There is a new trend in the Indian fashion industry, and it has little to do with fabric, embroidery or bling. Instead, it is of corporate houses, primarily Aditya Birla Fashion and Retail Ltd (ABFRL) and Reliance Brands Ltd (RBL), betting big on Indian designers. Earlier this year, RBL bought a 51 per cent majority stake in couture brand Abu Jani Sandeep Khosla and all its supplementary offerings, including GULABO by Abu Sandeep, ASAL by Abu Sandeep and MARD by Abu Sandeep. Jani and Khosla are the newest additions to an impressive line-up for Reliance that features strategic partnerships with designers Satya Paul, Raghavendra Rathore, Ritu Kumar, Anamika Khanna, Manish Malhotra, Rahul Mishra and Abraham & Thakore. Six of these partnerships took place in the past one year. RBL acquired Satya Paul in 2018 and its first strategic partnership was with Raghavendra Rathore in 2019. But the trend was started by ABFRL—part of the Aditya Birla Group, which had revenues of Rs 2,875 crore in the quarter ended June 30—when in 2019 it acquired a 51 per cent stake in designers Shantanu & Nikhil’s company Finesse International Design Pvt. Ltd. It followed up with a 51 per cent stake in designer Sabyasachi Mukherjee’s fashion house in January last year. With designer Tarun Tahiliani, it established a new company in February of last year and launched a contemporary men’s ethnic wear brand called Tasva, with the goal of selling Rs 500 crore worth of men’s ethnic clothes and accessories in five years.
ABFRL owns an 80 per cent stake in the new entity and Tarun Tahiliani holds the balance. It also bought a 33.5 per cent stake in the firm—Indivinity Clothing Pvt. Ltd —that houses Tahiliani’s fashion house, with the option of increasing it to 51 per cent. The latest designer in ABFRL’s kitty is brand Masaba. The company bought a 51 per cent stake in House of Masaba Lifestyle Private Limited, the entity that houses apparel, non-apparel, beauty and personal care, and accessories businesses under brand ‘Masaba’ owned by designer Masaba Gupta. The brand is targeting to achieve annual revenues of around Rs 500 crore in the next five years. The new offering will include everything from garments and accessories to lifestyle products, with the intention of leveraging the designer’s relationship with the new generation of young, digitally influenced consumers. The partnership is focussed on building a scaleable domestic brand for the new generation of digital-first customers. That is one of the prime reasons for legacy brands joining forces with leading retail companies.
The dynamics of India’s fashion business are shifting and social media is assisting young con sumers not only in metros but also Tier II cities in discovering new brands. Designers are realising that couture is no longer enough; they need to expand their customer base by offering more accessible price points, extensive distribution, and a wider range of products, something they cannot do on their own. And that’s where the funding and expertise of the corporate houses comes in. “While Indian fashion is fabulous with its understanding of craftsmanship, positioning, marketing, etc., what it lacks is a scientific approach to supply chain, the kind of sourcing and manufacturing strategy we need to have, etc.—things that are important to scale up,” says Shantanu Mehra, CEO and Co-founder of Shantanu & Nikhil. The joint venture with ABFRL resulted in them launching their bridge-to-luxury brand S&N, which opened its first store in Delhi in April 2020. Over the past year, it has opened nine more stores in Delhi-NCR, Mumbai, Bengaluru, Ahmedabad and Raipur.
The plan is to open another four S&N outlets this year and then 10 more next year. Besides that, the designer duo have six Shantanu & Nikhil stores selling couture. Currently, 30 per cent of their revenue comes from S&N, which going forward will go up to 50 per cent. “It has scale written all over it,” says Shantanu. The pandemic taught them that they could go direct-to-consumers as well through e-commerce. “We set up a vertical which was more digital. The technology and supply chain support that we got from ABFRL helped us fasten the process,” says Shantanu. But why are ABFRL and RBL interested in Indian designers? It’s because for years they have had brands specialising in western wear. ABFRL owns and markets brands such as Louis Philippe, Van Heusen and Allen Solly. And RBL, which is part of Reliance Industries Limited (RIL), has partnered with more than 60 global brands including Burberry, Coach, Jimmy Choo, Diesel, and Michael Kors, among others. “Men’s western wear has been their focus for the last 35 years since when the ready-made garment industry started, but now they need a foot in the Indian ethnic wear market,” says Harminder Sahni, Founder and Managing Director of Wazir Advisors, who has advised several design houses on such deals. According to Mumbai-based brokerage Edelweiss, the ethnic wear market in India is pegged at $20 billion, of which 70 per cent is unorganised.
Sahni says that the retail conglomerates have two choices: they can either create their own brand, which may take long, or enter into a partnership with an existing brand. “Unlike the men’s western wear market, there are various Indian ethnic wear designers who have a great brand and are talented,” he says. Moreover, these brands are not very expensive, so it makes sense to enter into a partnership with them or acquire them. “Most design houses are not very large. Most are below Rs 100 crore so it made sense for the corporates to buy them. It was an inexpensive option to get into the Indian ethnic and women’s wear market,” explains Sahni. Globally, too, there are just a handful of companies that control all the top luxury labels. French conglomerate LVMH Moët Hennessy Louis Vuitton is home to brands such as Bvlgari, Tiffany, Dior, etc., while the Kering Group manages brands such as Gucci and Alexander McQueen.
In october last year, RBL invested in designer Manish Malhotra’s company MM Styles for a 40 per cent minority stake. “We’re bringing additional changes and innovations on the platter. With beauty, jewellery, virtual store, NFT already on the horizon, I plan on taking these ventures to newer heights. With Reliance, we hope to go more corporate and systematic. It’s basically corporatisation of Indian fashion that’s going to happen now. This will help us with the technology and sustainability,” says Malhotra, who started out as a movie costume designer three decades ago with Swarg (1990), and founded his label in 2005. Malhotra has designed costumes for several hundred films, and also has jewellery and make-up lines. Post the collaboration with RBL, Malhotra has launched Diffuse, a bridge-to-luxury label. “While initially the plan was to bridge the gap between youth and couture, we decided to make a separate line altogether to make the offerings consciously-priced and available,” he says. Another designer who is happy to have entered into a partnership with RBL is Rahul Mishra, the first Indian designer to showcase at Paris Haute Couture week. RBL has entered into a 60:40 joint venture with Rahul Mishra to create a new ready-to-wear brand. The plan is to have a worldwide footprint with dedicated flagship stores at fashion capitals around the world in the next five years.
While Mishra started his career with ready-to-wear with his collections being shown at the Paris Fashion Week for several years, and it formed 50 per cent of his business till 2020 (the balance being couture), post the pandemic the brand has become synonymous with couture with both Hollywood and Bollywood celebrities donning it. “Couture gave us a major jump in revenue since prices are higher. Between 2020 and 2021 the company grew 100 per cent and last year, too, growth was around 70 per cent,” says Mishra, adding that he focussed on couture because supply chains were disrupted as were interactions with wholesale buyers. However, now with the JV with RBL, he is all set to re-enter the ready-to-wear market and create a new brand for both Indian and global markets. “If you have to dream of establishing a global brand out of India, it has to be ready-to-wear. RBL will help us achieve scale. I could be supplying across the globe but nothing beats having a flagship store. We are looking at an omnichannel presence in cities like London and Paris. RBL enables that,” says Mishra. He gives the example of Gucci, saying that it was a $100-million brand while it was with the family but with the Kering Group it has grown to be a $12-billion brand. “That kind of growth comes through corporatisation.” He adds that RBL is helping create structure and putting systems in place. “I have a business brain, too. But it is good to have a top B-school graduate taking care of that while I focus purely on design,” he laughs. The new JV brand (name still to be decided) will grow both vertically and horizontally in the fields of accessories, footwear, home, beauty, and jewellery for a worldwide audience. The ABFRL-Tarun Tahiliani partnership led to the first Tasva store opening in Bengaluru in December 2021. It currently operates nine stores across five cities including Mumbai, Delhi, Hyderabad, Bengaluru as well as Indore. It has massive expansion plans and there are likely to be 75 Tasva stores across the country by March 2023. Tahiliani says Tasva is a long-time dream of his that has become possible because of ABFRL.
Sahni says that with their ethnic ready-to wear offerings, designers and retail conglom erates are trying to attract the next 10-15 per cent of the population that has the money but is not looking for couture. “Market expansion will happen because the next layer of the market is far larger in terms of numbers and they also have money.” In October last year, Reliance Retail Ventures Ltd (RRVL) acquired a 52 per cent stake in fashion designer Ritu Kumar’s Ritika Pvt. Ltd that owns Ritu Kumar, Label Ritu Kumar, RI Ritu Kumar, aarké, and Ritu Kumar Home and Living. Amrish Kumar, designer Ritu Kumar’s son and Managing Director of Reliance Ritu Kumar (the way the company is referred to post the acquisition), says that RRVL brings with it a whole lot of skill sets and operational knowhow that are very beneficial. “Access to capital and the ability to take the kind of decisions that give you long-term benefits is one key advantage. Plus, they have a lot of brands, so dovetailing with what they are doing, we get better rates and better access.” Kumar says that while aarké, their latest brand meant to reach a larger consumer base, contributes to revenue in single digits, they expect it to grow exponentially. Currently, the Ritu Kumar brand is the largest and contributes around 35-37 per cent to the total revenue followed by Label, which is about 30 per cent, and then bridal brand RI at about 18-20 per cent.
ABFRL, which intends to craft a portfolio that addresses the entire gamut of ethnic wear segments including value, premium and luxury, acquired a 51 per cent stake in designer brand Sabyasachi in January last year. The aim is to make Sabyasachi a global luxury lifestyle brand that includes everything from clothes and perfume to cosmetics and home furnishings. Currently, the brand straddles categories such as apparel, accessories and jewellery, and has a strong franchise in India, the US, the UK and the Middle-East. It recently concluded a one-month exhibition and sale of a special jewellery collection at Bergdorf Goodman in New York. It has previously tied up with global brands such as Christian Louboutin and Thomas Goode. Sahni says that Indian designers will benefit greatly with the tie-ups and, going forward, their companies’ valuations will go up manifold. “No one has sold off their business 100 per cent. Everyone has sold 33-51 per cent. The remaining part is going to be hugely valuable in 7-10 years.”
According to him, if a brand has sold 51 per cent stake for Rs 100 crore today, 10 years down the line the balance 49 per cent could be worth Rs 2,000 crore, if all the plans of the corporate and the designer come true. He believes that at some point the corporates will acquire the design companies fully, but the time period may vary from 10-20 years. “By the end of that period, there is an option for either party to acquire fully or sell fully,” he says. “While these are brands started by designers, eventually brands don’t need individual designers. The brand is the name itself,” he adds. As corporates continue to invest in design houses and create bridge-to luxury and ready-to-wear lines, more and more Indians will be seen dressed in designer wear.
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