re pretty conscious that India represents an important manufacturing and sourcing opportunity for the country,” Mr. Nangia said, conceding that a part of this decision was driven by the fact that sourcing in other markets such as China was becoming more expensive.
While Fossil has only one manufacturing unit here, it has several — including fully-owned ones and joint ventures — units produce over 30 million watches a year. At present, the company is in the early stages of developing expertise here as very little of the high-end watches are made here. “We are working on the talent base here; while the technology skills exist, techniques, aesthetics, finishing and quality control need more attention as we ramp up. That’s where the challenge is,’’ he said.
Investment upMr. Nangia said the company would be investing more than Rs. 25 crore or $4.5 million for expansion in India in the coming year. Apart from the single brand retail store opened in Mumbai recently, plans are on to set up multi-brand retail franchise stores under the Watch Station International (WSI) brand (the first pilot store was opened ten days ago through a franchise at the New Delhi airport) across the country.
Fossil India’s multi-pronged retail strategy includes opening at least 25 fully-owned stores in the top malls in all major metros across India, expanding WSI through franchisees and ramping setting up franchise stores under the WSI brand and tapping into all existing distribution doors.
The focus remained on urban Tier-I, Tier-II to occupying a ‘market gap’ that existed in the ‘bridge to luxury’ segment, he said. The lower end was ‘in trouble’ as was evident in the results of the ‘big-boys’, he said, referring to sales of watches priced below Rs.2,000. This, he attributes, to an increased brand consciousness among consumers, and feels a sign of a maturing market.
