Raymond to restructure portfolio, sales strategy

Raymond to restructure portfolio, sales strategy
Comment E-mail Print Share
First Published: Mon, Oct 05 2009. 09 40 PM IST

Starting afresh: A Raymond store in Jayanagar, Bangalore. Low consumer sentiment and high rentals have hurt Raymond’s revenues hard in the last fiscal. Its retail revenue in fiscal 2009 stood at Rs637
Starting afresh: A Raymond store in Jayanagar, Bangalore. Low consumer sentiment and high rentals have hurt Raymond’s revenues hard in the last fiscal. Its retail revenue in fiscal 2009 stood at Rs637
Updated: Mon, Oct 05 2009. 09 40 PM IST
Bangalore: As it enters the last leg of its exit from the premium Italian apparel brand GAS, textile firm Raymond Ltd is focusing on restructuring both its portfolio and sales strategy for its domestic retail business.
The 85-year-old owner of brands such as Park Avenue, Parx, ColorPlus, Zapp!, Manzoni and the flagship Raymond doesn’t believe price reductions alone can draw more people to its stores or boost sales. To enter small cities such as Gandhidham, Nadiad and Himmatnagar in Gujarat and smaller markets in other states, Raymond will bank on franchisees for its Park Avenue formal menswear and Parx casual wear, in addition to price cuts.
Starting afresh: A Raymond store in Jayanagar, Bangalore. Low consumer sentiment and high rentals have hurt Raymond’s revenues hard in the last fiscal. Its retail revenue in fiscal 2009 stood at Rs637 crore. Hemant Mishra / Mint
“The aim is to get back consumer confidence in the coming months, which got affected in the past few months,” said Shreyas Joshi, president (group apparel) at Raymond. “We’ve moved product mix and prices for some brands, tweaked the sales model for the rest.”
Low consumer sentiment and high rentals have hurt Raymond’s revenues hard in the last fiscal. Its retail revenue in fiscal 2009 stood at Rs637 crore, which accounts for about 25% of its consolidated revenue, according to a 16 September report by brokerage firm Batlivala and Karani Securities India Pvt. Ltd.
Overall, Raymond’s net sales declined to Rs355.38 crore for the March quarter, compared with Rs435.78 crore in the year-ago period. The firm is also under pressure from losses at its various joint ventures (JVs) and subsidiaries.
Over the past few months, Raymond has rolled back its 50:50 JV with Italy’s Grotto SpA for GAS. Joshi blames it on lukewarm sales and the premium positioning of the brand.
The GAS exclusive stores, mostly on high streets, couldn’t thrive because of high rentals and extensive, imported merchandise.
According to the report, this is the third time a Raymond JV has fallen apart, the other two being Raymond Fedora Pvt. Ltd and Raymond UCO Denim Pvt. Ltd.
Retail analysts say Raymond has now adopted a holistic approach of organizing and exploring its brands unlike some other retailers who have stopped at tweaking prices, switching formats and closing outlets.
Over the past few months, retailers such as Indus-League Clothing Ltd, Celebrity Fashions Pvt. Ltd and Madura Garments, owner of the the premium Van Heusen and Allen Solly brands, have fine-tuned prices, offered more options at lower prices and revamped their womenswear line to stem sliding revenue.
As a large retailer, Raymond has not yet fully explored the potential of all its its brands, said Prashant Agarwal, associate vice-president at Technopak Advisors Pvt. Ltd, a management consultancy. “It should take this opportunity to first organize its portfolio, look at segments that have growth potential and then decide on expansion plans.”
Better supply chain management, relating primarily to sourcing costs and inventory control, has already fetched good results for companies such as Marks and Spencer Group Plc, which has started buying material locally wherever sales have picked up, he added.
Rachna Aggarwal, chief executive of Indus League, a part of Future Group that sells brands such as Scullers, Indigo Nation, Urbana and Urban Yoga, told Mint earlier in September that sales had improved after the firm cut prices, but it was too early to predict the quarterly trend.
While retailers have promoted value brands during the downturn, higher-priced labels, too, have fared well. Indus League, for instance, says it has received good feedback for the just launched Daniel Hechter, a premium French lifestyle brand with an entry price of Rs1,999 for its shirts.
Raymond will retain its premium positioning for ColorPlus, which contributed to about 25% of the firm’s Rs569 crore apparel revenue in 2008-09, because of a niche, loyal clientele for the brand.
Similarly, Raymond will keep intact its womenswear line, which it sells through Park Avenue.
As it scales down other brands, Raymond, which runs 548 stores, wants an efficient franchise network to keep investment in check while expanding quickly, said Joshi, pointing to a shift in the firm’s thrust on high streets. The new format calls for smaller, 500 sq. ft stores costing not more than Rs2,000 per sq. ft each. Currently, the outlets are typically larger, at 1,200-1,500 sq. ft and above.
The aim is also to expand the new formats such as Neckties & More and Shirts & More, which sell accessories such as ties and cufflinks along with shirts, through a franchise model, Joshi said.
Comment E-mail Print Share
First Published: Mon, Oct 05 2009. 09 40 PM IST
More Topics: Raymond | Retail | Sales | Park Avenue | Parx |
blog comments powered by Disqus
  • Wed, Oct 29 2014. 04 15 PM
  • Wed, Oct 22 2014. 09 49 PM
Subscribe |  Contact Us  |  mint Code  |  Privacy policy  |  Terms of Use  |  Advertising  |  Mint Apps  |  About HT Media  |  Jobs
Contact Us
Copyright © 2014 HT Media All Rights Reserved