ET NowLast month, Reliance Brands Ltd, part of Mukesh Ambani-led Reliance Industries, completed four years of operations. Starting with 30 employees and one Diesel store in 2010, RBL today employs more than 1,000 people, sells 40 brands across segments, including luxury labels like Ermenegildo Zegna & Stuart Weitzman and has 150 points of sales. RBL CEO, Darshan Mehta, says, the company will continue to get more fashion brands into India, strengthen the position of existing ones, besides looking at Indian fashion labels as strategic investors. Edited excerpts of an interview with ET.
ET: After four years of operations, where is RBL in RIL portfolio?
Darshan Mehta: We are still in the investment mode because we continue to launch new brands and expand existing partnerships. The long-term target is to create great value in the fashion business. We not only get full financial support but also the bandwidth of the senior management of RIL. They meet all our partners. The quality of our partnerships is such that we are also adding optical value to the company and vice-versa for all our marquee brands.
ET: How is RBL doing financially?
Darshan Mehta: Different brands are going through different evolution cycles. The good news is that we have long crossed the point of a cash loss at the store level. Our stores make cash profit, which in our business is a big turnaround. As a rule of thumb we target each store to break-even in the 18th month of operations. Having said that, fashion as business does not create toplines and bottomlines like FMCG or ordinary retail. We have invested in joint ventures that are timeless and even our distribution partnerships are for 20 years.
ET: So far RBL's focus has been on getting international brands into India. Are you not looking at the Indian fashion industry?
Darshan Mehta: India slowly but surely is trading up in fashion. The change indicates that there is a value to be created in every segment and we are not wedded to any particular category. If there is homegrown Indian talent which has a certain genre of design, aesthetics, business vision and scalability, then we would certainly be a strategic investor. We will provide supply chain infrastructure, marketing & sales support, other than putting money, unlike a private equity investor.
ET: How close are you to making an investment like that? Have you identified anyone yet?
Darshan Mehta: There are a handful of people, may be three or four. I have met everyone at some point in life. If we invest it would be for a lifetime. We don't have to exit at a point of time. Indian fashion is an interesting space. If we find something we will go there.
Is there a missing link right now in your portfolio of brands?
Darshan Mehta: Yes, we do have a few things missing. Most interesting and hence a big gap is beauty. With discretionary spends going up we believe that beauty will grow dramatically in this country across levels. Before the end of this year we should be hopefully able to fill in that gap. Another category is children' s clothing. Having tasted success with Hamleys , we believe in the power of that category as the same set of people who splurge on toys are ready to spend on clothing.
ET: Have you considered getting into food retail?
Darshan Mehta: There could be synergy between our existing business and food, like real estate and front-end but other than that the dynamics are very different. And in most of the consumer-facing businesses, the challenge is in the back-end. People have approached us, but there is so much to do in the existing core fashion business that we are not looking at food right now.
ET: Is there any brand that you would want to get rid of?
Darshan Mehta: We have so far not got rid of a single brand. The only one where we face a challenge is Timberland as it does not have intellectual property protection against Woodland in India. Starting from the logo to individual product designs, Woodland makes replica of Timberland at one-third the price. So, we have reservations about growing that brand and looking to convert some of the Timberland stores into other brands.
ET: After four years of operations, where is RBL in RIL portfolio?
Darshan Mehta: We are still in the investment mode because we continue to launch new brands and expand existing partnerships. The long-term target is to create great value in the fashion business. We not only get full financial support but also the bandwidth of the senior management of RIL. They meet all our partners. The quality of our partnerships is such that we are also adding optical value to the company and vice-versa for all our marquee brands.
ET: How is RBL doing financially?
Darshan Mehta: Different brands are going through different evolution cycles. The good news is that we have long crossed the point of a cash loss at the store level. Our stores make cash profit, which in our business is a big turnaround. As a rule of thumb we target each store to break-even in the 18th month of operations. Having said that, fashion as business does not create toplines and bottomlines like FMCG or ordinary retail. We have invested in joint ventures that are timeless and even our distribution partnerships are for 20 years.
ET: So far RBL's focus has been on getting international brands into India. Are you not looking at the Indian fashion industry?
Darshan Mehta: India slowly but surely is trading up in fashion. The change indicates that there is a value to be created in every segment and we are not wedded to any particular category. If there is homegrown Indian talent which has a certain genre of design, aesthetics, business vision and scalability, then we would certainly be a strategic investor. We will provide supply chain infrastructure, marketing & sales support, other than putting money, unlike a private equity investor.
ET: How close are you to making an investment like that? Have you identified anyone yet?
Darshan Mehta: There are a handful of people, may be three or four. I have met everyone at some point in life. If we invest it would be for a lifetime. We don't have to exit at a point of time. Indian fashion is an interesting space. If we find something we will go there.
Is there a missing link right now in your portfolio of brands?
Darshan Mehta: Yes, we do have a few things missing. Most interesting and hence a big gap is beauty. With discretionary spends going up we believe that beauty will grow dramatically in this country across levels. Before the end of this year we should be hopefully able to fill in that gap. Another category is children' s clothing. Having tasted success with Hamleys , we believe in the power of that category as the same set of people who splurge on toys are ready to spend on clothing.
ET: Have you considered getting into food retail?
Darshan Mehta: There could be synergy between our existing business and food, like real estate and front-end but other than that the dynamics are very different. And in most of the consumer-facing businesses, the challenge is in the back-end. People have approached us, but there is so much to do in the existing core fashion business that we are not looking at food right now.
ET: Is there any brand that you would want to get rid of?
Darshan Mehta: We have so far not got rid of a single brand. The only one where we face a challenge is Timberland as it does not have intellectual property protection against Woodland in India. Starting from the logo to individual product designs, Woodland makes replica of Timberland at one-third the price. So, we have reservations about growing that brand and looking to convert some of the Timberland stores into other brands.
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