Mumbai: Kishore Biyani-led Future Lifestyle Fashions Ltd (FLFL) on Wednesday said it has reached a conditional agreement to buy 29.9% stake in online fashion retailer Koovs Plc for ₹ 140 crore, subject to regulatory and procedural approvals.
With this acquisition, Biyani is looking at playing a significant role in online fashion. “We hope to become one of the largest online fashion retailers," Biyani, chairman and chief executive officer of Future Group said over the phone.
Biyani had told Mint in May that he was looking to cement its pole position through collaborations and partnerships. The company, he had said, was in talks with some of the world’s biggest retailers, technology companies and strategic investors, including Amazon.com Inc., the Walmart-Flipkart combine, Alphabet Inc.’s Google, Chinese firms such as Tencent Holdings Ltd and Alibaba Group Holding Ltd, and even Japan’s SoftBank Group Corp., as it looks at pursuing growth. However, Biyani did not give an update on these talks.
The Koovs acquisition will be funded through internal accruals and the money it had raised in May from Singapore-based private equity firm L Catterton Asia. The company had then said that the investment of approximately ₹ 800 crore made by L Catterton is likely to help it gain “global fashion and retail expertise" to further expand its business.
FLFL owns and sells about 30 fashion brands through exclusive brand outlets, department stores and multi-brand outlets, as well as company-operated chains such as Central and Brand Factory. The fashion and apparel retailer collectively operates more than 400 stores spread over 6 million sq ft.
The AIM-listed India-focused online fashion retailer Koovs runs an inventory-led model. It offers its private label apart from international brands and exclusive style collaborations. The merchandise from Koovs will now retail at FLFL’s retail chains like Central and Brand Factory. Moreover, even FLFL’s brands will be sold online on Koovs, Biyani explained.
Biyani, however, did not share details on further investments planned to grow the online retail business. “It is too early," he said.
Currently, Flipkart-owned Jabong-Myntra dominate the online fashion space. However, Flipkart operates under the marketplace model. Walmart Inc. has proposed to acquire the home-grown etailer for $16 billion. The acquisition, if successful, will see the world’s largest brick-and-mortar retailer having a larger online presence in India. It will also launch more offline retail stores with private labels playing a larger role in segments such as fashion and electronic accessories.
Future Group is among India’s leading consumer goods companies with brands and retail networks in fashion, food and homeware segments. It owns over 60 brands, operates close to 2,000 retail stores spanning over 22 million square feet and attracts footfalls of over 500 million annually.
Across retail chains like FBB, Central, Brand Factory and various brands that it owns, Future Group sells about 300 million garments per annum in volume making it one of the top 10 fashion apparel companies in the world, the company said.
To be sure, this is not the first time that Biyani is investing in an online retail company. In 2016, Future Group company Future Retail Ltd had bought Rocket Internet’s online furniture seller FabFurnish.com, his first acquisition of an internet store. However, a year later, the company shut the site and users are now directed to its own website—www.hometown.in -- for its home furnishing retail chain Home Town.
Online retail sales in India are expected to grow by 31% this year to touch $32.70 billion, led by e-commerce players Flipkart, Amazon India and Paytm Mall, according to a report by researcher eMarketer.
To be sure, even as online retail market in India has more than tripled since 2015, it is only expected to contribute to 2.9% of the total retail sales in 2018, said the market research firm.
All the same, e-tail can’t be ignored. eMarketer estimates that a quarter of India’s population will become digital shoppers by end of 2018 and the figure will touch 41.6% by 2022.
HT Media Ltd, the publisher of Hindustan Times and Mint is an investor in Koovs