How Wills Lifestyle hopes to stand out in the
crowded readymade apparel market.
ITC
entered the apparel retail market in 2000 with
Wills Lifestyle. Cigarettes, it knew, was no
longer a sunrise business and it needed to
diversify into areas where strong brand values
can be created. Apparel fitted the bill. The
market had begun to show signs of explosive
growth as disposable incomes were climbing
rapidly. To begin with, Wills Lifestyle had a
range of formals for men and a line of western
wear for the working woman. Over the years, the
company has added new lines of evening wear,
sportswear, designer wear, fragrances and
accessories.
But
the business, which comes under ITC’s
fast-moving consumer goods division (2008-09
turnover Rs 18,129 crore, inclusive of taxes),
is small ten years later. Atul Chand, chief
executive of ITC’s lifestyle retail business
division, indicates that the turnover of Wills
Lifestyle could be around Rs 200 crore: “We have
10 per cent of the premium apparel retail market
which is around Rs 2,000 crore in size.” Another
Rs 150 to 200 crore comes from its
value-for-money brand, John Players, which
retails from 225 stores in the country. Chand’s
division — Wills Lifestyle plus John Players —
thus contributes a little over 2 per cent of
ITC’s FMCG business. All told, the branded
apparel market in the country is worth Rs 10,000
crore per annum — ITC’s share is therefore not
more than 4 per cent. IDFC-SSKI Managing
Director feels the small size of the business
could work against it. “There could be a lack of
focus because of the business being a small
portion of the company,” says he.
It
may not be big, but is it profitable? Chand does
not share numbers. “What we have done has
improved the profitability of our business,”
says he. This could mean anything. But some
other numbers illustrate a related point. Chand
has 100,000 sq ft of retail space for Wills
Lifestyle, which fetches him Rs 200 crore in
sale. He, in other words, sells Rs 20,000 per sq
ft per annum or a tad over Rs 1,650 per sq ft
per month. Value retailers are at around Rs 400
per sq ft per month at the moment, while other
lifestyle retailers are stuck at around Rs 1,000
per sq ft.
The
readymade apparel market, it so happens, is
highly fragmented. Madura Garments (Van Heusen,
Louis Philippe, Allen Solly and so on) of the
Aditya Birla Group leads the pack in the premium
end, according to analysts, with a market share
of 12 per cent. ITC, with a ten per cent market
share, hasn’t done too badly. What it also means
is that the market is extremely competitive and
Chand has to keep the buzz around the brand
alive at all times to tackle the rivals.
What
has compounded his problem is that rivals like
Madura Garments now offer a complete wardrobe
like Wills Lifestyle. “We are present in all the
addressable markets that exist,” says Madura
Garments Chief Operating Officer Shital Kumar
Mehta. With his original USP gone, Chand has his
task cut out.
Banking on fashion
In 2006, Wills Lifestyle became the title
sponsor of the India Fashion Week. Though it is
a B2B event, it has, claims Chand, improved the
visibility and recognition of his brand, and
shored up its premium equity. More important,
this has given him access to the country’s top
designers. Wills Lifestyle sells designer wear
priced between Rs 4,000 and Rs 10,000 from its
stores. “This is the largest initiative ever to
popular designer wear,” says he. “We have sold
over 100,000 pieces so far.”
For
this season, Chand has tied up with eight top
designers: JJ Vallaya, Rajesh Pratap Singh,
Ranna Gill, Rina Dhaka, Rohit Bal, Rohit Gandhi
& Rahul Khanna, Satya Paul and Shantanu & Nikhil.
Some of them make the clothes they supply, while
others get them done by contract manufacturers.
Of course, the designs they put up at the Wills
Lifestyle stores cannot be retailed anywhere
else.
But
what’s in it for these designers? Don’t the low
prices (designer wear at exclusive outlets can
cost four to five times more) erode their brand
equity? It gives them access to several
prosperous non-metro markets where they do not
have a presence, argues Chand.
Affordable designer wear is one way Chand has
been able to build bridges with women. Almost 35
per cent of sale at Wills Lifestyle is women’s
wear — western and fusion —, though 50 per cent
of the shoppers are women. Women’s wear, to be
sure, is a tough business. Many companies have
burnt their fingers in it. Analysts say this is
because they are extremely value-conscious
buyers. Raymond, for instance, had started the
Be: stores exclusively for women. The stores
have since been shut.
To
strengthen Wills Lifestyle’s portfolio of
women’s wear, Chand has tied-up with Ricardo
Rami Studio of Milan for a whole new line. It
will be priced between Rs 2,000 and Rs 3,000 —
in the gap between designer wear and the Wills
Lifestyle line.
Some
rivals insist that women’s wear is still a small
category. The readymade apparel market is still
largely dominated by men. “The branded women’s
wear market is still a nascent one. We will
expand there as the market grows in the next
five years or more. We will rev up our presence
then,” says Mehta.
Chand admits that women’s wear is far more
complex than men’s wear: “This is due to
multiple factors — many players, a large
unorganised segment, usage of diverse fabric
bases, wide palette of colours, especially in
prints, different silhouettes, styling and
accessories.” He adds that “success in this
segment depends on getting the right consumer
insights, creating a recipe for differentiation
and engaging with the consumer through
appropriate communication and retail
experience.”
Also, much of what Chand has done recently — the
introduction of designer wear and the Ricardo
Rami line — comes with a price tag of Rs 2,000
and above. But the sweet spot at which most
sales are congregated, according to Chand, is Rs
1,500 to Rs 2,000.
Fast forward
To keep the excitement going in the popular
segment, Chand has decided to refresh the lines
every two months. Most other retailers prepare
for two seasons in a year — summer and fall.
Wills Lifestyle, in a way, could have as many as
six in a year.
The
insight here was that, on an average, a customer
walks into a Wills Lifestyle store every two
months. “So, we need o give something new every
time the customer comes to us,” says Chand. This
is an attempt to lock in customers. According to
Chand, Wills Lifestyle scores high on brand
loyalty. Its loyalty programme has 80,000
members who account for as much as 55 per cent
of total sales. Chand claims this is the highest
in the industry. In addition, 50 per cent of the
designer wear is bought by existing customers.
Line
upgrade every two months requires the company to
have a very efficient supply chain: Smaller
stocks need to be sent to the stores, smaller
orders need to be sent to the production lines.
It also means that Wills Lifestyle may have to
resort to end-of-season sale more frequently
than rivals. Regular sale announcements can take
the shine off a premium brand. But that does not
seem to bother Chand. “End-of-season sale is the
norm in the industry. All top international
brands do it regularly,” says he.
To
exercise better control over the supply chain,
ITC has kept all production in-house, except
knits (T-shirts and so on). This goes against
the conventional wisdom in the industry. Most
retailers outsource production to third-party
suppliers to keep their costs low. Chand admits
that this has raised his costs a bit but adds
that it has given him a better grip over his
supply chain. A contractor perhaps would find it
difficult to execute orders that can be changed
every two months. Chand also says that when
exports were booming, several contractors were
so full with orders that supplies to local
retailers were badly hit. Its own production
facility at Bangalore is Wills Lifestyle’s way
to ensure that its racks do not ever run empty.
Growth plans
In the last ten years, Wills Lifestyle has
opened 50 stores in 30 cities. This cannot be
called rapid expansion by any stretch of
imagination. One reason could be high real
estate prices and the lack of high-street
locations for the stores. But things could
change now with commercial real estate prices on
the decline. Chand says that he has pared real
estate costs by 30 per cent in the last one
year. (Store rentals vary from 8 per cent to 15
per cent of turnover, depending on the catchment
– high street vis-à-vis mall and Tier 1 city
vis-à-vis Tier 2 city.)
In
the next three years, Chand wants to double the
number of stores to 100. Over the next six
months, he hopes to open two every month in Tier
2 cities like Nagpur, Indore, Nashik and Jaipur.
Also on the drawing board are five or six
high-end flagship/concept stores in different
cities which will offer bespoke services. He has
opened a boutique store in the ITC Maurya in New
Delhi. Chand says he will open such stores in
other ITC hotels — Bangalore could be the next.
For
the existing stores, Wills Lifestyle has begun
to work with FRCH, a US-based retail design
firm, to improve their look and feel. Elemental
Design of the United Kingdom is helping the
stores in display and presentation of products.
For customer service and engagement, it has
hired the services of The Friedman Group.
Rivals say Wills Lifestyle has shut quite a few
stores in the recent past — a clear indication
that it didn’t get its retail strategy right.
Wills Lifestyle has, Chand admits, shut eight
stores in the last five years. But he says this
was more realignment than downsizing. “The
retail scenario has always been dynamic with the
constant emergence of new market places and
shopping catchments, and the recent development
of modern formats,” says he.
Clearly, the challenges are many.
