Raymond Apparel is slimming down in a bid to grow its business
Sometime in 2009, Raymond Apparel, a wholly-owned subsidiary of Raymond Limited, decided to slim down its brand portfolio. The first to come under the axe was Notting Hill, an economy apparel brand which was removed from shelves in metros and large cities, and was confined to Raymond stores in tier 4 and 5 towns. Next in line was children’s wear brand Zapp which was pulled out in 2010, after a brief stint of four years in the market. The women and children’s line of the casual fashion brand ColorPlus were removed recently.
The downsizing of its portfolio leaves the company with five brands — Raymond Premium Apparel, Park Avenue, Parx, Manzoni and ColorPlus (acquired in 2003 and operates as a separate company) — in its stable. Going forward, the company will concentrate on its thoroughbreds (Park Avenue, Parx and ColorPlus), which clocked a combined revenue of Rs 460 crore of total branded apparel revenue of Rs 550 crore in 2009-10.
The intent is clear: the company wants to divest unproductive ventures and focus on the core brands that are most profitable to the company. At the close of the financial year, the company hopes to notch up a 30 per cent growth over the previous year for its apparel business.
Analysts say the company’s optimism isn’t misplaced. Says Abhishek Ranganathan, analyst with MF Global Sify Securities, “Raymond has rationalised its business by exiting businesses that were not profitable. Now it is able to focus better. An improved retail network has increased visibility and improved sales. Its brands have also benefited from an uptake in consumer spending.”
But why exit ventures that it entered with much fanfare? Did the company give its new product lines a fair chance?
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Mind you, when Raymond entered the children and women’s wear segments it knew pretty well it was getting into unfamiliar territory. Children’s wear by itself is a tricky segment. The market is largely unorganised. Children outgrow their clothes quickly, making customers price sensitive. “The price points where Zapp operated didn’t appeal consumers much. Given that margin in the children’s wear business is low, being profitable is a big challenge,” says ORS Rao, CEO, Cygnus Business Consulting.
With Notting Hill, the problem was achieving economies of scale. “Notting Hill, being an economy player, could not be stocked in all Raymond Shops in the metros because they have a premium image,” reasons Rao. Achieving scale through large retailers was not a viable solution because all these players have their private labels which they tend to push harder for obvious reasons,” he adds. In Raymond stores in tier 4 and 5 cities, Notting Hill would still work as an ‘aspirational brand’ for customers accustomed to getting their clothes stitched to order.
Joshi acknowledges, “We decided to tap newer segments like women and children’s wear, but realised we would be more successful if we achieved scale in what has been our forte — men’s wear.”
Of course, ready-to-wear men’s clothing is big business. According to Cygnus Business Consulting and Research, while men’s wear makes up 61 per cent of the overall branded ready-to-wear market (Rs 39,000 crore), women’s wear and children’s wear constitute 30 per cent and 9 per cent respectively. Branded ready-to-wear is only 25 per cent of the total apparel market. The market is growing at 10-15 per cent year-on-year, but competition is stiff with brands like Louis Philippe, Allen Solly, Peter England, Van Heusen (from Madura Fashion & Lifestyle), Arrow (from Arvind Brands) and Reid & Taylor, Belmonte (from S. Kumars) straddling different segments and price points. Retailer labels and lately international fashion labels such as Zara have joined the battle for space in the consumers’ wardrobe.
With the product line rationalised, Joshi says the company has identified four clear segments for its brands. Park Avenue is positioned as a formal wear brand for men, with a range for women too. ColorPlus occupies the premium ‘smart casual’ space with offerings like trousers, shirts and knits, and Parx is positioned as the ‘beyond work’ brand with a young attitude and the product mix consists of t-shirts, trousers and jackets. And Raymond Premium Apparel, offering suits, trousers and shirts, will be an all occasion brand.
The company will focus on three key areas to drive the unique appeal of each of its brands — product mix, retail experience and communication. As Joshi explains, “A white shirt irrespective of brand is a white shirt. What clearly makes the difference is the imagery in the mind of the consumer. This is driven by a mnemonic or logo, style and fit or the experience at the time of buying the product.”
Product focus
The three-pronged strategy is underway across its entire portfolio. For instance, Park Avenue is focusing on product design. “We study how body structures are evolving, lifestyles are changing. Earlier in formal wear shirts, the traditional colours were blue, white and cream; however, four years back, we introduced fashion colours (aqua green and blue, pink and purple) which met with fantastic results.” Similarly, in suits, Park Avenue introduced slim fit and super slim fit suits. Other innovations done by the brand include non-iron and wrinkle-free shirts. Park Avenue will also introduce ‘limited edition’ products starting this season.
Joshi feels that the brand ColorPlus has very strong equity and has single-handedly built the smart casual category in India. He points out, “The brand differentiates itself through the unique mix of colours. We took the lead in introducing innovative washes and fabrics.” The company toyed with the ColorPlus women’s line briefly but decided women’s wear is not really its cup of tea.
So why add women’s wear to the Park Avenue brand? “In the casual space, the competition is much higher,” says Joshi. “The dressing habit of Indian women in the formal wear space is slowly evolving. Women are looking for alternatives beyond kurta pyjama and saris. In casual wear, women continue to wear jeans, rather than trousers and shirts.”
The company is betting its shirts on Raymond Premium Apparel, the newest brand in the portfolio. “With this brand we wish to capitalise on the strength of the Raymond brand, and its huge recall. It will help us move up the value chain,” says Joshi.
Manzoni will continue to operate as the bridge to the luxury space. “People look for maximum value at any price point. With Manzoni, our offerings are 25-30 per cent cheaper than any luxury brand,” says Joshi. The difference between a Manzoni suit and a Raymond suit will be in the nature of the fabric. “For Manzoni, we source fabrics from all over the world. The fit and style also vary. I can’t have a super slim fit at a Manzoni store, it would fail miserably as I don’t have that type of consumer base walking in,” adds Joshi.
While rivals argue Raymond tends to slip on design, Joshi claims each of the company’s brands has its own design team. “Our designers regularly visit fashion fairs in Italy to learn about fashion trends. We subscribe to a digital portal which does fashion trend forecasting,” says Joshi. Beyond the macro fashion trends, the preferences of consumers who visit the store are tracked extensively. “Through our point-of-sale systems, we track the sizes and colours that sell. In India, the tastes and preferences are quite unique and we also keep that in mind when launching the colour palette for a particular season.
Retail push
Product is only one aspect, the other is retail. Rivals say the real strength of Raymond is its widespread distribution network. The company, with its legacy in the textile business, flaunts 560 Raymond Shops across the country — the largest for any branded apparel manufacturer. By end March, the company hopes to add 100 more stores. That’s over and above its presence in multi-branded outlets and department stores.
To reduce dependence on what the company calls its crown jewels (Raymond Shops), which now account for more than 50 per cent of overall sales, Raymond is keen to move more merchandise through exclusive stores to gain tighter control of its brands. Park Avenue with 16 exclusive brand outlets, hopes to reach 30 this year. Parx aims to reach 20, from its current 14. ColorPlus will continue to operate through 74 exclusive stores.
Observers say that there is another aspect that needs attention: the retail experience. Raymond needs to build a complete retail eco-system around its brands focusing on all aspects — from retail identity to visual display and staff training.
Joshi is only too aware and believes the company is taking concrete steps in this direction. For instance, the company will unveil a new retail design in August for Park Avenue and Parx, for ColorPlus it plans to have in-store demos where consumers can touch and feel the product. “The new retail concept for the Raymond Shop unveiled two years back has personalised sections for each brand,” says Joshi.
Raymond is also investing in pure retail initiatives such as Neckties and More and Made to Measure. Neckties and More, stocking accessories from all brands, are 100-200 square feet stores in malls and airports (Mumbai and Hyderabad) to tap impulse buying. “This model is also being extended to shop-in-shops and currently exists in 30 locations,” says Joshi. This concept will be extended to Shirts and More in the future, which will be small format stores stocking shirts from all four brands.
The retail initiative is part of its larger brand-building effort. The company spent 8 per cent of its turnover last year on advertising. The spend will be the same but the mix will be different this year. Traditionally, Park Avenue and Parx have used the print and outdoor media in a big way. Going forward, the focus will be on the electronic media. “For these two brands we will have models, as before, to carry off our brands, while for ColorPlus, we will focus on showcasing the product in all our communication; that has been our unique advertising style.”
To improve appeal among younger consumers, Park Avenue is using Facebook which has 20,000 members and allows designers to interact with consumers. Going forward, Parx and ColorPlus will also focus on building communities around their brand.
Indeed, industry experts say Raymond needs to work more than ever before to build stronger identities for its brands. The Raymond textile brand which commands a strong brand equity was built at a time when competition was as good as absent. For apparel brands this is not the case. “The brand needs to create desire in consumers to buy the brand or consumer pull rather than depend on sales push,” says an industry expert who wishes to stay anonymous.
Many of Raymond’s peers are banking on ‘imagery’ to score points with younger audiences. If you notice, Raymond’s communication also shows a lot of older people. “The Louis Philippe brand, for example, has built an aura of power and authority around it; Van Heusen is for the upwardly mobile executive who is successful; Allen Solly is for the unconventional person while the Arrow man wants to be impeccably dressed. What is the mindset of the Raymond brands?” asks Prateek Srivastava, group president (south), O&M.
That may not be too difficult — Raymond has ‘heritage’ on its side. Starting from the “You don’t have to be a Raymonds’ man… but it helps” campaign (which featured ‘offbeat’ celebrities like Vishwanathan Anand and Geet Sethi) to a culmination in “The Complete Man”, the advertising for the brand has evolved brilliantly over the past couple of decades. And everyone acknowledges its then advertising agency Enterprise has played a huge role in building the brand.
What it will have to work on is segmenting its offerings on more concrete values, says a Delhi-based brand consultant. “When a consumer walks into a Raymond Shop which offers Raymond Premium Apparel shirts as well as Park Avenue shirts, how does one differentiate? It appears as though both brands are chasing the same segment,” he says.
ColorPlus, which has a unique aspirational appeal, should stick to its knitting, he says. “The brand has experimented too much. They introduced product lines targeted at women and children, but that did not go down well with the consumer, forcing them to go back to their core lines.”
Manzoni is in need of a vibrant, trendsetter image. “Consumers would rather spend a little extra on a Hugo Boss or Canali suit that have very strong aspirational appeal,” notes Rao of Cygnus Business Consulting. “In the premium segment, it is not a value for money game,” he adds. At the end of the day, it’s all about desirability.
After all, in an increasingly competitive apparel space, it is not just the product but the branding and experience that will do the trick.