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Reliance Brands dominates the luxury business in India. How did it get almost every well-known brand in its kitty and what’s the endgame?
By: Krishna Gopalan
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A couple of years ago, Darshan Mehta saw a young man, perhaps in his late-20s, wearing a pair of red trousers. It was at an airport and he remembers the attention the red trousers drew. “If he had done that in Italy, it would have been quite normal. But this was India,” he says with a laugh.

Today, says Mehta, Managing Director and CEO, Reliance Brands Limited (RBL), the level of experimentation with fashion in India is a revelation. He should know that better than most given that he heads RBL’s portfolio of 69 luxury brands. They include the likes of Armani Exchange, Brooks Brothers, Canali, Diesel, Ermenegildo Zegna, Giorgio Armani, Hugo Boss, Michael Kors, Paul Smith, Steve Madden, and Tiffany. Bet you didn’t know RBL brought all of these to India! This ensemble of brands is spread across 595 stores as well as 744 shop-in-shops and is the lynchpin of RBL’s fashion empire of Rs 2,436 crore in FY21 (vs pre-Covid-19 sales of Rs 3,562 crore in FY20).

Most recently, Mukesh Ambani’s Reliance Industries Limited (of which RBL is a part) unveiled Jio World Drive mall in Mumbai’s Bandra Kurla Complex (BKC) area. It will house 72 prominent international and Indian brands apart from culinary outlets and also a drive-in theatre. The objective is to create a high-street experience.

Mehta says RBL aims for a share, and a hefty one at that, of Indians’ discretionary spend. But not of every wallet, nor all indulgences. “We were clear that our play was only in products and not services, which meant spas and leisure were out. Our core audience was the top 10 million customers in India. It was a laser-sharp approach,” he says. In that regard, Pushpa Bector, Executive Director, DLF Retail, credits RBL with assembling a stellar bouquet of brands with universal appeal. Or at least as universal as it can get in luxury. “Be it accessories, womenswear or menswear, they have the best brands. They have been judicious with the spectrum of brands and have uniquely curated them. That is what has been most interesting,” she says.

There is competition—in the mix is Aditya Birla Fashion and Retail Limited—but Bector says RBL’s uniqueness is its ability to cater to the discerning consumer across categories. That gives it a vantage point in a segment whose growth is outpacing the broader market. “If retail grows at 35 per cent each year, the corresponding number for luxury will be 55-60 per cent. While one can say the base is low, the growth has been consistent,” says Susil S. Dungarwal, Promoter and Chief Mall Mechanic, Beyond Squarefeet, a mall advisory and mall management company. Luxury, as a category, is uniquely placed simply because it is recession-proof, he adds. While the pandemic slowed down luxury consumption, it was only because supply was restricted. Demand is bursting at the seams. “Anyone in the business will tell you about the long queues at stores,” points out Dungarwal.

The catalyst for this demand is a significant mindset shift. Savings are no longer converted into gold, Dungarwal points out. “You just need to look around to understand that savings are now being spent on luxury. In many ways, it marks the evolution of a new consumer class,” he says. “To be seen with one Louis Vuitton bag is not it. It is about having several of them or an entire wardrobe of luxury brands. This, straight away, means luxury will be restricted to a few people or rather the chosen ones.”

They [RBL] realised the merit in creating different formats and, with luxury and bridge- to-luxury, today cater to a large base of consumers

Rashmi Sen

Chief Operating Officer, The Phoenix Mills

That equates to the top 10 million customers in India for Mehta. At this point though, it must be said that he is not comfortable with associating the word ‘luxury’ with RBL’s brands. “It gets associated with excesses. We would rather choose to go with the unhurried experience of shopping or quite simply what money can’t buy.”

Mehta’s sharp finance mind comes to the fore many times during the conversation. The trained chartered and cost accountant spent time in advertising (the legendary Ravi Gupta of Trikaya Grey was his boss) and he built his reputation over many years at Sanjay Lalbhai’s Arvind Limited. His left brain approach, Mehta says, comes from the accountant and the right brain tilts towards fashion. He helped set up Reliance Brands Limited in 2007 and, over the years, guided its evolution into India’s premier destination for fashion or, dare we say, luxury brands.

“Strategically, think of us as a fund,” Mehta says, quite succinctly, of RBL. “We are not compulsive operators. In fact, we have just been effective board members in a few cases,” he emphasises. It’s the same modus operandi that RBL’s parent has used to good effect, not just to build a portfolio but also shareholder value. Mehta comes from the same school of thought. “The parent has an unparalleled record when it comes to return on capital employed. With the fund approach, RBL must do exactly that,” he says. This business, he continues, is not about getting overly excited about some brand, but about being profitable. At an EBITDA (earnings before interest, tax, depreciation and amortisation) level, RBL has walked the talk. Its EBITDA jumped from Rs 23 crore in FY18 to Rs 417 crore in FY20, before the Covid-19 impact lowered it to Rs 337 crore in FY21.

Their credo is to be flexible. Depending on the brand and its potential, RBL has played a multitude of roles. It has been a licensor, private equity investor, master franchisee, distributor and joint venture partner. “We will be agnostic towards any model. As a fund manager, I have to create value. Everything we do has to go through a lens of value creation,” Mehta categorically states.

Choosing the right brand to partner with sounds like child’s play when Mehta describes it. But that’s 14 years of experience with RBL talking, as is evident in the unhurried tone. “It is critical for the brand to have some ready cache of customers. That is the starting point for us, followed by the brand being financially robust,” he explains. A brand could very likely do well in India but that scarcely matters if the parent’s financials are in poor health. Mehta recalls the time when marquee brands BCBG and Kenneth Cole went bankrupt. RBL had an understanding with both at the time which put it in a spot of bother. Mehta learnt from that experience and has since scrutinised every potential relationship with an even sharper vision.

They have been judicious with the spectrum of brands and have uniquely curated them. That is what has been most interesting

Pushpa Bector

Executive Director, DLF Retail

That reaped rewards over the years. Bector, who hosts RBL’s brands at her luxury malls, thinks the choice of brands has been impressive. “The decisions are taken with a long-term approach. They have gone about it with a lot of financial prudence,” she says.

Mehta’s approach of a long-term vision when conducting business is non-negotiable. The business equivalent of “try now, buy later” is not his style. “To us, a solid runway to build a brand is needed to enhance shareholder value. For that to fructify, it has to be at least a 20-year association,” he says. And, obviously, every deal has to be commercially viable. The accountant in him comes to the fore as he explains. A 20 per cent royalty (the industry average for large players is in the low single-digits range) “makes no sense and any deal should leave money on the table”.

Every potential deal is put through a rigorous financial sieve and only a handful filter through. The conversion rate is less than 1 per cent, says Mehta. “We listen to everyone. There are some opportunities in segments such as kitchen, Indian designers, beauty and F&B,” he adds, without giving anything away. In essence, RBL, he says, is a fund placing strategic bets, to make a play for a wallet share of the top 10 million, and being long-term greedy.

RBL’s growth is interesting not just because of the company’s financial prudence but often just because of timing. Though it has a roster of an impressive array of brands accumulated organically, the drama lies in the story behind the buyouts of various companies. At the core, it shows RBL’s ability to be patient and adroitly pick its moment.

Two examples spring to Mehta’s mind. The first is the acquisition of luxury retailer Genesis Colors in 2019 at the third time of asking. Their first overture was too early in RBL’s opinion and in the second instance, the value did not make sense. “It was post demonetisation [in 2016] that we spoke again,” he recalls. When a deal was finally struck, it was a step-by-step approach. US-French private equity fund L Catterton was the first to sell its 40 per cent holding in Genesis, which distributes brands such as Jimmy Choo and Armani. Later, other shareholders were bought out.

We will be agnostic towards any model. As a fund manager, I have to create value. Everything we do has to go through a lens of value creation

Darshan Mehta

Managing Director and CEO, Reliance Brands Limited

Similarly, RBL’s talks with Hamleys went back and forth before a deal was struck. During that time, the toy retailer’s ownership changed twice—initially to a French company and then to a Chinese one—before RBL stepped in. The company, which already held the Indian franchise for Hamleys, inked the deal for Rs 620 crore in mid-2019. “Both the pricing and timing were right,” says Mehta.

RBL also recently picked up a 52% stake in Ritika Private Limited, the company that owns the Ritu Kumar set of brands. This comprises four fashion brand portfolios and 151 points of sale globally. The deal saw private equity fund Everstone selling its 35% stake, marking its complete exit from Ritika Private Limited. 

Having been in the luxury business for over a decade means RBL has picked up invaluable consumer insights. The company went through its learning curve and displayed a lot of patience, says Rashmi Sen, Chief Operating Officer, The Phoenix Mills. “They realised the merit in creating different formats and, with luxury and bridge-to-luxury, today cater to a large base of consumers,” she says. Sen’s company is a key player in the mall business and is known for the Phoenix Palladium in Mumbai.

RBL, Sen says, puts in a lot of effort to ensure “there is trained staff that speaks not just English but the local language as well. That’s apart from having a sound understanding of what is being sold.” And of its clientele. You will never hear “May I help you?” at any RBL store, Mehta promises.

Highlighting their insight on consumer preferences, Sen says RBL was well-prepared once the pandemic restrictions were eased. “All their brands had fresh merchandise for the new season. That was a clear indication of not just understanding the mind of the consumer but the result of a robust supply chain,” she says.

If retail grows at 35 per cent each year, the corresponding number for luxury will be 55-60 per cent. While one can say the base is low, the growth has been consistent

Susil S. Dungarwal

Promoter and Chief Mall Mechanic, Beyond Squarefeet

Success in luxury, the way Sen sees it, needs scale and variety. “Luxury can’t be viewed in isolation; it has to be compelling. If you are a part of a larger destination offering F&B and fashion, the ability to succeed is higher.”

But to succeed, says Mehta, every new brand brought into the fold must be nurtured. It is this brand building process that Sen alludes to. “Sure, they had the well-known names such as Diesel or Burberry but it took time to build the other ones,” she says. The example she brings up is of Scotch & Soda, an Amsterdam-based brand that RBL brought in 2016. She says the brand was not as famous as others but RBL spent time building it. “They invest in capex and the store experience. There is no compromising on both. And with the right brand mix, it only strengthens your business,” she adds.

That’s what convinced Superdry. The British fashion clothing brand joined hands with RBL in 2012 and its management is quite bullish about the potential in India. Kristoff Risse, Superdry’s Global Wholesale Director, was impressed by India’s sheer size and scale, but excited about the population’s appetite for international brands. “We need to be in India but it is a continent. To expand our store network, the role of a strong partner is critical,” he says. RBL, to his mind, was the obvious choice.

As it was for many others. But despite everything they have achieved so far, neither RBL nor Mehta is done. There is, after all, an insatiable target, “We must have a greater share of the wallet of those top 10 million consumers.” And they are getting there. Mehta sees a lot more youngsters in coloured trousers today and does spare himself a smile.

Why Canali Picked Reliance Brands


Stefano Canali, President and CEO of luxury menswear brand Canali Spa, talks about the India story and operating in a post-pandemic world.

Stefano Canali has a relaxed demeanour. The President and CEO of Canali Spa, scion of the dynasty that is synonymous with menswear, loves India for its culture and immense business potential. In a joint venture (JV) with Reliance Brands, Canali wants more of the India piece and says it is here for the long haul. A man with conviction that physical stores for his brand will always be around, he thinks e-commerce will complement it. In a freewheeling chat, he opens up on a host of issues, from how the pandemic has been hugely disruptive to how much India matters to the company. Edited excerpts:

What is it about India that has struck you as being remarkable?

I had a chance to discover India on my first visit in 2008-09. I was very impressed with what I saw around culture and heritage. Casual conversations with people reveal a long history. To some extent, there are quite a few similarities between the people in India and those in Italy—starting with the passion for culture, well-crafted items or anything that is precious. The evolution of a civilisation through art and other forms is quite fascinating.

There is a connection here since Canali is known for making high-quality, well-crafted garments for men. It is very important for customers to fall in love with Canali’s products. That means the customer has to understand what products he is trying, and appreciates the details that the garment comes with.

Over the years, I have had a chance to meet many Canali customers. They were passionate about these details and obviously, that made me happy. It is this passion that, we believe, differentiates our customers from other brands.

Our relationship with India goes back about 15 years. We did not follow the strategy we usually do in other countries, like China for instance. As we looked closely at the Indian market, we saw there was a great clientele but not too many luxury locations. In order to preserve the value of the brand, we decided not to over distribute and did it only when we found the right location.

Even today, we have six-seven boutiques in India, while the number in China is four-five times more. This approach was important for financial prudence. That has been made possible because of our clientele and having a good partner in Reliance.

Was India very different from what you had imagined?

To be honest, India was not dramatically different. Before I came for the first time, I did my homework on the potential. The lack of infrastructure was a bit of a surprise. That said, my belief is that a luxury brand must adapt to the context it deals with.

India is a wonderful market to be in and we will continue to invest in brand awareness, more product offerings, and managing customer relationships. We are confident India will be a very fruitful market for us. As long as India is profitable and offers potential, there is no reason to believe it will not be a long-term game for us. We are here to stay. If we continue to invest, as we have, the India experience will be very interesting for us and our Indian partner as well.

Is there any market globally across time that reminds you of India?

[Pauses before answering] It is a very peculiar market and we notice the difference in the way the clientele deals with the products. While we do have a loyal clientele in most markets, the Indian customer is more loyal.

I think it comes down to the cultural bit—if there is a good product promise, it leads to, I believe, a marriage made in heaven or what I would like to say a chemical reaction between a customer, the brand, and the ambassador.


What does Reliance Brands bring to the table as a strategic partner?

Reliance allows us to make our investments in a more effective manner and give it a structured long-term approach. Of course, we do rely on their extensive network of relationships, which they have built over time. We do have a joint venture with them and believe the arrangement is a very effective facilitator.

It is here that I would want to mention that we also have an excellent working relationship with their people. In reality, it comes down to this component that really makes all the difference.

How different is the relationship with Reliance Brands compared to the approach in other markets?

First of all, I must highlight that we do not have a JV anywhere else. When you are in India and dealing with issues like infrastructure or a limited number of luxury locations, it is necessary to work around a plan that is profitable from day one. Secondly, working with a strong local partner has given us a lot of knowledge and key insights about the country.

In many ways, Italians and Indians are close culturally, but with a lot of nuances. That said, at the end of the day, if there is an opportunity to work with Indians in their own markets, it is certainly a more effective way of going about it. The role of the partner is critical in understanding the cultural nuances that I spoke of. If you have the right partner to [help you] understand a country that would have been difficult otherwise, you are all set.

What was the impact of the pandemic and how did you cope with it?

Yes, the last 18 months have been extremely difficult and quite dramatic to some extent. On the positive part, I can say we were forced and eventually able to react to a very unpredictable situation. Consider it from a point where the stores were shut down overnight. There were no customers, nor was anyone allowed to work in the store. Quickly, we set up distance-selling tools, which went a long way in maintaining our relationship with customers and a chance to sell what they really needed.

So, what are we left with at the end of 18 months? We have [seen] a great display of resilience and a chance to use the new tools with the realisation that going back to normalcy means reestablishing our network. Of course, we will need to wear masks and follow health procedures.

At the end of the day, we are happy that this period is over, where we learnt many lessons and are ready with a new approach. It has been such an unpredictable period that many of us will not even want to think of it.

In that sense, how will you look at your business in a post-pandemic scenario?

We have noticed that customers are buying what they used to before the pandemic, and more casualwear now. Basically, they broadened their base—sportswear, jumpers, and chinos are being purchased in larger quantities.

Today, the customer asks for more from Canali knowing that he will certainly get more. We will need to build on that now.

What more in the offing for India? You are referring to our interpretation of the bandhgala jacket that we call the Nawab [laughs].

That was a very interesting experiment. At the first stage, we simply wanted to interpret the Italian way of a classic, ceremonial jacket. Once we saw how successful it was with our clientele, we thought it was a good idea to turn it into something sportier.

That led to the sport coat with very specific and innovative fabric like a blend of silk, wool, and other materials, which was very well received.

It was a great experiment since we mixed our Italian craftsmanship and infused that into something very much Indian. We also noticed that the typical western jacket (like what I am wearing right now) did well.

I just want to get back to the question on the pandemic for a moment.

The post-pandemic phase has shown us how people are ready to dress up or dress more. On the one hand, we have seen customers getting rid of what they had and [on the other] wanting to express themselves in a more effective way.

I think we are very well-positioned to meet these emerging needs. You will see more innovations for India and there will be something new over the next few years.

What are your thoughts on the new digital world for the Canali brand?

We have taken the digital route in the US and Europe for six years [now]. Growth has been good but digital or e-commerce will not substitute the physical store. Rather, it will complement the physical store.

Digital is about delivery in a very effective and convenient way but the store will always be the most preferred option to meet the customer. Here is where the product will be tried, its quality understood, and customers get a chance to talk to the Canali ambassador to get the full experience.

As long as you are selling something luxurious with precious details, the touch and feel bit is important.

The physical store will never disappear. In my mind, we have to look at it as a circular effect where one helps the other.


Story: Krishna Gopalan

Producer: Vivek Dubey

Creative Producer: Raj Verma, Anirban Ghosh

Photos: Bandeep Singh, Rajwant Rawat

Videos: Rashi Bisaria, Mohsin Shaikh