Aditya Birla Fashion shakes up India's Rs 1.45-trillion ethnic wear market

Aditya Birla Fashion, which has acquired Sabyasachi, Tarun Tahiliani, and Shantanu & Nikhil brands in recent transactions, proposes to take these names to a wider audience

Names such as Sabyasachi, Tarun Tahiliani, and Shantanu & Nikhil are labels that many Indians aspire to have in their wardrobes. Few can afford these names though. The ones that do, openly flaunt these labels on many an occasion.

Aditya Birla Fashion, which has acquired the three brands in recent transactions, proposes to take these names to a wider audience. Experts say the apparel retailer will be the first in a fragmented market to do so.

“Aditya Birla Fashion will be the first retailer of scale in ethnic wear (in India). The market has many brands, promoted by big and small designers. Plus, there is a large unorganised market. In my view, Aditya Birla Fashion will have to create this bridge-to-luxury market it is indicating, since ethnic wear is a category that is seeing traction from consumers,” Jaydeep Shetty, retail expert and entrepreneur, said.

While announcing the deal with Tarun Tahiliani last month, Ashish Dikshit, managing director of Aditya Birla Fashion, said ethnic wear was going to become an important category in the future. “Confident Indians will rediscover their culture and heritage. We want to make an impact in the market with the combined expertise of Tarun Tahiliani and us,” he said.

Industry sources say Aditya Birla Fashion may stitch up deals with more fashion designers as it looks to build an all-round portfolio of value, premium, and luxury ethnic wear brands.

According to Mumbai-based brokerage Edelweiss, the ethnic wear market in India is pegged at $20 billion or Rs 1.45 trillion in size. Of this, over two-thirds or 70 per cent is unorganised. The balance is distributed between many big and small labels, experts said. 

 Based on gender, the organised ethnic wear market in India, pegged at Rs 43,500 crore in size, is skewed towards women’s wear. It is 85 per cent of the market. This segment is growing at 10 per cent per annum. The men’s ethnic wear category, on the other hand, is 15 per cent in terms of size, but growing at double the above rate of growth.  

While Reliance Retail is known largely as a house for international brands, retailers such as Shoppers Stop, Lifestyle, and Future group have not aggressively forayed into ethnic wear the way Aditya Birla Fashion has, experts said. Future group had a few years ago picked up stakes in companies such as BIBA and Anita Dongre (AND) Designs, but had exited these firms subsequently.

As such, apparel retailers in India do have their own ready-to-wear collections in value ethnic wear, Shetty says. This is different from the strategy being pursued by Aditya Birla Fashion, he says. “They (Aditya Birla Fashion) are carefully picking up stakes in companies. The idea is to leave the creative aspects to the designers and bring their back-end skills and might to promote the labels and take it to more people,” he says. In a note last week, Abneesh Roy, executive vice president, research (institutional equities), Edelweiss, said Aditya Birla Fashion was looking to grow its presence significantly in ethnic wear. 

“The company expects to gain massive foothold in ethnic wear to achieve Rs 2,000 crore revenue by FY26 versus Rs 50 crore now. They propose to do this via acquired brands along with Pantaloons’ existence in the value ethnic wear category,” he said.

Online sales are expected to be a big part of Aditya Birla Fashion’s strategy to grow its presence in ethnic wear, experts said, as rival e-tailers such as Myntra, Flipkart Fashion, Amazon, and ajio.com from Reliance Retail take advantage of the digital dividend triggered by the Covid-19 pandemic.

Two years ago, Aditya Birla Fashion had acquired e-tailer Jaypore, aimed at stepping up its presence in the online ethnic wear space. The acquired brands could be pushed on to this platform in the future.