Indian billionaires are betting big on local couture
The largest Indian conglomerates have taken stakes in high-end local designer brands to help them grow and go global.
The trend, experts say, indicates a luxury retail market on the verge of maturing.
In October, Reliance Brands Limited (RBL), a subsidiary of oil conglomerate Reliance, announced that it was buying 40% of the eponymous brand from famous fashion designer Manish Malhotra. A week later, the company bought over 50% stake in Ritu Kumar, one of India’s oldest fashion houses.
Malhotra, who has dressed the biggest stars of Bollywood for 30 years, launched his label about fifteen years ago. He has an annual income of around $ 30million (Â£ 22million), according to Forbes.
The call for a partnership with a company like Reliance was driven in part by his decision to focus on his Bollywood directorial debut, Malhotra said. But it was also the result of its ambition to develop internationally.
âI have the practical knowledge, but for someone who hasn’t studied the fashion business, my dreams and my stories need this support to go global,â he told the BBC during from his design studio in the suburb of Santacruz in Mumbai.
“The label needs to organize itself more. It’s very family-friendly.”
It’s a logical decision and in line with international trends, says Ankur Bisen, senior partner at Technopak, retail consulting.
He points to several fashion giants – Dior, Chanel, Hugo Boss, Saint Laurent (YSL) – who have done the same: they have âinstitutionalizedâ themselves by overtaking the founder who launched the eponymous labels.
âA lot of designers in India are now in their 50s and 60s and need to answer that call,â Bisen said.
Reliance wants to create more Malhotra flagship stores and also accelerate the company’s foray into e-commerce.
RBL’s current portfolio of brand partnerships includes renowned global brands such as Armani Exchange, Bottega Veneta, Jimmy Choo, Kate Spade New York, Michael Kors, Tiffany & Co., among others.
But RBL is not the first or the only company to invest in local labels. Aditya Birla Fashion, owned by Indian multinational Aditya Birla Group, has done the same – in recent years it has acquired stakes in top fashion designers like Sabyasachi, Tarun Tahiliani and Shantanu & Nikhil.
The switch to domestic designer brands was long overdue, experts say.
âInternational brands are not going to appeal to an Indian audience. They have tried,â said Nonita Kalra, editor-in-chief of Tata CliQ Luxury.
âClothing in India remains very specifically Indian in its taste. If you want to grow in the fashion market, you will have to grow with very specific Indian tastes in mind. “
She added that since couture purchases in India are largely driven by weddings and religious holidays, the appeal of local brands lies in the emphasis on bridal and ethnic fashion.
And by partnering with companies, she said, designers can âfine-tune and layerâ their products so they can reach a larger market with more affordable luxury clothing.
In fact, earlier this year, Sabyasachi became the first Indian designer to launch a collection in partnership with Swedish fashion giant H&M. And Rahul Mishra, a burgeoning haute couture designer, has collaborated with a popular and affordable Indian brand – W – to launch a collection ahead of festival season this year.
According to McKinsey data, India’s clothing market will reach $ 60 billion in 2022, making it the sixth in the world, comparable to the UK and Germany.
Couture labels currently occupy a small portion and are still modest in size compared to their global counterparts. The annual turnover of India’s top 10 fashion houses is between $ 25 million and $ 100 million, according to the Economic Times.
But the interest in them is “not because of who they are today, but who they can be tomorrow,” Ms. Bisen said. âPlus, the alternative for retailers – developing labels, building design talent, and creating a brand recall – is too expensive and time-consuming. “
That is, it is easier to invest in a label that already has all of this.
But making a global game with ethnic sewing might be easier to dream of than to achieve. Demand and supply are a challenge.
In a world where fashion trends are largely in Europe and America, and the market is frequented by consumers from China and the Middle East, making Indian ethnic clothing ambitious is a difficult proposition. It is also difficult to introduce a supply chain adapted to the Indian fashionable global industrial model, which still relies on weavers, manual labor and a large pool of informal talent.
While the pandemic has been a temporary setback, industry watchers say the recovery has been swift, aided by e-commerce.
It also made it easier for local designers to tap into India’s 18 million-strong, wealthy diaspora.
âCustomers who are increasingly nomadic and cosmopolitan in their outlook have reshaped our approach to viewing customers independently of geography,â said Darshan Mehta, President and CEO of RBL.
As the world opens up after the pandemic, Indian designers are also keen to expand overseas.
Access to capital was a huge handicap for these labels, but it is no longer a hindrance. Following Aditya Birla Fashion’s investment, Sabyasachi announced that it will open a sprawling 60,000 square foot (5,574 mÂ²) store in New York City in 2022. And in February of this year, it showcased a selection of clothing. and accessories in the city’s luxury department store. , Bergdorf Goodman.
Given the wave of announcements, experts believe the industry is riding a wave of optimism.
âLuxury needs help,â Ms. Kalra said.
“I think we’re going to see a very accelerated rate of acquisition, change and growth. It won’t always be easy, and there will be dramatic breaks, pleasant falls and conscious decouplings.”
“But I think things as we know them will change forever.”