ABFRL eyes over 10% of revenue from new age digital brands in 3-5 years

Aditya Birla Fashion & Retail Ltd (ABFRL) expects to see over 10 per cent of its revenue come from new age digital brands over the next 3-5 years.

The fashion retail chain recently received its Board of Director’s approval to set-up a subsidiary which will invest in direct-to-consumer (D-2-C) brands and also organically create its own brands across fashion, beauty and other allied lifestyle segments.

“We will help brands extend categories, grow through working capital management and through better management,” Ashish Dikshit, MD at ABFRL, told Business Standard.

He explained that in the last two years, there has been a growth of digitally native brands across categories.

“The whole idea is that we should invest at an early stage in promising brands which are there, help them and assist them grow with the formidable capabilities that we have, as well as unique capabilities that the entrepreneur brings. So that partnership will bring the best of both worlds,” Dikshit explained.

He also said D-2-C brands understand the digital ecosystem and the category or unique proposition. Dikshit explained that ABFRL can help these brands with finance, management, technology, access to marketplace platforms and partners, sourcing and supply chain systems which will help D-2-C brands scale up faster and more efficiently.

However, ABFRL will look at buying out a majority stake in D-2-C brands it will invest in as it has done in the past in its other investments. Over the next three to five years, the company plans to have 25-30 brands in its kitty.

In the first 12-14 months, ABFRL plans to add around seven to ten D-2-C brands in its portfolio and launch three to four of its own online first brands. Dikshit said that once ABFRL’s subsidiary has a portfolio of a certain operating size then it will look to raise funds. However, it will still be a majority invested ABFRL company.