{"id":6225,"date":"2023-06-09T16:58:00","date_gmt":"2023-06-09T11:28:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=6225"},"modified":"2023-09-11T20:24:47","modified_gmt":"2023-09-11T14:54:47","slug":"the-business-of-fashion","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/the-business-of-fashion\/","title":{"rendered":"The Business of Fashion"},"content":{"rendered":"\n

By Pavan Lall, Fortune India <\/em>
Jun 9, 2023<\/em> <\/p>\n\n\n\n

For fashion designer Tarun Tahiliani, getting funding from a corporate house was incidental. It happened through a high-profile customer, none other than Aditya Birla Group chairman Kumar Mangalam Birla. Birla had been a customer of Tahiliani\u2019s Ensemble some three decades ago when he was getting engaged. They stayed in touch over the years and at one stage discussed the need for an Indian fashion brand focused on scale and accessibility. \u201cIt came out of a conversation and was a two-year ambling route. I had asked if they were expanding their designer brand footprint, and he (Birla) told me to meet the Aditya Birla Fashion and Retail (ABFRL) CEO for a deeper chat,\u201d recalls Tahiliani.<\/p>\n\n\n\n

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The result was Tasva, a sub-brand that Tahiliani has a minority stake in. The focus was to zero in on the ethnic space, not lose out on the homegrown touch, yet keep user-friendly clothes in traditional silhouettes at accessible price points that were not haute couture. Launched in December 2021, Tasva primarily caters to the premium occasion-wear segment, and has been growing at a fast pace.<\/p>\n\n\n\n

Raising Cash<\/strong><\/p>\n\n\n\n

Tahiliani, who got \u20b967 crore funding for a third of his company with an option to further offload up to 20%, isn\u2019t the only one to see corporate finance push capital into his designs and stores. Sabyasachi Mukherjee of Kolkata, who opened a large multi-level store in a heritage-style building early this year in Mumbai, sold a little over half his company to Birla, reportedly for around \u20b9398 crore. ABFRL has also bought a 51% stake in House of Masaba Lifestyle, the entity that houses apparel, personal care, and accessories businesses under brand \u2018Masaba\u2019 owned by designer Masaba Gupta. Besides the Aditya Birla Group, Mukesh Ambani-led Reliance Brands has bought a 52% stake in Ritu Kumar, 51% in Abu Jani Sandeep Khosla, and 40% in Manish Malhotra. Earlier, in 2008, Kishore Biyani\u2019s Future Group took a 23% stake in Anita Dongre, which was later sold to private equity player General Atlantic for \u20b9150 crore.<\/p>\n\n\n\n

\u201cWhile we are reaching a sense of critical mass in terms of consumer base, luxury is not new to India. Designers have been flogging their wares for decades,\u201d says Devangshu Dutta, founder of Third Eyesight, a consultancy firm focused on consumer goods and modern retail. \u201cWhat has changed is the size of the target audience.\u201d<\/strong><\/p>\n\n\n\n

According to a recent Knight Frank wealth report, India is set to see a projected 58.4% increase in ultra-high-net-worth individuals, those with a net worth over $30 million, from 12,069 in 2022 to 19,119 in 2027. The domestic apparel market, too, was pegged at $60 billion last year, not far behind the developed world, a McKinsey\u2019s FashionScope report has said.<\/p>\n\n\n\n

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\u201cEarlier, India was a country that just produced for the world. Today India is also becoming the largest consumer market. International brands are keen to invest in business relationships with India. India will change the game for luxury. Where else will you get a billion people who are of a young age, and will be the future luxury buyers of brands?\u201d says Sabyasachi.<\/p>\n\n\n\n

\u201cThe economy has expanded beyond bigger cities, which has raised the consumption size\u201d adds Dutta of Third Eyesight.<\/strong><\/p>\n\n\n\n

Corporate Handholding<\/strong><\/p>\n\n\n\n

\u201cCorporate involvement helps scale faster than organically, and a lot of designers are tying up with companies with technical expertise and go-to-market for smaller towns and cities,\u201d says Anita Dongre. \u201cFor a designer, having a corporate brings in processes, technical expertise and management know-how, and helps her focus on designing,\u201d she adds. In Sabyasachi\u2019s case, too, a new CEO \u2014 Sumati Mattu, as well as a new HR head and COO, were brought on board to prepare for the brand\u2019s expansion.<\/p>\n\n\n\n

For Sabyasachi though, it has helped in creating a safety net, especially for his employees, more than anything else. \u201cRight now we have two investors \u2014 me and Birla together, so it makes me feel protected. Nothing else has changed. The only thing that has changed is that we have a great HR policy with the Birlas; they will be able to look after my people better, as I have created a beautiful safety net for all my employees.\u201d<\/p>\n\n\n\n

Dutta, on the other hand, says that \u201cfor large companies in the fashion space such as Aditya Birla, it is a natural step to buy into an established brand with scale since brand recognition combined with capital and organisational structure make for a win-win. The platform of fashion is currently at the right juncture to replicate networks and create scale,\u201d he adds.<\/strong><\/p>\n\n\n\n

Other designers, including Manish Malhotra, who has also received funding from Reliance, say, \u201ccorporatisation of fashion houses in India has brought about a safety net for luxury brands, making us push for larger creative forces and expansion in terms of scale, branding and customers.\u201d<\/p>\n\n\n\n

Growing Into India<\/strong><\/p>\n\n\n\n

Tahiliani says we have opened 55 Tasva stores and will reach 90 in this financial year. Tasva crossed around \u20b960 crore in annual revenue in 2022, and is set to hit \u20b9200 crore this year, he adds.<\/p>\n\n\n\n

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Similarly, Dongre, widely regarded as the largest designer and fashion house by revenue, has around 150 stores across brands, and Global Desi, a substantial increase from the 10-15 stores she ran before receiving her first funding. \u201cThe added benefit is that such funding helps push into international markets.\u201d While Dongre launched her stores in Dubai and New York a few years ago, Sabyasachi launched a New York-located store in West Village last year.<\/p>\n\n\n\n

So, what\u2019s the road ahead?<\/strong><\/p>\n\n\n\n

\u201cCorporate India has successfully built large-scale fashion businesses and acquired international brands, but has not been able to create a homegrown luxury brand of cultural or social significance. That will change now,\u201d says Sabyasachi. Jewellery is set to be his focus, along with sunglasses, beauty, shoes, and other categories. \u201cJewellery is a very important category in the country, a great revenue earner,\u201d he says.<\/p>\n\n\n\n

\u201cThe film industry was corporatised because its potential was discovered, now it is fashion\u2019s time,\u201d adds Manish Malhotra. \u201cCorporatisation lets designers look beyond bridal-wear, occasion-wear, and focus on newer creative strategies as there\u2019s more space and potential for experimentation.\u201d<\/p>\n\n\n\n

Tahiliani agrees that compared to overseas, the trend is an expected one. \u201cMost of the brands abroad have seen stellar growth because they have been aligned with corporate houses.\u201d He points to the famous Alexander McQueen, who started in 1992, and was discovered by Isabella \u201cIssie\u201d Blow. The tie-up allowed him to expand his label, open boutiques around the world, and push into the categories of perfume, eyewear, accessories trainer and clothes for men.<\/p>\n\n\n\n

Globally, France-based Kering group owns designer labels Gucci, Alexander McQueen, and Balenciaga, among others. LVMH Mo\u00ebt Hennessy Louis Vuitton, commonly known as LVMH, owns Loro Piana, Fendi, Christian Dior, Kenzo and Marc Jacobs.<\/p>\n\n\n\n

The question then is, with all the global exposure and corporatisation, will there be a shift in Indian design sensibilities?<\/p>\n\n\n\n

\"Popular<\/figure>\n\n\n\n
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\u201cNow you see people wearing bold gowns or black ties for one or two events, but Indians have kept a unique spirit of celebration and culture unlike anywhere else in the world. Bollywood has played a huge part in amplifying this because of the song and dance and colours and events such as Holi and Sangeet,\u201d feels Tahiliani.<\/p>\n\n\n\n

The bottomline: Luxury fashion is now more inclusive, and regional customers are the next big target area for brands.<\/p>\n\n\n\n

(With inputs from Priya Kumari Rana)<\/p>\n\n\n\n

(Published in Fortune India<\/a>)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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