The premium international denim brands that entered India with hopes of cashing-in on increasing

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luxury spends in the country have been unable to find a foothold in the domestic market. While some international brands are limiting their presence, others are on their way out. In addition, international denim brands such as Diesel are delaying their entry into the market and no new brands are exploring an entry into the Indian market this year.

According to industry observers, American designer brand Calvin Klein jeans, which entered India through the Murjani Group in 2006, has frozen its future expansion plans. The brand had plans to open 30 stores inclusive of shop-in-shops by the end of 2009, but it has only 17 shop-in-shops till now. An email questionnaire to Calvin Klein didn’t went unanswered.

Similarly, premium Italian denim brand GAS is shutting down its standalone stores across metros and is likely to exit the market soon.

Another Italian brand Replay that had entered India in 2008 through Future Group’s Pantaloon Retail exited the joint venture (JV) after a short stint. An official with Future Group, who did not wish to be identified, said, “Luxury items took a beating during the downturn and Replay entered India when the slowdown set in. Therefore, they couldn’t establish their base.”

High price points due to import duties and skyrocketing retail rentals in premium locations, which were not supported by adequate sales, are some of the many challenges these brands face. Ashish Dhir, associate vice-president of Technopak Advisors, said, “Only those international brands that source garments from India for their local stores are able to succeed. High import duties, which range between 25-30 per cent, increases the price of the merchandise besides leading to a high turnaround or lead time, which consequently results in high inventory cost. So the entire cost of operations for these international brands becomes unsustainable.”

The total denim market in India is estimated at 100 million units per year. Out of this total market size, the branded denim market is only about 10 million units, comprising brands such as Levi’s, Lee, Wrangler, Pepe Jeans, Spykar and Flying Machine, in addition to the international denim brands.