Arvind Ltd, the ₹10,826 crore company, has diversified from textile manufacturing to retail and branded apparel. A shift to fast fashion the world over and the popularity of athleisure has the company’s global clients, such as Levi’s, H&M, GAP (to whom it supplies fabric and garments), asking for swifter solutions. Arvind is stepping up its efforts by investing in textile parks and making garments. In an interview, Sanjay Lalbhai, the company’s chairman and managing director, talks about India’s growing appetite for branded apparel. Edited excerpts:
Arvind was among the first Indian companies to sell denim globally.Where does denim stand today for the group?
We are now changing the entire premise on denim. We will be the first company to do denim polos and round-necks. We are going into tops, like knits and denim shirts. That’s a large market and largely serviced by China. This will start in three-four months. And I’m going into technologies that are unheard of—to make jeans and the entire athleisure and sportswear in Indigo (denim).
The Indian textiles export market has seen tepid growth, while other countries have held ground.
China is three times more expensive, but they are only surviving because of verticalization. Then there is Bangladesh, Pakistan, Sri Lanka and Turkey. India should dominate, but we don’t because we have no scale. Where are the garment factories in India deploying 10,000 workers? There are Chinese factories at that scale. We are setting up large parks where there will be a minimum of 10,000 workers—in Jharkhand, Gujarat and Andhra Pradesh. When a buyer comes, he wants to buy large quantities from one location. When you go to China, you buy 10% of whatever GAP sells at one location. That’s the differentiation. It isn’t cost since they are more expensive. Scale is the key.
Arvind has set a target of achieving ₹12,000-crore in its textile business over the next five years. How will you achieve that?
We’re verticalizing, that is, we are not only selling fabrics, but we are giving complete solutions. Second is the advanced material division, which is technical textile (used in industrial application). Then there is sportswear and athleisure wear, because currently this business is with China, Korea and Taiwan. Athleisure and sportswear are becoming big in India. Because denim is going down, people are wearing more and more of their gym wear as outerwear. Some of our brands such as Flying Machine have an athleisure line. We will be servicing Adidas, Reebok and other such brands with our range. Then there is B2C business for the Arvind fabric store. We are building this whole new Arvind store, which will be just like Raymonds—where we will sell fabrics, do customized tailoring and sell ready-to-wear stuff under the Arvind brand.
What consumer trends are shaping apparel retail in India?
The unorganized market is becoming more organized because of GST and the arrival of omni-channel retail. There are specific areas of growth: we feel value retail will do very well. There is a trend of formal becoming more casual—people are dressing down. That’s a huge area and we have a strong play in that with US Polo, Flying Machine, GAP and Aeropostale. Children’s wear is also a large opportunity, as is undergarments.
Arvind entered e-commerce in 2015-16 with Nnnow.com. How does it fit into your portfolio?
We saw it coming. We knew the world is going to consume products very differently. We were one of the first few to embrace omni-channel and to develop a home-grown platform. Having said that, we won’t burn money. We have to become relevant to customers. Additionally, we will also continue to control our own inventory on marketplaces such as Flipkart, while Nnnow will be used to talk to our loyal shoppers.
How deeply is e-commerce affecting brick-and-mortar retailers?
I think retailers will have to reconsider the density of the number of shops as people buy more online. Brick-and-mortar stores will become more of experience centres, or for unique solutions. The rest of it will broadly be consumed online.