Van Heusen, a part of Madura Fashion & Lifestyle, the branded apparel business of the Aditya Birla Group, is targeting the non-apparel space as a future growth engine.
Van Heusen is a leading premium lifestyle brand straddling the premium apparel range with a turnover of Rs.650 crore and it is now planning to increase its presence in the premium non-apparel space currently dominated by multinational brands.
From a small presence in men's ties and belts, the company's non-apparel business plan includes an entry into men's footwear, eyewear, watches and luggage. It will also enter the women's shoes and bags segment.
Speaking to this correspondent, Ajay Ramachandran, Brand Head, Van Heusen, said, “we see a good demand for these products and over the next five years, expect the non-apparel business to contribute around 10 per cent of our targeted Rs.2,000-crore turnover.” These products will come under the Van Heusen brand umbrella although the company has yet to decide on the business model — “either the licensing or the ‘buy-and-sell' model,” said Mr. Ramachandran, adding that the company was targeting a turnover of Rs.850 crore in 2011.
It recently made a foray into new categories of apparel with Van Heusen ‘Sport' offering smart casuals, ‘V Dot' targeting the youth and Van Heusen Women — all of these have been successful.
Van Heusen's branded apparel business has been growing at 60 per cent while the apparel industry clocked 15 per cent. While about 65 per cent of the business has come from existing outlets, the balance has come from newly-opened outlets. It has around 1,000 outlets with about 65 per cent being multi-brand outlets, 120 exclusive outlets, 100 department stores, 80 Planet Fashion stores and 50 value stores.
Retail store presence
Mr. Ramachandran said that going forward the focus would be on increasing retail store presence and about 60 per cent of upcoming stores would be exclusive stores. “We invested around Rs.30 crore to date in our stores and almost all are doing well. There has been a lot of interest from franchises willing to run Van Heusen stores. Our future investment will come down drastically as a result of this.” In terms of product mix, shirts, trousers and suits account for 90 per cent of the business and 75 per cent of these are made in its own units in Bangalore, the balance being made by vendors in Bangalore and Mumbai. Knits, sweaters and jackets account for the remaining 10 per cent of the business and these are made by vendors in Tiruppur, Ludhiana and China.
Commenting on the budget proposal to bring branded readymade garments and made-ups under the mandatory excise duty of 10 per cent, Mr. Ramachandran said, “coupled with the 130 per cent rise in raw material cost over the last six months, the excise duty will result in a mark-up of 20-25 per cent to the customer as the industry anyway operates on wafer-thin margins. We will evaluate other manufacturing options like Bangladesh or Sri Lanka as they attract only countervailing duty.”