Debojyoti Ghosh,\u00a0Fortune India<\/p>\n\n\n\n
April 21, 2021 <\/p>\n\n\n\n
Billionaire entrepreneur Kumar Mangalam Birla-led retailer Aditya Birla Fashion and Retail Limited (ABFRL) has continued its build-up in the ethnic wear market with its fourth deal since 2019 and second this year. In February, the Mumbai-based fashion retailer picked up a 33.5% stake in fashion designer Tarun Tahiliani\u2019s Goodview Properties\u2014that will own and operate the designer\u2019s eponymous couture label\u2014for \u20b967 crore. That was a month after ABFRL acquired a 51% stake in Kolkata-based designer Sabyasachi Mukherjee\u2019s company, Sabyasachi Couture, which sells garments, accessories, and fine jewellery, for \u20b9398 crore.<\/p>\n\n\n\n
ABFRL, which owns fashion brands such as Louis Philippe and Van Heusen, said in a statement that ethnic wear \u201cis a large and growing market with a significant opportunity to build scale\u201d and expects it to be an important category over the next few years.<\/p>\n\n\n\n
Experts note the two recent deals come as the luxury industry, including fashion, has been hammered by the pandemic. The year-long shutdown in global travel has slowed over a decade of growth across luxury categories. Indeed, the global fashion industry\u2019s profit is expected to have slumped about 93% in 2020, according to a report by consulting firm McKinsey and The Business of Fashion in December.<\/p>\n\n\n\n
\u201c[Luxury] business has been hit hard during the pandemic, like all fashion and retail businesses. And a significant injection of money is needed to maintain the business momentum, and to scale it further,\u201d says Devangshu Dutta, chief executive of retail consultancy Third Eyesight.<\/strong><\/p>\n\n\n\n In March, Italy\u2019s billionaire Agnelli family\u2014best known as the founders of automaker Fiat\u2014acquired a 24% stake in French luxury shoemaker Christian Louboutin for $642 million. Three months before that it paid $95 million for a controlling stake in Shang Xia Paris, a Chinese luxury goods business founded by French luxury brand Herm\u00e8s and Chinese designer Jiang Qiong Er.<\/p>\n\n\n\n Many fashion firms have used the Covid-19-induced slowdown to reshape business models, streamline operations, and sharpen their customer propositions, said the report by McKinsey and The Business of Fashion.<\/p>\n\n\n\n And that is exactly what Tahiliani plans to do with his new corporate partner. The duo will create a new entity\u201480% held by ABFRL and 20% by Tahiliani\u2014to launch a new brand of apparel and accessories in the affordable premium ethnic wear segment, while it also plans to launch a men\u2019s ethnic wear brand.<\/p>\n\n\n\n \u201cDiscussions with ABFRL have been in the works for nearly two years. I couldn\u2019t be happier about entering into this partnership. They understand scale and numbers like no one else in the market today. Each of their home-grown brands is a resounding success,\u201d Tahiliani, founder and CEO of Tarun Tahiliani Brand, tells Fortune India<\/em>. \u201cThis collaboration permits me the financial freedom to focus on designing,\u201d he adds.<\/p>\n\n\n\n ABFRL aims to build the new ethnic wear brand into a \u20b9500-crore business in the next five years, with more than 250 stores across India. The first tranche of stores is expected to open by September. \u201cThis new entity with ABFRL currently concentrates only on menswear. In our collective opinion, at present, there is only one branded national player in the Indian ethnic [wear] for men space. In order to scale this up, we need to be in three or four categories of clothing. This will give depth, both in terms of style and sizing to the men who come into the store,\u201d says Tahiliani.<\/p>\n\n\n\n Currently, the top panIndia ethnic wear brand for men is Vedant Fashions\u2019 Manyavar. The Kolkata-based company forayed into women\u2019s wear in 2016 selling lehengas<\/em>, saris, and the like under the label Mohey,<\/p>\n\n\n\n ABFRL\u2019s previous deals in the segment\u2014both in 2019\u2014were a 51% stake in fashion designers Shantanu & Nikhil\u2019s Finesse International Design for a reported \u20b960 crore, and its \u20b9110-crore acquisition of Jaypore. Both make apparel, footwear, accessories, and other items.<\/p>\n\n\n\n ABFRL\u2019s managing director, Ashish Dikshit, declined to comment for this story. ABFRL had, when announcing the Sabyasachi Couture investment, said it expected that deal to accelerate its strategy to build a comprehensive portfolio of brands across segments, occasions, and geographies.<\/p>\n\n\n\n Experts say ABFRL\u2019s recent investments allow it to tap into the designer\u2019s creative stream and goodwill, while providing the financial and organisational muscle of a large corporate. Albeit one that is not aiming too far upmarket.<\/p>\n\n\n\n