Mumbai: Vimal, a brand owned by Reliance Industries Ltd (RIL) that was once among the most recognized textile brands in India, will be sold out of 150 store-in-stores in Reliance Retail outlets by the end of 2008. This is part of an attempt by the company to revive the brand.
“We will be launching around 150 shop-in-shops at Reliance Retail’s large format stores by next year. These will come up wherever the large format Reliance Retail stores come up,” said Chetan Desai, vice-president, domestic sales, RIL.
“These will be in addition to our plans to launch 700 stand-alone stores. We are also looking at taking over the management of our franchisee outlets to redesign them and train their staff,” Desai added.
RIL plans to spend Rs600 crore to revive the brand. Of this, Rs500 crore will go into retail-oriented efforts and Rs100 crore on revamping the brand.
Desai said London-based design firm Lewis and Hickey, which designed the Hugo Boss logo, is designing a new logo for the brand. “The idea is to attract a younger and more trendy clientele to the brand. The new Vimal will be youth-focused and energetic,” he added.
India’s Rs32,200 crore organized retail business is growing at around 40% a year, according to a report by Man Financial, a Mumbai-based brokerage. Although the penetration of organized retail in the country is only 4%, apparel and textiles is one area where it is higher at around 8.4%, according to the Man Financial report.
Attracted by an overall retail market of $300 billion (Rs12.12 trillion), RIL and other business houses such as Bharti Enterprises Ltd, the Tata group, and the Aditya Birla Group have drawn up ambitious plans for their retail businesses. In June 2006, RIL announced a Rs25,000 crore investment in its retail business. Since then, it has opened 220 neighbourhood grocery stores and a consumer durables store, and will open a 175,000 sq. ft hypermarket in Ahmedabad in September.
A Mumbai-based analyst, who did not wish to be named, said the Vimal relaunch will not make a significant difference to the company’s bottom line. He pointed out that competitors such as Raymond also make only around Rs200 crore in profit and, as such, even a 100% growth in the textile business will not add any significant shareholder value, given RIL’s Rs10,000 crore bottom line.
But Pratichee Kapoor, senior consultant with Technopak, a Delhi-based management consulting company, says: “Reliance Retail will provide the perfect launch pad for Vimal. They intend to be in 784 towns in 10 years. This will give Vimal tremendous reach. If Vimal tries to create such a presence on their own, they will have to make huge investments. So, this makes sense at many levels.”
According to RIL’s plans for Vimal, six new stores will be launched by September. The store-in-stores will start coming up with the large format Reliance Retail stores that are expected to be launched sometime in 2008.
After that, the Vimal brand would move into the next phase of repositioning, said Desai, refusing to elaborate further. The company also plans to set up high-street stores, the first of which will be in Mumbai.
From being a cloth exporter—Vimal currently exports around 40% of its cloth production—RIL is also looking to become an outsourced manufacturer for fashion labels and retailers such as Hugo Boss and Marks and Spencers, according to Desai.