VF Arvind to tap into large retail outlets

Riding on the boom in apparel sales through large format outlets, VF Arvind Brands, the joint venture between the US-based VF Corp and Arvind Brands, is planning to prise open the lower end of the apparel market.

The company plans to launch Riders, a VF Corporation brand, in the country and also extend its other brand Hero to large format retail outlets. Currently, Hero sells only through the Metro Cash and Carry route.

VF Arvind Brands CEO Darshan Mehta said, "India is witnessing an apparel socialism and we want to be a part of the change." He said that the Riders and Hero brands will be sold as a value proposition for consumers who are upgrading from unbranded apparel.

Mehta added that the value proposition for these brands is created though dis-intermediation as the large retail formats cut down on intermediaries like the distributors and wholesalers and thus help manufacturers protect margins despite selling at competitive prices. "When selling through large retailers, the intermediaries are cut down and this gives companies better room for margins in the lower end apparel," he said.

According to company estimates, apparel sales constitute only 2 per cent of the organised retail sales. But this is expected to touch 20 per cent in just three years. While retailers use food and grocery to drive in footfalls, categories like apparel provide them real margins, Mehta said.

In the past, the Arvind group has tried to tap the bottom end of the market through concepts like self-stitch denims under the Ruf-n-Tuf brand. However, the concept failed to take off. According to Mehta, the biggest challenge in tapping mass markets till now was the distribution network. "Distribution, which was a crucial factor at that point of time, is no longer a disadvantage," he added.

According to company executives, there was a constant shift from tailored to ready-to-wear. Even the mid-priced segment is booming, they said. For instance, the company claims that the profitability of stores in smaller towns is better.

For instance, the stores in Bikaner and Pali deliver business worth Rs 3-4 lakh a month compared to a store in Mumbai, which delivers sales worth Rs 10-12 lakh.

It must be noted that the rentals in Mumbai are higher and cost one-third of a store's sales while only the rentals in smaller towns take up only one-tenth of the sales.