Arvind Lifestyle shutters Debenhams stores in India3 min read . Updated: 10 Mar 2015, 12:44 AM IST
The Arvind Ltd unit had acquired the franchise in September 2012 along with the business of Nautica and Next from Planet Retail
Mumbai/New Delhi: Arvind Lifestyle Brands Ltd, a unit of Arvind Ltd, has closed Debenhams department stores in India as it evaluates its strategy for the British retail chain, said a senior executive.
Arvind Lifestyle acquired the franchise for Debenhams in September 2012 along with the business of Nautica and Next from Planet Retail Pvt. Ltd. At the time of acquisition, the company proposed to open six new Debenhams stores in the country by 2017 and said the acquired business would grow to ₹ 500 crore from ₹ 70 crore over five years.
With the closure of Debenhams, the acquired businesses of Planet Retail is now expected to grow to ₹ 250 crore by 2017, said J. Suresh, managing director and chief executive of Arvind Lifestyle Brands.
Since the acquisition, Arvind Lifestyle had not opened any new Debenhams stores.
“Debenhams had very steep price points and it was difficult for us to make any changes in the supply chain to bring down the prices. The (store) locations were also not right," explained Suresh.
Arvind Lifestyle Brands is now in talks with the British multinational retailer to rework the strategy for the Indian market, which includes reducing prices and sale through e-commerce portals like Flipkart and Amazon.com Inc. “The ball is in their court... They have to come back to us," said Suresh.
In November, Timberland Llc, the maker of hiking boots and other outdoor gear decided to exit from India after it failed to make a dent in the market due to the presence of a similar local brand, Woodland. By the end of March, Timberland which had 14 stores in India at its peak, will have shuttered all its stores, Mint reported in November.
Marks & Spencer (M&S) India had a rocky start when it first set up franchise shops in India in 2001. Prices were high and sales were far from robust. “We got positioned, incorrectly, as a very expensive brand," Venu Nair, managing director, M&S India said in an interview in November to Mint. In 2008, M&S scrapped the franchise model, and formed a joint venture (JV) with Reliance Retail. The JV now has over 40 stores. It also reworked its pricing strategy.
As online retail gains steam in India, brick and mortar retailers have been rethinking their strategy. To be sure, some global fashion brands like Dorothy Perkins, Desigual and Miss Selfridge are available only online and not in stores.
“Every retailer is looking for an online and offline presence either through omni-channel or through market place e-tailers," said Amitabh Mall, partner and director, Boston Consulting Group, a global management consulting firm.
Earlier this year, Shoppers Stop Ltd, India’s oldest department retail chain started selling its private labels across most major e-commerce platforms. Likewise, Future Group has an exclusive partnership with Amazon. The retailers are also working on their omni-channel sales strategy.
Even the Arvind Group has set up Arvind Internet Ltd and is in the midst of launching an online custom clothing brand Creyate and a multi-brand site by October. “In three years, online retail which is 3-4% of our revenue now will grow to 10%," said Suresh.
In the next five years, the e-commerce market is expected to grow in India. “The share of e-commerce is expected to jump from 2% in 2014 to 11% in 2019, while the share of physical, organized or modern retail is expected to fall from 17% to 13%," said Think India. Think Retail, a February report by the property consultant Knight Frank India Pvt. Ltd and the lobby group Retailers Association of India. The rest of the business, 76%, will be accounted for by India’s traditional retailers.
Arvind Lifestyle has licensing relationships with international brands such as Gant, Arrow, Izod, Energie, US Polo Association, Elle, Cherokee, Mossimo and Geoffrey Beene. In August, the company announced a tie up with The Children’s Place Inc., America largest children’s specialty retailer, and with American multinational clothing and accessories retailer Gap Inc. The stores of these new brands are to open by 2015. “Typically, we open 100-150 stores every year across all brands," said Suresh.
For the year-ending March 2015, Arvind Lifestyle expects a 33% growth in revenue over the last financial year, to ₹ 2,300 crore. The like-to-like growth will be 8-15% for various brands, said Suresh. Like-to-like sales growth represents comparable growth at stores that have been open for over a year and does not take into account growth on account of new store opening.
For the quarter-ending 31 December. Arvind reported net profit of ₹ 109.1 crore and revenues of ₹ 2,069.29 crore. Arvind Ltd’s stock closed trading on Monday at ₹ 303.45 a piece on BSE, down 2.38%, while the benchmark Sensex closed at 28,844.78 points, down 2.05%.