Pandemic, entry of global players threatens domestic apparel brands
Speculations over the sale of two of Raymond’s most prized possessions, Park Avenue and ColorPlus are raising questions about the future of legacy brands in India. Legacy brands, especially those operating in the formal wear category, have been facing headwinds with ‘work from home’ culture during the pandemic. This has led to Raymond contemplating the sale of its two most coveted brands: Park Avenue, ColorPlus. The company is currently negotiating with Danish retail group Bestseller, for the sale of these brands. It has sought a valuation of over Rs 500 crore for each of them.
Growth amidst industry slowdown
However, Sunil Kataria, CEO-Lifestyle Business, refutes these rumors. Both Park Avenue and ColorPlus account for around 50 per cent of Raymond’s apparel business, he says. The company had already demerged the apparel business in September 2021 covering all its ‘power brands’ including Park Avenue, Raymond Ready to Wear, ColorPlus and Parx, Kataria adds.
One reason behind the demerger was the company’s aim to double apparel business revenues in the next three years. In FY 22 Q3, Raymond Apparels registered total business worth Rs 300 crore, even amidst lingering COVID-19 effects. The company now plans to expand its retail footprint for Park Avenue, ColorPlus and the newly-launched Ethnix brand. Its hopes, the upcoming wedding season and resurgence of travel in the next few months will drive growth.
Raymond currently has around 1,500 stores across 600 cities. Of these, around 300 are exclusive outlets for brands like Park Avenue, Parx and ColorPlus. Samit Sinha, Founder & Managing Director, Alchemist Brand Consulting adds, as a brand, Raymond continues to hold great aspirational value despite the presence of big international labels.
Pandemic threatens legacy brands in India
However, the speculation about Raymond’s sale of these brands highlights the current predicament of legacy brands in India. With the rise of ‘work from home,’ eclipsing professional lives, legacy brands, especially in the formal wear category, have been facing many challenges. Consumers shift to online shopping post pandemic and entry of international brands have been impacting the business of homegrown apparel companies, says Lloyd Mathias, Business Strategist.
Over the last three years, Raymond has increasingly penetrated Tier III and IV markets across India as it is facing several headwinds in big markets, adds Devangshu Dutta, CEO, Third Eyesight, a retail consultancy. However, brands have to remain satisfied with lower sales density in these smaller cities. They also have to run their business with great efficiency to make their expansion strategy successful, he adds.
