Wednesday, October 12, 2011

Madura Garments

Madura Garments standard of living Retail will set up its high-end luxury stores, the communal, in three new cities next year besides increasing in the existing locations. Madura Lifestyle, promoted by the Adyta Birla Group, OKJMLS33 currently operates two such stores bottega veneta bags. With a store each in Mumbai and Bangalore under ‘The Collective’ banner it sells high-end luxury apparel and trimmings from brands crossways the world. The third store will be opened in New Delhi soon and the plan is to explore opportunities in Chennai, Chandigarh and Hyderabad by next year. Also they plan to add more stores in Mumbai and Delhi. The stores house high-end apparel brands such as juicy couture handbags, bottega veneta, Duchamp,Fred Perry, Hackett, Hugo Boss, Kenneth Cole, Ted Baker, True Religion and Versace Collection. In the upcoming season new brands for men and women will be introduced.
Madura Garments has been responsible for putting Karnataka on the nation’s map as a hub for attire manufacturing and branding. Presently, Madura Garments operates five manufacturing units in this southern state devoted to home demands and three factories wholly for meeting exports to the United States and the European Union countries.

Stylish model



Madura Garments also introduced its exclusive in-house multi-brand retail format Planet Fashion. It’s a men’s store that stocks all the Madura Garment brands under one roof. Moncler Sweaters Planet Fashion has 82 outlets spread across metros and cities in India and five outlets abroad including Nepal and the Middle East. Madura Garments has turned cash optimistic after battling losses for 15 months in the wake of slowing customer expend. The Rs 1,000-crore operations, with brands like Louis Philippe, Van Heusen and Allen Solly, posted a cash profit in July and is projecting a 10% rise in sales throughout the current year. All of Madura’s major brands are running profitable operations, except the luxury retail format, The Collective, and street wear fashion store, People. Cost rationalization is a key motive for the return to productivity. India Madura retail clothing company plans to expand its overseas market, the company plans of the Company’s lifestyle brands to open stores, dsquared jeans 2011, in East Africa, West Asia, South and Southeast Asia to open multi-Planet Fashion brand stores. Madura lifestyle brand apparel companies and retail Hemchandra Javeri CEO, said the company has in India, little known outside of West Asia, the company brand in West Asia Planet section stores and 10 retail stores selling fashion. However, the company also opened several West Louis Philippe brand stores, Allen Solly in Kenya to open a store. Madura garments are looking for suitable partners for the establishment of the company stores all of the lifestyle brands and Planet Fashion stores. But the company started from the creation of Louis Philippe shopping malls, and then to other brands to open stores. Companies hope to see rapid growth in Indians retail market share, open foreign markets within three years about 10 Louis Philippe store. Presently, the company has about 75 Planet Fashion stores; the company has about 30 of each lifestyle brand stores. Hemchandra said, the company recently is the various brands for the company’s internal restructuring. Meanwhile,dsquared jeans, Madura Garment Company hope to see our lifestyle brands to expand the supply of jeans, the company decided to gradually reduce the market share of San Frisco Jeans, improved focus on sales of other brands key region has been rents - Madura now works on store rentals that do not exceed 15 % of the store sales, or sign up new locations where it is hard to make projections on numbers.

Looking good with madura garments


Madura Garments has an imposing collection of premium formal and casual dress in for today’s smart and modern men. In its formal menswear, Louise Philippe and Van Heusen have already established themselves as premium lifestyle brands in India. Madura Garments also has the distinction of introducing India to the Friday dressing concept with its premium semi formal variety of men’s wear, Allen Solly. After the success of the concept, brain Allen Solly went on to create weekend clothes with Allen Solly Outdoors. Peter England is a brand of mid range shirts targeting executive’s looking Sequoia will invest up to Rs 120 crore in the rapidly growing garment retail business Nahar Retail. Better known by its brand name ‘Cotton County’, Nahar Retail attempts to do what very few have managed in India, build a profitable garment brand with an associated retail presence. To be fair to Nahar Retail, it has covered a lot of position since its launch. Some reports suggest that it has 400-plus outlets in 300 cities. This is a huge reach. However, in retail, it is one thing to quickly expand reach. It is quite another to build a profitable business. The retailer has to make sure that a majority of the stores break even and become decently profitable. This requires ensuring foot falls, then conversion of those foot falls into sales. Not every attempt succeeds in this. Arvind Brands tried to build a unhelpful retail presence about 6-8 years ago. It succeeded for a while, at least in establishing a large network. But then it rolled back most of that strategy within 2-3 years, which seems to suggest that most of the stores never reached breakeven. Not too many other players have attempted the kind of rollout Cotton County is up to. Kewal Kiran Clothing, an older player in the garment business, took perhaps three years to reach the 75 stores-mark. In total, the company perhaps reaches out to 60-70 cities, at this point, through around 100 outlets. Pantaloon Retail, which overall has perhaps 1,000 stores in around 80 formats, has around 40 stores under the format Pantaloon Fresh Fashions. Raymond has close to 500 outlets, but it has built them over decades. Madura Garments, a part of Aditya Birla Nuvo, has close to 250 restricted brand outlets in 43 cities. Thus, Cotton County appears to be betting more forcefully than practically any other player in the garment space. It perhaps is a work-in-progress, at least if its website is any indication. Its mission is stated thus, ‘We aim to be recognized as the fastest growing retail chain in the Everyday low pricing business model’. Elsewhere, it describes itself as a mass-volume brand.
Building a strong garment brand is not easy, since barriers to access remain quite low. It is hard to attain product and format differentiation. There is large fragmentation, and competition from small players. Large players have, so far, not really tried to compete on the price platform.

Madura garments


Old established companies like Madura, Arvind and Zodiac, to name a few, are all relatively up market in their positioning. Amongst new successful players, Provogue and Wills Lifestyle have also constantly taken premium positioning.
Clearly, a value positioning, with wide reach has theoretical plea. India, after all, is about its vast middle class. But garments are aspirational products. A brand positioned on price runs the danger of being perceived as a poor man’s brand. There are quite a few cases of garment brands which have stagnated due to a ‘nowhere’ positioning. While you can perhaps sell a mobile service on price, it may be harder to sell garments on price.
Cotton County may well emerge as India’s largest garment company if it is successful. But how much value will it create? According to reports, Cotton County has currently around Rs 100 core in sales, and aims to be a Rs 250-crore business by FY09.
Madura Garments registered sales of Rs 750 core in FY07, with PBIT of Rs 4 crore. An Enam report of 2007 valued Madura Garment business at around Rs 500 crore, or less than 1x sales. This is despite burly brands and reliable sales growth. Zodiac has also struggled to beat valuation of 1x sales.
Aggressive store expansion means two things – serious capital spending and lots of people to handle the stores. Every brand worth its salt wants to possess a widespread Retail store network across the length and breadth of the country no matter what the store level EBITDA is. While there are various ways to expand its network, some of the commonly used ones by Retailers are franchising and Coco – Company Owned Company Operated model. While Franchising could mean faster expansion, there are chances that the Retailer may lose control on the quality of customer experience among other things. The Coco model is very expensive to scale-up unless backed by a solid VC / PE Firm. One of the other means to raise funds for growth is through the Capital Market – recently Specialty Restaurants that runs the Mainland China, Oh! Calcutta, Signee and other restaurants debuted their IPO, the first of its kind in the F&B Industry in India (while Jubilant Foods which runs Dominos Pizza in India is also listed, it is not in the Restaurant business but into Casual Dining). Retailers like CafĂ© Coffee Day, Dominos, Food world, Spencer’s, Zara, Tommy Hilfiger and many others have invested deeply on their own in terms of store expansion crossways the country, while others like McDonalds, Pizza Hut, Madura Garments, Reebok, Adidas, Benetton, Nilgiris, etc. have taken the Franchisee model.
There is another alternate model – One of the easiest ways that a few Retail Brands have taken to, which is known as the “Minimum Guarantee” model where in a Second Party is appointed to manage the store(s) on behalf of the company while the Retailer itself invests on the business. Let me explain this in detail. Assume that the store fit-out costs for a 1,000 sft store is Rs. 40 Lakhs plus stocks to the tune of Rs. 50 Lakhs, then the Retailer invests Rs. 90 Lakhs to set up the store and also bears the Security Deposit to the landlord.  Once the project work is completed, the store is handed over to a second party, also known as a Managing Partner or a Managing Franchisee who is responsible for the day-today upkeep of the store. All direct and operating costs such as manpower, electricity, rent and incidental costs are taken up by the Retailer and the Partner is also paid a lump-sum ranging from a few thousands to a couple of lakhs – just to operate the store every day. The logic is, if there were to be an Area Manager to micro-manage the store, and then the costs would be substantially high. And hence the Managing Franchisee model. The partner also has sales based incentives that are if the store achieves a set target, then he receives a further commission, usually as a percentage to sales. In many cases, the Partner leases his own goods to the Retailer, which means the Rental income comes back to him! In a few cases, either the same partner operates through kith and kin or through friends and relatives who become partners! And then, there are incentives for introducing new partners and locations in other cities. This is certainly a vicious series. In the name of faster expansion and quick growth, many Retail Brands have resorted to this practice. While there is nothing incorrect in this approach, the Managing Partner typically gets the cake and eats it too. Without any investment, he has a full time job, a respectable retail profession and a handsome income too. While it is not clear whether the practice has been internationally common and if yes, from when – it is quite popular in the Indian Retail scenario over the past decade. While Retailers like Madura Garments have fixed to the tested Franchise model of “Buy and Sell”, others like Reebok, according to push and media releases in the recent past have opted the organization Partner model.