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Business News/ Opinion / Columns/  Will ABFRL’s designer label plan work?
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Will ABFRL’s designer label plan work?

Recently, ABFRL announced that it was joining hands with fashion designer Tarun Tahiliani to sell contemporary ethnic clothing and accessories for men.
  • The company that retails brands Louis Philippe, Van Heusen, Allen Solly and Peter England sewed an 80:20 partnership with Tahiliani.
  • Will ABFRl’s designer label plan work?Premium
    Will ABFRl’s designer label plan work?

    Recently, Aditya Birla Fashion and Retail Ltd (ABFRL) announced that it was joining hands with fashion designer Tarun Tahiliani to sell contemporary ethnic clothing and accessories for men under a new brand. The company that retails men’s formal wear brands Louis Philippe, Van Heusen, Allen Solly and Peter England sewed an 80:20 partnership with Tahiliani. It also picked a 33.5% stake in the designer’s luxury couture business Goodview Properties Pvt. Ltd for 67 crore.

    The move comes close on the heels of its investment in Sabyasachi, the designer label owned by Sabyasachi Couture where ABFRL is putting in 398 crore for a majority stake. The fashion firm, part of the $50 billion Aditya Birla group, first acquired ethnic fashion startup Jaypore for 110 crore in June 2019, followed by the acquisition of a 51% stake in Finesse International Design Pvt. Ltd, the company owned by designers Shantanu & Nikhil. ABFRL is positioned as a pure-play fashion house with a network of 3,025 stores and revenue of 8,788 crore in FY19-20.

    At the time of the Sabyasachi investment in January, the company said that the label would add weight to ABFRL’s growing ethnic wear portfolio, a market it is keen to capture and build along with its men’s western wear portfolio.

    “We believe that over the next few years, ethnic wear is going to be an increasingly important category as young and confident Indians rediscover their culture and heritage. Over the next few years, ABFRL intends to craft a portfolio that addresses the entire gamut of ethnic wear segments: value, premium and luxury," ABFRL managing director Ashish Dikshit had said.

    ABFRL may have been increasing its exposure to premium Indian designer labels, but not everyone is convinced about the move. People familiar with the deals say that even within the company, not many are impressed. The approach seems confusing and devoid of strategy, they feel. “For starters, these designer label businesses are not scalable. They are not daily wear brands. It is top-end, occasion wear that the company has invested in," said a person with knowledge of the developments.

    Also, unlike Reliance Brands, which distributes several premium and luxury brands in the country and took the franchise route to do business, ABFRL has invested in these labels, he said.

    Commenting on the deals with designers, in his research notes, Abneesh Roy, executive vice president, institutional equities, Edelweiss, pointed out that ABFRL will have to strategize on driving scale and synergies with its existing businesses besides managing the cultural aspects of these companies. On Tahiliani, he said that in the new venture, the key thing to understand is how the company will differentiate it from Shantanu & Nikhil’s positioning and focus, which is also menswear driven.

    Many say that an aggressive digital push and pivot for the existing brands would have made for a better business case for ABFRL instead of stitching deals with fashion designers.

    “Louis Philippe with a turnover of about 1,000 crore, may be its largest brand but the existing brands need investment and innovation. They offer a weak proposition. Even the premium ones have been reduced to mid-tier brands," the person mentioned above said.

    Yet, others hail the company’s push into designer labels and plans for a more affordable brand in collaboration with Tahiliani.

    “When you are a house of fashion, as ABFRL is, you are bound to expand. Deals with designers is a very serious move on how to capture the market," said Harminder Sahni, founder, Wazir Advisors, the company that advised Tahiliani on the partnership.

    In the past 5-6 years, the traction for ethnic wear has accentuated. Indians are increasingly more comfortable in and proud of their Indian apparel. Bandgalas and achkans have replaced suits at weddings, and the ethnic wear space has been taken over by Manyavar, which has been a roaring success, Sahni said.

    Consumers aspire to own a Tahiliani outfit and this partnership will only make his brand more affordable, Sahni said, adding that in all the ABFRL-designer deals, the company is also getting access to the enormous design sensibilities of these designers. “Critics notwithstanding, how you view the development is your choice," he said. “Do you see it as a risk or an opportunity?"

    Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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    Published: 03 Mar 2021, 11:04 PM IST
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