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Aditya Birla vs Future Lifestyle it’s a tough competition for apparel retail biggies

Aditya Birla vs Future Lifestyle 1

 

Aditya Birla Fashion and Retail (ABFRL), the largest organised retailer of fashion and apparel in the country, is facing stiff competition from Future Lifestyle Fashions. In FY17, ABFRL generated revenues of Rs 6,633 crore, a growth of 10 per cent year on year. FLFL grew at a much faster rate of 17 per cent with Rs 3,877crore in revenue during the period. For Q3FY18, ABFRL's revenue grew by 2.8 per cent to Rs 1, 855 crore.

Over the same period, FLFL's revenue jumped 16.4 per cent to Rs1, 189 crore. ABFRL became the numero uno in fashion retail after merging Pantaloons Fashion and Retail (which it acquired from Future Group) with Madura Garments in 2015. It also acquired fashion brand Forever 21's India operations in 2016.

Aditya Birla vs Future

 

FLFL, on the other hand, is better known for its mass and affordable brands. What's fuelling Future? FLFL is in the sweet spot of the new goods and services tax (GST) structure: According to an amendment in October 2017, apparel worth up to Rs 1,000 are taxed at 5 per cent

Meanwhile, Future Group founder Kishore Biyani has made forayed into fast fashion with Cover Story, a private label aimed at younger women. FLFL launched over a dozen exclusive Cover Story outlets last year. ABFRL has lost its advantage in this vital category and left the field open for FLFL. The two companies differ sharply in their online strategies.

From e-commerce biggie Myntra to Future Group's other clothing business FBB which it operates under the Big Bazaar umbrella, private labels are hot because they help control costs and offer better margins. Ajay Srinivasan, Director, CRISIL Research, says, private labels contribute about 10-15 per cent of e-commerce sales in India. For organised bricks-and-mortar, it is around 20 per cent.

On the other hand Rajat Wahi, Partner at KPMG, estimates private labels could reach 50 per cent of total organised retail in India in the next decade and 15 per cent of all retail by 2025.

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