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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Speculations over the sale of two of Raymond’s most prized possessions, Park Avenue and ColorPlus are raising questions about the future of legacy brands in India. Legacy brands, especially those operating in the formal wear category, have been facing headwinds with ‘work from home’ culture during the pandemic. This has led to Raymond contemplating the sale of its two most coveted brands: Park Avenue, ColorPlus. The company is currently negotiating with Danish retail group Bestseller, for the sale of these brands. It has sought a valuation of over Rs 500 crore for each of them.

Growth amidst industry slowdown

However, Sunil Kataria, CEO-Lifestyle Business, refutes these rumors. Both Park Avenue and ColorPlus account for around 50 per cent of Raymond’s apparel business, he says. The company had already demerged the apparel business in September 2021 covering all its ‘power brands’ including Park Avenue, Raymond Ready to Wear, ColorPlus and Parx, Kataria adds.

One reason behind the demerger was the company’s aim to double apparel business revenues in the next three years. In FY 22 Q3, Raymond Apparels registered total business worth Rs 300 crore, even amidst lingering COVID-19 effects. The company now plans to expand its retail footprint for Park Avenue, ColorPlus and the newly-launched Ethnix brand. Its hopes, the upcoming wedding season and resurgence of travel in the next few months will drive growth.

Raymond currently has around 1,500 stores across 600 cities. Of these, around 300 are exclusive outlets for brands like Park Avenue, Parx and ColorPlus. Samit Sinha, Founder & Managing Director, Alchemist Brand Consulting adds, as a brand, Raymond continues to hold great aspirational value despite the presence of big international labels.

Pandemic threatens legacy brands in India

However, the speculation about Raymond’s sale of these brands highlights the current predicament of legacy brands in India. With the rise of ‘work from home,’ eclipsing professional lives, legacy brands, especially in the formal wear category, have been facing many challenges. Consumers shift to online shopping post pandemic and entry of international brands have been impacting the business of homegrown apparel companies, says Lloyd Mathias, Business Strategist.

Over the last three years, Raymond has increasingly penetrated Tier III and IV markets across India as it is facing several headwinds in big markets, adds Devangshu Dutta, CEO, Third Eyesight, a retail consultancy. However, brands have to remain satisfied with lower sales density in these smaller cities. They also have to run their business with great efficiency to make their expansion strategy successful, he adds.

Home textiles major Welspun India has forayed into the mattress category under its home linen brand Spaces.

As per a Daily Pioneer report, the company has launched 'SpacesMatchress' with a variety of offerings on the back of extensive market research as an extension of its home wellness offerings.

ManjariUpadhye, CEO, of Welspun India, Domestic Business, says, the company's deep understanding of stated and unstated consumer requirements helps it to innovate and offer the most relevant products and solutions to the country's diverse and fast-growing consumer base.

The brand offers customizable, orthopedic, firm and fab mattress ranges for different consumer preferences. These mattresses are available with the benefits of an in-built mattress protector, odor-free and anti-pilling, 12 years warranty, among others, the company said.

Welspun India’s move to enter the mattress category highlights the brand’s aggressive focus on the domestic market and its aim to capitalize on emerging opportunities in this high-potential segment with innovative offerings.

06 May 2022, Mumbai:

The uncontrolled rise in cotton prices for the last one year is compelling most fashion retailers like Shoppers Stop, Celio, and Arvind Fashions to increase apparel prices.

Despite efforts to be cost-efficient, retailers have not been able to absorb the entire surge in input costs, says Kulin Lalbhai, Director, Arvind Fashions and Executive Director, Arvind Limited.

Menswear Celio has revealed plans to increase the prices of the upcoming winter collection. As per Satyen Momaya, CEO prices are expected to go up around 6 percent.

Other apparel retailers too are following the same track of hiking prices by around 5-15 percent. Departmental-store chain Shoppers Stop pushed up prices by 10-12 percent and plans further hikes to control rising inputs costs, indicates Venu Nair, the Managing Director, and CEO.

Demand in the value segment gets affected

Cotton forms 50 percent of the materials used to make casual wear items like denim. Other clothing products such as T-shirts also contain 40-50 percent cotton. A surge in cotton prices affects the profit margins of all these products.

And as Nair points out, even though the price hike has not affected demand for new apparel in India, demand in the value segment has declined.

Price rise fuelled by a decline in end stocks

The rise in cotton prices, over the last year is attributed to tight global supplies and increasing demand in international markets. The hike has been a cause of concern for most fashion retailers in India Reaching its peak, cotton futures price on the Intercontinental Exchange (ICE) has surpassed $1.5 per pound, reveals Crisil data.

Average cotton prices in India have increased 45 percent Y-o-Y to reach Rs 8,220 per quintal compared to Rs 5,728 per quintal last year. Pushan Sharma, Director, CRISIL Research opines, that one of the main reasons for the increase in cotton prices is the estimated decline in end stock at both global and national levels.

As per the United States, Department of Agriculture (USDA) estimates, global end stocks will decline by around 7 percent in 2021-22. The Cotton Corporation of India estimates cotton end stock in India will fall 36 percent to 45.46 lakh bales in 2021-22.

In the 2021-22 season-spanning October-September, international cotton prices increased 150 cents per pound as against 85 cents per pound in the previous season.

The increase is attributed to declining in the output of key producers, including China and West Texas; supply-chain hurdles, and restrictions on China’s Xinjiang cotton by Western countries among others. v Sustained demand to boost prices further

The reopening of economies is sustaining cotton demand despite constrained supplies.

This is adding more pressure on cotton prices that have been rising uncontrollably since the last year, affirms Rajani Sinha, Chief Economist, CareEdge. While Indian apparel makers continue to battle high cotton prices, exporters plan to boost global cotton supplies.

This is likely to fuel further the price rise of the commodity.

To control the hike, the government is toying with the idea of banning cotton exports temporarily.

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The Indian textile and apparel market is on its road to recovery, says the Export Preparedness Index 2021 report by NITI Aayog and the Institute of Competitiveness. The textile sector has been able to maintain a trade surplus due to rising consumer demand and the government’s increased efforts to boost the sector, it adds.

Textile exports from India increased 53.86 per cent during April-November 2021. Growth was mainly driven increase in shipment of cotton fabrics, made-ups and readymade cotton garments. The government has also achieved 68 per cent of the annual target of $44 billion for textiles and apparel, including handicrafts, in 2021-22, the report adds.

The report states, India’s textile exports mainly suffer from intra- and inter-regional differences in export infrastructure; weak trade support and growth orientation across states; and lack of research and development infrastructure to promote complex and unique exports. Also, India fails to exploit the Lewis curve for low-skill manufacturing compared with more skill-intensive exports, it adds.

To exploit this opportunity, India must boost its manufacturing capacity, the report adds. A comprehensive analysis of India’s export achievements, the report can be used by states and union territories to benchmark their performance against their peers and analyse potential challenges to develop better policy mechanisms to foster export-led growth at the sub-national level.

There was a preference for bespoke or customized clothing in India long before ready-to-wear apparel made inroads in the domestic market. However, the entry and growth of international and domestic fashion brands in the 1990s gave rise to the ready-to-wear clothing culture in the country. Yet, there are many who prefer made-to-order clothes. They demand a better quality and fit in their garments over traditional ready to wear clothes that could often be ill-fitting. This is once again giving rise to the organized custom clothing sector in the country with a wave of new business erupting on high streets across metros.

Memorable shopping experiences for customers

Rather than just a product, these new companies focus on offering a memorable shopping experience. They offer a great alternative to ready-to-wear clothes through their adoption of a technology-focused lean methodology to test products, get user feedback and engage with influencers.

Rapid advancement of fashion technology is also enabling fashion firms to upgrade their supply chains, develop digital channels and increase revenues. The pandemic has compelled these companies to adopt change and technology innovations for more customer enhancement.

AR/VR and online marketplaces emerge

Many of these companies are exploring digitalization in the form of VR/AR configuration, 3D design and graphics, virtual fitting and trial rooms, digital Apparel, AI buyer prediction testing, etc. They are also employing sustainable materials. Others are developing a bespoke clothes online marketplace to help buyers select fabrics, accessories, and styles, as well as designers, tailors, and manufacturers.

Most of these platform use AI and data analytics to scan and analyze millions of data on different social media platforms. This helps fashion marketers estimate customer demand and trends accurately. With the help of data, companies can schedule their product releases. 3D software and apps enable customers try new clothes Buyers can also use the 3D design on the platform to take their photos and post them on the app. These photographs help buyers generate a 3D model to enable customers try on new clothes from their home. They can also use other apps including bespoke apparel design in 3D view, quick order tracking with ERP, confirming orders via WhatsApp using a 3D engine, and a virtual QR textile sample book, etc.

Another is uploading the photo of their preferred clothes from any source and identifying the most appropriate product from the brand’s website with the aid of visual AI, natural language processing, and tailored search engines.

Solutions for contact-free shopping

AR and VR systems can also serve customers for contact-free purchasing in retail stores. They can provide 3D e-commerce experience to help compare products from anywhere. Fashion startups across India are trying to build new technologies either internally or through collaborations. They aim to provide customers a lifetime shopping experience through technologies like 3D modeling and digital body measurement tools.

Some companies are expanding their collections to incorporate buyers’ traits and personal preferences and provide unrestricted customization.

New technologies to boost mass-customization

Despite the emergence of regional and internet players in India’s ready-to-wear apparel market, demand for customized clothing is set to grow. Introduction of new technologies is likely to encourage mass customization and personalized production. This will boost customized clothing trend which is set to growth at steady rate.

22 April 2022, Mumbai:

Quick adopter of new technologies, the fashion e-commerce industry reported 51 per cent order volume growth in FY21. As per a Unicommerce, e-commerce fashion report, many traditional offline retail companies built online presence during the year. They adopted new technologies and supply chain innovations to connect with customers across multiple touchpoints.

Currently, one of the most significant technological trends in the fashion market is: Artificial Intelligence. Providing a personalized experience to customers, the technology addresses customers’ individual needs. Its visual recognition feature predicts future fashion trends by decoding customer chats on social media, observing their previous purchase behavior, noting their time spent visiting brands’ websites, etc.

Addressing customer needs with chatbots

Another popular emerging trend in fashion e-commerce space is the adoption of chatbots. D2C brands use chatbots to increase their interactions with consumers. Chatbots help address customer queries and increase their engagement with the brand. Brands are also using social media platforms like Whatsapp, Instagram, and Facebook to increase interactions with consumers.

Exploring new avenues with D2C

Brands are also setting up more online stores. These stores give brands a complete access to customers’ data. Through this data, brands can plan their future growth strategies more effectively. The D2C technology also enables brands to explore new digital avenues like social commerce and mobile apps to re-establish connection with consumers.

Warehouses for efficient order processing

To enhance post-purchase delivery experience, brands are also setting up new warehouses. These warehouses help brands fulfill orders in real time, encouraging them to step up investments in order, inventory, warehouse and logistics management. They also facilitate a complete view of the available inventory across multiple warehouses, and enable brands to restructure order processing accordingly. The pandemic led to reinvention of many retail strategies. More brands are adopting omnichannel retail to ensure a constant shopping experience across offline and online platforms. The strategy also enables brands to clear inventory faster besides allowing marketplaces to ship orders directly to customers.

Fostering growth of new marketplaces

Traditionally, Myntra has been one of the most prominent players in India’s fashion e-commerce market. However, in recent years, Reliance backed Ajio and Tata-owned Tata Cliq also gained market share. Indian fashion e-commerce is big enough to allow multiple marketplaces to co-exist and grow their business simultaneously.

A frontrunner of new inventions, the Indian fashion industry has fostered the growth many successful online business. It will continue to dominate the e-commerce space in India with new technologies and product innovations.

India’s leading MMF manufacturing hub, Surat now aims to make a mark in garment manufacturing as well. The city currently manufactures around four crore metres of grey fabric annually. Of this, a small portion is used locally for manufacturing ethnic garments. The largest share is used to manufacture saris and the remaining is exported. Currently, Surat has around 1 lakh stitching machines. But, majority of these are used for stitching lace on saris, says Ashish Gujarati, President, Southern Gujarat Chamber of Commerce and Industry (SGCCI).

The city has around 200 medium and small size garment units. However, there are many new and emerging entrepreneurs, adds Gujarati. The Chamber is also exploring opportunities for garment parks in Surat and requesting the government to provide land. SGCCI also plans to participate in CMAI Fab Show in Mumbai next month to promote and explore opportunities in garment manufacturing in the city. It will organize workshops to create awareness about garment manufacturing at the event.

The surge in demand for fitness wear and sports equipment due to recurrent COVID outbreaks is boosting Puma’s revenues in India.

Last December, the brand’s revenues surpassed that of footwear brand Bata India. Sales surged ahead of sports retailer Decathlon and apparel brands Hennes & Maurtiz (H&M) to Rs 2,044 crore, as per the latest filings with the Registrar of Companies.

Puma also expanded its retail network, product portfolio and local supply chains last year. In all, it sold 1.2 lakh pairs of footwear and opened a new store every week to take the total outlet count to 411. Puma’s e-commerce sales too increased to 43 per cent of total sales from 25 per cent in 2019.

COVID disrupts production, supply chain

India is one of the largest markets for Puma Group however, the brand’s operations in the country were affected by the mandatory shutdown of factories in July-October due to a surge in COVID-19 cases. The surge in COVID cases also created a supply crunch for Puma as manufacturing hubs remained closed, fuel costs increased and laborers migrated from their workplaces. This further fuelled the company’s operating costs.

New partnerships to boost local sourcing

Puma has also been investing in local manufacturing that helped the brand increase its local sourcing to 40 per cent last year. It has built strong partnerships with Indian manufacturers to reduce dependence on global supply chains, says Abhishek Ganguly, Managing Direcfor, Puma India.

For footwear brands like Puma, Adidas and Nike, India is one of the fastest-growing and largest international markets. They have grown their business by partnering cricket and other sporting activities. However, many of these brands have also shifted focus to lifestyle and regular athletic wear.

Fashion demand from smaller cities to surge

Sports culture in India is growing faster compared to a few years ago. The country has a huge population below 25 years and it is likely to see an increase in demand for fashion products, especially from smaller cities, opines Ganguly.

Interest in traditional sports like Kabaddi, soccer, volleyball, hockey and badminton has also been rising.

The country now hosts professional leagues in most of these sporting disciplines. It has also partnered with cricketers KL Rahul and Virat Kohli besides making investments in Indian hockey, athletics, and soccer.

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