Big corporates need to retain core value of acquired designer brands to stimulate growth

16 May 2022, Mumbai:

Brand acquisition seems to be the flavor of the day for Aditya Birla and Reliance Group, two of India’s prominent business groups who have recently invested in designer brands like Manish Malhotra, House of Masaba, Tarun Tahiliani, Sabyasachi, and Anamika Khanna.

Both groups seem to be more inclined towards luxury brands, though they have also invested in a few premium ones, says an Inventiva report. And as per Mahesh Singh, Founder and Managing Director, Singhi Advisors these acquisitions will give Reliance Brands and Aditya Birla Fashion and Retail (ABFRL), a chance to expand their product lines while offering the designer brands an opportunity to open more stores, introduce new products etc.

Steady growth for fashion industry

Indian fashion industry has been growing at a steady rate despite a curb on weddings due to the pandemic. As per the market research company Euromonitor International, Indian fashion market is expected to grow at a CAGR of 15 per cent from 2021 and 2026. Both Reliance Brands and ABFRL have been trying to get a piece of this growth pie. For the last few years, they have strengthened their position through new acquisitions and partnerships.

For instance ABFRL invested in the House of Masaba to boost its beauty and personal products range. The acquisition helps the company acquire a well-known brand and its well-established consumer base. Through these acquisitions, both these groups plan to widen their price range to include consumers from all social and economic strata. For instance, ABFRL offers a mix of brands like Van Heusen, Allen Solly, Jaypore and Sabyasachi Couture for women.

Widen products and market reach

Such collaborations benefit designer brands by allowing them to sell and distribute products across the world through big companies. They help brands consolidate their market position and unlock some value. Meanwhile, conglomerates like ABFRL and Reliance Retail are able to offer more choices in clothes, points out Aditya Chaudhury, Partner, Argus Partners.

Investing corporate money into designer clothing industry also offers more expansion opportunities to designers. For instance, known for its bridal lehengas, Sabyasachi Couture launched its jewelry line in 2017. The designer brand also launched a fast fashion range in August 2021 in collaboration with H&M. Designers can also explore new markets by introducing an affordable clothing or jewelry range. This ensures their clothes are bought by more number people.

Build omnichannel networks

Brand acquisition by corporate houses also helps them build omnichannel networks and adopt a direct-to-consumer approach. For instance, the strategic purchases of Genesis Luxury and Brooke Brothers helps Reliance form partnerships with Burberry, Coach, Jimmy Choo, Diesel, Kate Spade, Michael Kors, Steve Madden, etc. However, corporate acquisitions aren’t limited to luxury brands alone as affordable brands like Clovia, was bought by Reliance for ten times its sales this year and Amante for the same amount in 2021. Similarly, ABFRL bought Phillipe, Van Heusen, Allen Solly, Peter England, Forever 21, etc.

Both groups prefer to buy brands rather than make them. To sustain their growth momentum, they need to widen their price range to serve a wide range of consumers. They also need to retain the core value of couture brands while growing them.

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