 "Pantaloon to wear a new look")
Pantaloon Fashion and Retail (Pantaloon) is set for a refreshed look and reshuffled portfolio as its new promoter, Kumar Mangalam Birla, plans to spend Rs 150 crore to expand and renovate the multi-brand apparel retail chain this financial year.
The $40-billion-turnover Aditya Birla Group had announced its acquisition of a controlling stake in debt-laden Pantaloon Retail's fashion business last year in a Rs 1,600-crore deal. Aditya Birla Nuvo (Nuvo), the diversified conglomerate of the Birla group, which also has a thriving branded apparel business in Madura Garments, finally got the reins of Pantaloon's fashion business this April, after its demerger from the retail empire of Kishore Biyani.
"It were stretched financially as the debt structure was very high, so it could not invest in the look and feel, and that has actually affected the business," says Rakesh Jain, managing director, Aditya Birla Nuvo. Pantaloon reported a net loss of Rs 57 crore in the quarter ended June, while clocking Rs 344 crore in revenue.
"The reason we acquired Pantaloon was to fill the gaps, especially in womenswear, kidswear and ethnicwear in which Madura does not have a presence," explains Jain. Nuvo has enjoyed a strong presence in branded menswear through subsidiaries such as Madura Garments and Jaya Shree Textiles.
Its brand portfolio includes marquee names in menswear such as Louis Philippe, Van Heusen, Allen Solly, Peter England, People and Linen Club. With the acquisition of Pantaloon, the company boasts of being the largest branded apparel player in India, selling at least one piece every second. It has now crossed over 1,500 exclusive brand outlets occupying over 3.8 million square feet of retail space and raking in over $1 billion (around Rs 6,800 crore) of annual revenue.
Apparel retailing is the second-largest contributor to the Indian retail industry, after food and grocery, but bestows higher margins than food. In the organised retail sector, apparel retailing is the largest and most-penetrated segment. From 2010 to 2012, the apparel retail market grew at 10 per cent to reach Rs 17.4 lakh crore sales.
The urban ready-to-wear segment is growing at a faster rate than overall apparel retail. It grew at 12 per cent in the three years under consideration to an estimated Rs 48,000 crore in 2012. As per the company's website, the segment is expected to grow at 13 per cent to Rs 77,000 crore by 2016. While menswear will continue to dominate the sector, womenswear and kidswear are expected to grow faster and lay claim to larger shares in the expanding pie.
Nuvo is looking to increase its share through turning around the business of Pantaloon. The latter has 96 stores spread across the country. It enjoys 3.8 million loyalty card-holders, which is one of the largest in the domestic market.
Now Nuvo plans to spend Rs 150 crore in the current financial year to add 12 new stores and refurbish some of the existing ones. The plan takes a leaf out of Madura Garments' successful turnaround of the loss-making Allen Solly stores last year. It was achieved by introducing freshness in design and variety, besides a new look and feel to the outlets.
Nuvo has also improved its business process by cutting down on its time-to-market from the stage of finalising design, placing an order for fabrics, making the garment to bringing it to the store. It now wants to use this learning to improve the operations of Pantaloon.
But Pantaloon is a multi-brand apparel chain, while Nuvo has been so far operating much smaller exclusive brand stores for Madura Garments. The company will have to work on a much elaborate distribution which is crucial for managing products from different suppliers for a multi-brand outlet chain.
While it is working on strategies to meet these challenges, it has decided not to tweak the original positioning of Pantaloon, that is, to cater to all members of a family through value-for-money products.
"Under Madura, we have certain brands like People which we would like to position as value brands. So we will add to the men's value product portfolio of Pantaloon," Jain says. This is part of the strategy to augment the merchandise. But Nuvo will not push the premium brands such as Louis Philippe, Van Heusen in the Pantaloon stores.
Other measures on Jain's list to get Pantaloon in black include expanding the loyalty customer base. But persistent high inflation and slow economic growth in the country have affected consumers' propensity to spend on apparels and it would not be easy for Nuvo to turnaround the business fast in such challenging circumstances.
NUVO'S WAY OUT
nSpend Rs 150 crore to add stores and refurbish some of the existing one
nKeep Pantaloon's original positioning to cater to families with value-for-money products
nAugment merchandise by bringing in budget brands from Madura's portfolio
nExpanding the loyalty customer base
nCut time-to-market, similar to what it has done with Madura's exclusive stores
nPantaloon to complement Madura's presence in menswear with womenswear, kidswear & ethnicwear
The $40-billion-turnover Aditya Birla Group had announced its acquisition of a controlling stake in debt-laden Pantaloon Retail's fashion business last year in a Rs 1,600-crore deal. Aditya Birla Nuvo (Nuvo), the diversified conglomerate of the Birla group, which also has a thriving branded apparel business in Madura Garments, finally got the reins of Pantaloon's fashion business this April, after its demerger from the retail empire of Kishore Biyani.
"It were stretched financially as the debt structure was very high, so it could not invest in the look and feel, and that has actually affected the business," says Rakesh Jain, managing director, Aditya Birla Nuvo. Pantaloon reported a net loss of Rs 57 crore in the quarter ended June, while clocking Rs 344 crore in revenue.
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"The reason we acquired Pantaloon was to fill the gaps, especially in womenswear, kidswear and ethnicwear in which Madura does not have a presence," explains Jain. Nuvo has enjoyed a strong presence in branded menswear through subsidiaries such as Madura Garments and Jaya Shree Textiles.
Its brand portfolio includes marquee names in menswear such as Louis Philippe, Van Heusen, Allen Solly, Peter England, People and Linen Club. With the acquisition of Pantaloon, the company boasts of being the largest branded apparel player in India, selling at least one piece every second. It has now crossed over 1,500 exclusive brand outlets occupying over 3.8 million square feet of retail space and raking in over $1 billion (around Rs 6,800 crore) of annual revenue.
Apparel retailing is the second-largest contributor to the Indian retail industry, after food and grocery, but bestows higher margins than food. In the organised retail sector, apparel retailing is the largest and most-penetrated segment. From 2010 to 2012, the apparel retail market grew at 10 per cent to reach Rs 17.4 lakh crore sales.
The urban ready-to-wear segment is growing at a faster rate than overall apparel retail. It grew at 12 per cent in the three years under consideration to an estimated Rs 48,000 crore in 2012. As per the company's website, the segment is expected to grow at 13 per cent to Rs 77,000 crore by 2016. While menswear will continue to dominate the sector, womenswear and kidswear are expected to grow faster and lay claim to larger shares in the expanding pie.
Nuvo is looking to increase its share through turning around the business of Pantaloon. The latter has 96 stores spread across the country. It enjoys 3.8 million loyalty card-holders, which is one of the largest in the domestic market.
Now Nuvo plans to spend Rs 150 crore in the current financial year to add 12 new stores and refurbish some of the existing ones. The plan takes a leaf out of Madura Garments' successful turnaround of the loss-making Allen Solly stores last year. It was achieved by introducing freshness in design and variety, besides a new look and feel to the outlets.
Nuvo has also improved its business process by cutting down on its time-to-market from the stage of finalising design, placing an order for fabrics, making the garment to bringing it to the store. It now wants to use this learning to improve the operations of Pantaloon.
But Pantaloon is a multi-brand apparel chain, while Nuvo has been so far operating much smaller exclusive brand stores for Madura Garments. The company will have to work on a much elaborate distribution which is crucial for managing products from different suppliers for a multi-brand outlet chain.
While it is working on strategies to meet these challenges, it has decided not to tweak the original positioning of Pantaloon, that is, to cater to all members of a family through value-for-money products.
"Under Madura, we have certain brands like People which we would like to position as value brands. So we will add to the men's value product portfolio of Pantaloon," Jain says. This is part of the strategy to augment the merchandise. But Nuvo will not push the premium brands such as Louis Philippe, Van Heusen in the Pantaloon stores.
Other measures on Jain's list to get Pantaloon in black include expanding the loyalty customer base. But persistent high inflation and slow economic growth in the country have affected consumers' propensity to spend on apparels and it would not be easy for Nuvo to turnaround the business fast in such challenging circumstances.
NUVO'S WAY OUT
nSpend Rs 150 crore to add stores and refurbish some of the existing one
nKeep Pantaloon's original positioning to cater to families with value-for-money products
nAugment merchandise by bringing in budget brands from Madura's portfolio
nExpanding the loyalty customer base
nCut time-to-market, similar to what it has done with Madura's exclusive stores
nPantaloon to complement Madura's presence in menswear with womenswear, kidswear & ethnicwear