Madura Fashion and Lifestyle is a part of Aditya Birla Nuvo Ltd (ABNL), which has an extensive brand portfolio of well known apparel brands including Louis Philippe, Van Heusen, Allen Solly, Peter England and People. In 2015 Aditya Birla Nuvo had revenues of Rs 27,006 crore and a net profit of Rs 1,491.1 crore. Three of ABNL's apparel brand - Louis Philippe, Van Heusen and Peter England - have annual revenues in excess of Rs 1,000 crore. Of these Van Heusen positions itself as a premium lifestyle brand offering 'fashion for professionals' for both men and women. Vinay Bhopatkar, the COO of Van Heusen spoke to Venkatesha Babu of Business Today on the why the company is investing in setting up 'Style Studios' and the challenges of e-commerce. Edited Excerpts:
BT: You recently opened a large format store which you call 'style studio' in Bangalore. In an era of e-commerce investing several crores in a single location, what sense does it make?
VB: Admittedly there is a shift towards online (but remember) online is just one channel. It's a transactional channel. It is not necessary that we launched this (new) model to counter the e-commerce space. This is a reaction to the change in consumer's shopping behaviour. For us digital has become so omnipresent where consumer wants to check everything before they make any decision. The digital integration experience has become so integral to consumers today. Secondly, there are is so much of exposure and information which leads to more confusion for the consumer. Consumers are seeking out for guidance from brands on how to look well and dress up well. This store "Style Studio" is taking all these into consideration and providing that opportunity. They are seeking for advice from the brands. This store addresses all these and gives a new meaning to shopping experience.
This is a flagship experience store with all digital integrations are built in like "virtual mirror." The consumer need not try all garments. They can try virtually and make a sense of what looks good on them. Social is so integral to us that consumer can try more than 5 looks at one go and take feedback from people through social media.
There are fashion consultants in the store who helps one to choose your clothes and help you to complete the look. The way the store is laid out, the way the visual merchandising is, the way the elevations are, it gives a complete experience to the consumer. Unlike normal store where you will see stack of shirts, here you will find more of displays and digital integrations.
Our aim is to inspire people to get the right look and help them to get proper guidance on fashion through the consultants at the store. We are taking cognizance of change in consumer behaviour and consumer just doesn't want to buy a shirt or a trouser. Today, they want to buy the complete look and seek advice. They want to look more fashionable and well dressed.
As we go along, it will be very important for brands that they become more distinctive and interactive with the consumer. They should provide more omni in their retail experiences. Consumers would want to have the flexibility to buy online and return online. They would want to look at garments and demand for home delivery. If they don't get a shirt from a particular store they should be able to order it from another store. So brands and retailers have to become omni in their business model, so this store completely integrates that. If consumer doesn't get what they want, they can order and deliver it at their door step.
BT: Is this a scalable model? Will you replicate this in other cities?
Vinay: This kind of set up comes for double the cost as compare to the normal set up. The cost also varies based on location and how big it is etc.The flagship store builds brand. We might be able to open 6 - 10 stores, but they go long way in terms of establish and elevate the brand image. To your question is this scalable? To certain extent, yes with 5-10 stores but the task is not just about getting huge profit or becoming the sole business model. This helps in building the brand image. The fashion consultant at the flagship store can do a web chat and give consultancy to other stores. Our second phase of work is underway as we develop an app with a recommendation engine that can go on cloud. This is all about innovation, can they do a virtual trail through mobile phone? This is the anchor store where we will have lot of innovations. This is a true omnistore, which takes experiences online. Omni (retail) is not all about one way of consumer and one way of inventory, it is all about how you create experiences. For example the store in Mysore might have a recommendation engine because it is just a screen and connected though cloud. Hubli, you might even not have a recommendation engine but you might have services where he can access our website through internet. So this becomes a two way approach and that to me is a true success of any omni model store.
BT: What kind of time line for 5- 10 stores?
Vinay: Actually it is more like 10-15 stores which will have distinctive features and several firsts for India. There are very few international brands like Burberry which has such handful of experience stores but they don't have all these integrated features in one store that we have. This being the first store, there is going to be lot of learning for us at the moment. We will take at least 3 months for us to figure out what's working and what not working. What is over designed and what is needed to be added and then over 10 - 15 months we will want to roll out and have these 10-15 stores at least in key metros.
BT: Haven't virtual mirrors been around for quite some time? What is so unique about yours?
Vinay: In fact virtual mirrors are not something too out of the world. The challenge is that there are lots of start-ups who are doing this because this is just based on camera. So you just need to have a screen and camera. It is not something which is not unthinkable and there are huge numbers of video online available. There are companies like Infosys and Wipro which work on something like this. The biggest challenge is: The experience of the virtual mirror. Some of them can be very jerky; the pictures are not clear and aligned. How they look on you and how close they are to reality. If you see across 10 different virtual mirrors you will identify the difference between the experiences in virtual mirror.
Remember the apparel industry has very short life cycle. Season changes every 6 months and there are 1000s of designs which gets launched. So today if I launch the best looking shirt, in 10 days it can get stocked out. The largest piece in experience store is about updating content and that requires huge investment to integrate what's online and in the store. You need to be updated and keep it live. You have to shoot, upgrade your recommendation engine and you need to create content around it. That's the single largest challenge why brands are not able to scale up internationally. If merchandise keeps changing in every 10 days, you have to update accordingly. So one part is experience and the other part is for the brand's commitment to keep it sustained.
We have made investments in technology part, content partners, and digital partners. The challenge is to update the content in collaboration with the team we have invested.
BT: What is Van Heusen's positioning ?
Vinay: "Fashion for professionals" is our defining position today. And that cuts across formals, casuals, across men & women. Therefore, we always wanted to be the most fashionable in the workwear context. You can't expect to wear too jazzy stuff at work. We want to be the most fashionable brand for the work place in context for the working professional.
BT: What about the brand extension apart from apparel?
Vinay: Yes, apart from clothing we do footwear and accessories. When I say accessories we do belts, wallets, cuff links etc.. Accessories in India are just picking up, internationally accessories contribute around 15 per cent and in India it is just 5 per cent that contributes in the overall business. This is because the consumers are waking up and they realised that accessories are equally important, like a belt is equally important and should match up with your shirt and trousers. While internationally consumers are more evolved. I think, there is a huge potential to move from 5 per cent to 15 per cent in India as more and more consumers are aware of the importance of accessories.
We are strengthening our play in youth, if you look Van Heusen has been always traditionally from 35 year, work wear and men driven brand. Now we are strengthening our play in youth, we have a brand called V Dot. This is more targeted to youth. Now that is something that we are strongly building and we are launching stores exclusively for V Dot. Another focus area for us women's wears by launching large format store and exclusive stores.
The range of our accessories is very comprehensive, now the logical extension will be perfumes and watches. We have sunglasses, which we do it in small scale. Not many people are aware about this. We also do footwear. Strengthening accessories is going to be a large priority. We do lot of gifting in accessories, like we have these combo packs and they sell like hot cakes and not lot of brands do that. So strengthening Accessories, V DOT, and Women Wear is the task. On the new initiatives is that we launched MyFit and this flagship store.
Flagship store is the manifestation of what we are current doing. The larger purpose is how we create the next model in retail. And retail may not happen tomorrow at physical store it can happen in both digital and physical. So how do we build on that is the larger purpose? Basically, to take retail to the next level in India. This is huge task, not many brands are doing this. They are doing this in bits and pieces but this is something we have it all in one store.
Myfit, which customises fit to your body contours and Style studio are two initiatives we are focusing on.
BT: For the brand what is the retail foot print?
Vinay: We have 280 exclusive stores and we have enabled Myfit in 200 stores.
In multi brand we have two formats. One is the departmental store formats, where we are presents with 800 point of sales and the other is the 1200 multiband outlets. Put together we have around 2000 points of sales in India.
BT: You have multiple online presence through Madura and also ABOF. Doesn't it create confusion?
Vinay: Abof.in needs to be looked at very independently because abof is Aditya Birla Group's foray into e-commerce to compete and deal with likes of Flipkart and other e-commerce players. It is going to be a complete horizontal. It will not sell only Madhura brands, it will sell other brands like Levis and all. The positioning there is Fashion, but it's a complete apparel e-commerce play.
Trend. in is different. Since we have 5 brands, so for us it doesn't make sense to create 5 different verticals on digital for different brands. So Trendin becomes a platform where all the 5 brands are sold. Even internationally all the sets up like banana republic, all the corporate entities which have multiple brands have common digital platform.
BT: But aren't these brands targeted at different audience. Peter England is affordable wear but something like Louis Philippe is positioned as a premium luxury brand.
Vinay: True, but distinctiveness needs to come at the frontend and the backend needs to be integrated but if you look at our supply chain, it is integrated across all brands. If you look at our sales structure, it is integrated. In the case of trendin, the backend is integrated. So if you select Louis Phillip shirt on trendin it is going to be different from Peter England. The commerce part of it, which is completely transactional, will be the same. But if I enter the Louis Phillippe space on trendin that world is very different from other brands like Van Heusen and Peter England. So the distinctiveness and experiences should come in the retail spaces where consumer interacts with the brand.
BT: What is Van Heusen's contribution in Madhura's business?
Vinay: Around 24 per cent. Louis Phillip is the largest. There are only few brands in apparel space which are more than Rs 1,000 cr. Louis Phillip is around 10 per cent bigger than Van Heusen in terms revenue. Louis Phillips price point is slightly higher, the difference is in positioning. They are more for the traditional rich, heritage and craftsmanship. Van Heusen is more about fashion, corporate fashion, we are more for the working professional. The positioning is different, otherwise both the brands operates in the same manner.