Aditya Birla Fashion and Retail Limited (ABFRL) will set up a new entity that will incubate and acquire new-age, digital brands across fashion, beauty and other lifestyle segments—akin to building a house of direct-to-consumer brands, the company said Friday.
“The Board of directors of the company in their meeting today provided an omnibus approval to set up a new subsidiary towards building a portfolio of distinct, new-age, digital brands across categories in fashion, beauty and other allied lifestyle segments. The direct-to-consumer or D-2-C portfolio will be built through organic and inorganic means,” the company informed the exchanges on Friday.
The new direct-to-consumer venture will initially be funded through ABFRL’s internal accruals, it said. “At an appropriate time, the company will look to bring in external capital to accelerate the growth journey,” it added.
The newly incorporated entity will organically incubate and acquire promising and scalable direct-to-consumer brands.
"At ABFRL, we want to build the next set of iconic brands in the digital space as we evolve with our changing consumers," said Ashish Dikshit, managing director, ABFRL.
The direct-to-consumer market opportunity in India is expected to be $100 billion by 2025. To be sure—the “house-of-brands” model has garnered investor interest as homegrown start-ups eye consolidation of niche online-first brands.
Mint had earlier reported that competition in the space is heating up, with Thrasio-style e-commerce ventures such as 10Club and GlobalBees raising $40 million and $150 million, respectively, in one of the largest early-stage rounds among Indian startups. Last November—Mensa Brands, which buys stakes in digital brands, raised $135 million at a valuation of around $1.2 billion
ABFRL's foray into this market comes as the fashion company—that sells Louis Philippe, Van Heusen, Allen Solly and Peter England brands in India—has been on an investment spree.
Last month, it acquired a 51% stake in House of Masaba Lifestyle Private limited. This is besides its investments in investments in Sabyasachi and Tarun Tahiliani. In 2019—ABFRL acquired omni-channel ethnic wear retailer Jaypore for Rs110 crore. It recently also signed a long-term licensing agreement to exclusively sell Reebok products in India and other ASEAN countries.
ABFRL will leverage capabilities around design, product creation, sourcing and brand building in the offline space, while creating a fashion and lifestyle products-led portfolio in the digital space as well, the company said. The company will accelerate the process of building the direct-to-consumer framework and identifying key talent for this play. It will do so by tapping into the broader tech ecosystem and collaborate effectively with its e-commerce partners, tech service providers, digital marketing agencies to scale this business rapidly, it said.
On Friday the company reported a 44% jump in December quarter consolidated revenue at Rs 2,987 crore. Profit after tax was up 237% year-on-year to Rs 197 crore. The company launched more than 200 new stores across businesses and formats in the three months ended 31 December 2021.