Hidesign: Building India's First Global Fashion Brand

Abstract:

Hidesign, founded by Dilip Kapur (Kapur) in 1978, was a company manufacturing and marketing leather produc handbags, travel bags, wallets, and small accessories like coin purses, key chains, and passport cases.Thad four m company prided itself on its eco-friendly design and manufacturing process. The company, by 2011, was worth o distribution network of over 2000 stores in over 23 countries like Australia, Austria, Belgium, China, Germany, I Sri Lanka, Oman, Nepal, Malaysia, the UK, the US, and Vietnam. To expand globally, Hidesign chose distributo Kapur also brought world renowned designers like Armani designer Alberto Ciaschini to keep the company's designs fresh and appealing. Apart from following these strategies, Kapur, to increase the reach of his product, established tie-ups with Louis Vuitton, Italian brand Braccialini, and Future Group of India. However, Kapur contended that though Hidesign was present in major international markets, it was still not recognized as a global brand. The challenge before him was how to make Hidesign a truly global brand. This case is meant for MBA students as a part of the International Management/ Strategy curriculum. It can also be used in an International Marketing curriculum.

Issues:
Understand the issues and challenges faced by an Indian company in managing its business internationally. Explore strategies that Hidesign could adopt in order to realize the synergy between countries and become a truly global brand. Every country is an individual case. We sell 8000 bags per month in the United Kingdom, but in Paris nobody knows us. It is not easy for brands to cross over cultural lines. If you are successful in Australia, that doesn't mean you'll be successful in Indonesia. Right now I don't know how many countries we will have to be in before we start being recognized as an international brand. It will be interesting to see when we start realizing synergy between countries." -Dilip Kapur, Founder and President, Hidesign. In 1978, when Dilip Kapur (Kapur), founder and president of Hidesign, started making leather goods as a hobby, little did he dream that he was taking the first step toward building a company that would go on to become one of the first brands from India to succeed in the global fashion marketplace. That Hidesign managed to develop a distinct brand image and establish a global presence was in large part due to the quality of the products made and the effort that Kapur took to formulate strategies and partnerships. The company consistently emphasised being eco-friendly and used the centuries-old skill of tanning with natural seeds and barks. It carved a niche for itself as an eco-friendly leather goods brand and impressed customers with the beauty of its handcrafted products. Hidesign, as a part of its global growth strategy, established a presence in more than 23 countries including Australia, Austria, Belgium, China, Germany, Ireland, Norway, Russia, South Africa, Sri

Lanka, Oman, Nepal, Malaysia, the UK, the US and Vietnam, and was looking at expanding into some more neighboring and European countries, either through stand-alone stores or through a counter space in airports. With the companys global expansion picking up, in 2011, Kapur wondered how best to move forward to build a truly global brand with a global reach.

Industry Overview
The Indian leather industry, one of the oldest manufacturing industries, held a prominent place in the country's economy. It had a high export earning potential and was considered among the top foreign exchange earners for the country. It contributed to the development of the country both in terms of production and creating employment. The industry employed around 2.5 million people and had an annual production value of over US$ 7 billion. The value of its exports during 2008-2009 was US$3.59 billion, which accounted for a share of about 3% in the global leather trade - the US, Germany, the UK, and Spain being its important markets. The leather industry in India dates back to the prehistoric ages (around 3000 B.C). However, modern production was introduced to India by the English and the French in 1857. Traditionally, the industry produced hides and skins with secondary leather industries like shoes, garments, bags, gloves, wallets, belts, etc. However, over the years, the country underwent a sea change, going from being a mere exporter of raw material in the early 1960s and 1970s to an exporter of value-added finished leather products by 2011. Its success was due to the various policy initiatives taken by the Indian Government. In a bid to help the domestic industry, India prohibited the export of raw or part processed hides and skins, which helped the industry obtain a strong position. The Indian leather industry was quite large. With the country being home to nearly one-fourth of the world's cattle population, the basic raw material was available in plenty. Of the 185 million hides and skins processed annually, 85% was sourced domestically - with cows accounting for 28 million pieces (from fallen carcasses and illegal slaughter houses), buffalo 28 million, goat 82 million, and sheep 30 million (from organized and mechanized slaughter houses). However, the import of raw hides, skins, and wet-blue was growing continuously. In addition to the hides and skins, portions of finishing and tanning materials, dyes, chemicals, and machinery were also imported. The leather industry in India was categorized into two - organized and unorganized. The unorganized sector generated around 75% of the leather output - through the small, cottage, and artisan sectors. The organized sector constituted the modern large scale tanneries, which produced vegetable as well as chrome-tanned leather; small tanneries, on the other hand, produced only vegetable tanned leather and they were spread across the country

About Hidesign
Hidesign, founded by Kapur, manufactured and marketed leather products such as briefcases, computer bags, handbags, travel bags, wallets, and small accessories like coin purses, key chains, and passport cases. As of 2011, it had four manufacturing facilities, one at Baddi in Himachal Pradesh, two in Puducherry, and one tannery in Chennai in Tamil Nadu. The company laid emphasis on product design and the manufacturing process, which was done using genuine leather and traditional processing like vegetable tanning and handcrafting. Kapur was born in New Delhi in 1948. But at the age of six he moved to Puducherry (previously Pondicherry), a former French colony on Indias southeast coast.

Global Expansion
Hidesign had grown from a mere investment of Rs. 25,000 to a business worth over Rs 1 billion in 2011, with a distribution network of over 2,000 stores in over 23 countries. Many celebrities, executives, models, and big names like Nelson Mandela, Steven Spielberg, and Indira Gandhi were among the ones who loved the stuff Kapur designed. Hidesign, based on the values Kapur believed in, had come a long way. Hidesign valued natural beauty. The leathers used were full grained and vegetable-tanned using natural seeds and barks, which enhanced the intrinsic characteristics like strength and durability.

Hidesign Customers
Initially, Hidesign was a product out of the mainstream and was featured in stores that had built a cult following within their geographies. Being an Indian brand was also a disadvantage where the growth of the brand was concerned, as distributors and retailers were reluctant to place it in their stores. So, it had to target stores which emphasized the fashion aspect more. However, all this changed when a Hidesign bag won the 'Accessory of the Year' award from a British magazine, Accessory Magazine, in 1992. Princess Diana handed over the award.

Promoting the Brand

According to Kapur, each country was a separate exercise in brand building. As the company sold mostly through distributors in international markets, brand building activities were few. However, the company also invested in advertising to enhance its brand image. Hidesign products began featuring in higher-end print media and on television. The company also generated extensive publicity through eight fashion shows it sponsored each year. Hidesign took up advertising and extensive public relations efforts, which drove traffic to its stores. For instance, while opening its first exclusive store in Atlanta, USA, in September 2002, it unveiled a new two-part ad campaign focused on giving the brand a 'cool' image.

Strategic Partnerships
In addition to the classic collection of bags, Hidesign added its seasonal collection of bags twice every year. For the purpose, Hidesign had setup three multi-cultural design teams based in Milan, London, and Puducherry through strategic partnerships with renowned fashion designers to keep its designs fresh and current. In 2001, Hidesign forged a strategic alliance with Chennai-based Qwiky's Coffee Pub to sell its merchandise at Qwiky's outlets across the country. In turn, Qwiky's set up coffee islands or kiosks at select Hidesign stores throughout India. The idea behind this give and take relationship between the two was to tap into the aspirations of the growing youth segment

Maintaining the Focus

At one point when Kapur's hobby had become a business, he had come close to giving it up. But what kept Kapur going and his excitement alive were the customers' likes and dislikes that threw challenges at him and his creativity. "I am very hands-on with my business, even now. I have always been told that's wrong. But I got a big boost when LVMH (the French luxury brand Louis Vuitton)

invested in us and I looked at its president Yves Carcelle. He is worse than me. He knows every single manager in his 400 shops around the world. He looks through every product. That's when I realized my model is not completely out of line. I work closely with our designers in Milan. I have to finally okay everything and the general direction of the range has to come from me

Product Portfolio Expansion

Expanding Hidesign's portfolio, in 2004 and 2005, Kapur and his German-born wife Jacqueline opened two boutique hotels in Puducherry. The concept of hotels carried the same aura of Hidesign, as Kapur said, "My first hotel, The Duplex, was the result of my desire to conserve my heritage. It was our house in Pondicherry where we had started Hidesign. Once we moved to Auroville, it was lying vacant and we didn't know what to do with it. So a group of us worked on it together, in an attempt to showcase what was best in Pondicherry. We used the woodwork from a house that had been destroyed by a political bigwig and brought it to The Duplex. We added modern design elements.

Challenges Ahead
According to McKinsey, India's consumer market was expected to grow five-fold to US$1.5 trillion by 2025, with a boost in the personal incomes of the country's youth. The boom in the retail industry had increased the visibility for lifestyle products and growing consumer awareness had developed an appreciation for what accessories could do to their looks, raising the demand for fashion products. Of the Rs 1.1 billion turnover of Hidesign, international markets contributed about 40% and though the Indian market was targeted by the company much later, it contributed 60% of the revenue.
Questions:

Q1. Discuss the conclusion of this case study. Q2. Discuss the issues and challenges faced by an Indian company in building a global brand. Q3.Explain Hidesign's global growth strategies.