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For\nthe Aditya Birla group this is a first. Although it has trekked down\nthe acquisitions route to build its fashion empire in the past, be it\nthe buy-out of rival Kishore Biyani’s Pantaloons, or the numerous\nforeign labels under Madura, the group has steered clear of fast\nfashion. But with the Rs 200-crore purchase of Forever 21, the group\nhas finally forayed into this big, but notoriously fickle market.“If\nyou look at fashion globally, fast fashion is largest part of the\nmarket. In India also, more women are moving towards western wear.\nForever 21 is a renowned brand and its proposition is attractive. It is\nimportant for us to expand the portfolio and grow the brand in the long\nterm,” said Ashish Dikshit, business head, Madura Fashion &\nLifestyle at Aditya Birla Fashion & Retail in a telephonic\ninterview with Business Standard.
But can Forever 21 deliver the\nresults it is expected to, especially since it competes with global\ngiants Zara and H&M? Both have tweaked their value proposition for\nIndia, offering affordable fashion for price conscious local consumers.
Forever\n21 entered the country in 2010 with Sharaf Retail, but failed to scale\nup operations. In 2013, it forged a partnership with DLF Brands to open\n40-50 stores in five years in the country, but these plans too hit a\nroadblock. Currently, the brand has 12 stores and a small online\npresence and it has been in the hunt for a new partner for a while. In\nIndia, the label targets the young urban woman and not just the\nteen-market.
“The partnership will help establish Forever 21 as\none of the largest women’s wear brand in the country,” says Jatin\nMalhotra, director, global expansion, Forever 21. The Birla group seems\nto be looking at a similar goal. Dikshit said they would not look at\ntapping synergies between Birla’s fashion units and Forever 21. “We see\nit as a standalone large opportunity. We want to build it as a large\nindependent business in the long term,” he said.
Globally the\nlabel is known for its large retail stores and its ability to serve up\nbargain fare for a generation constantly on the look-out for new\ntrends. The brand is also seen as a typical American success story, the\njourney from a single store set up by Korean immigrants into a\nmulti-million dollar global chain is the stuff of many case studies.\nHowever in recent years as digital marketplaces have altered the retail\nlandscape, the label has seen market realities change and has cut down\non the size and number of its stores.
In India, the\nproliferation of e-commerce players has been a big disruptor too; by\noffering a wider choice of styles and bringing in labels that would\notherwise been out of bounds in the country, it has changed consumer\nbehaviour and large chains have had to struggle to understand the shift.
However,\non the plus side for traditional retail chains, digital marketplaces\nhave helped expand the market for fashion, especially among young urban\nwomen and teens. Possibly global labels such as Forever 21, Zara and\nH&M offer such chains a way in, as these brands have a high recall\namong buyers of fast fashion.
The Birla group is not alone in\nlooking for a foothold into this market. Landmark group’s fashion chain\nMax has also come out with an in-house brand Runway for the same\nsegment. Max has one store in Bengaluru and plans to set up seven to\neight such stores. “Till three years ago, fast fashion was out of reach\nfor Indian shoppers. Now with the advent of e-commerce, new brands\nlaunching and people travelling abroad, shoppers are getting used to\nit,” said Vasant Kumar, managing director at Max Fashion.
Kishore\nBiyani’s Future Group is also looking to launch a fast fashion brand\n‘Cover Story’ in Mumbai next month. “Indian companies who have\nmanufacturing background and sourcing capabilities will do a good job\nin it,” said Jaydeep Shetty, CEO of fashion chain Mineral (Future group\nhas a stake in the company).
Will Forever21 give the Birla group\nan advantage over the desi brands, which still have to establish\nthemselves in this segment? Whatever the outcome, many believe that it\nwill definitely lead to a tough battle on the streets. “Increased\ncompetition in fast fashion means cheaper clothes and cheaper inputs in\nmerchandise. I think share of full price merchandise will reduce from\n54 per cent to 47 per cent going forward,” Shetty said. But he adds\nthat it is illogical to presume Indian chains can compete with Zara or\nForever 21 as they look at different demographics.
Zara launches\nnew designs twice a week and Forever 21 turns its inventory 14 times a\nyear. “Even in western markets, nobody is able to compete with them\nsuccessfully,” he added.
However,\nDevangshu Dutta, chief executive at Third Eyesight believes that fast\nfashion as a concept does not exist in the Indian market. “In Europe,\ncustomers line up every Wednesday or Thursday to buy a new style or\nline. But here, people wait for three to four months to get discounts\non merchandise. You will get very few customers who are ready to pay a\ncertain sum to buy a new style or new line,” Dutta said. He said\nshoppers in the country are more value conscious than fashion\nconscious. <\/span><\/p>
For Forever 21 and the Birla group, it is\ncritical that they learn the rules of the game fast enough, before the\nbrutal world of teen fashion changes yet again. <\/p>