The global macroeconomic factors that have been hard on the textile and apparel sector over the past 3-4 years have not spared Arvind Ltd’s exports. The company is having to hence increase focus on the domestic market. It has been looking at various business models to increase the proportion of its total business from the domestic market.
As of now Arvind Ltd, the integrated textiles and branded apparel player, sees 35-40 per cent of its revenues from the domestic market. The company wants to reverse this ratio and is experimenting with formats that would help increase its revenues from local business. It’s looking at models that it hopes will give it good margins.
The ‘exclusive brand outlet’ or the EBO is being seen by the company as one of the means to achieve this. Arvind Ltd has opened its first EBO in Bangalore with its fashion brands under one roof, thus bringing a new format to the city.
The Arvind Store is said to be the first opportunity for the apparel major to have its brands under one roof, including its top-end brands. “This will allow the company to enjoy better returns,” P S Rajiv, Head - Retail (EBOs), Arvind Limited, told Business Standard.
The number of these stores that now stand at 40, will see another 20 by the end of the year and 90 of such stores will be added by next year and a total of 240 such stores will be set up by the end of 2014. “That will mean revenues of about Rs 400 crore from this format by the end of 2014,” added Rajiv. Each of the store is expected to see a capex of Rs 1,800 per square foot to Rs 2,000 per square foot. Hence, including the stocks, one store would require an investment of Rs 50-60 lakh.
Bangalore could play host to 10 such stores and the state 20 such stores by the end of this quarter.
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The format is expected to breakeven in three to four years. And, it is expected to see a return on capital per annum of 18-20 per cent.
The format has both bespoke, where each product would be personalised, and ‘made to measure’, where there’s already a pattern and any deviation is mapped. Hence, the stores will have a tailor. “We will provide a good environment for tailors,” said Rajiv speaking of how good tailors are a dying breed on Monday. It’s a value migration for the tailor, he added.
Arvind has licensing pacts with international brands like Arrow, Izod, GANT, US Polo and Energie. It has JVs with VF Corporation with brands like Lee and Wrangler, and with the Murjani Group for Tommy Hilfiger to distribute and retail these brands in India.