Aditya Birla Fashion and Retail on Friday announced its plans to set up an e-commerce platform as it looks to enter the direct-to-consumer (D2C) business.
The company says its board has given the approval to set up a new subsidiary towards building a portfolio of new-age, digital brands across categories in fashion, beauty and other allied lifestyle segments.
The fashion retailer says the D2C portfolio will be built through organic and inorganic means. “The newly incorporated entity will organically incubate and also acquire promising and scalable D2C brands.”
“This venture will initially be funded through ABFRL’s internal accruals. At an appropriate time, the company will look to bring in external capital to accelerate the growth journey,” it says.
This comes at a time when the D2C segment is projected to have a $100 billion addressable market by 2025, according to a report by financial services firm Avendus Capital. India is one of the largest retail markets in the world, projected to surpass $1.7 trillion by 2025, the report says.
“We are excited about the D2C opportunity in India. At ABFRL, we want to build the next set of iconic brands in the digital space as we evolve with our changing consumers, says Ashish Dikshit, managing director at ABFRL. “We are confident that this foray will successfully meet the aspirations of digitally native customers and also create long-term value for investors and other stakeholders.”
The fashion retailer says it plans to leverage its core capabilities around design, product creation, sourcing and brand building to craft a blockbuster portfolio in the digital space as well. “Other than providing growth capital, ABFRL’s proposition is built around its strong operational expertise where it will utilize its rich experience and capabilities to scale up this portfolio.”
As it plans to expand into segments and businesses that are inherently more digital in nature and in sync with the consumer trends in fashion, the company says it will now accelerate the process of identifying key talent for this play.
“ABFRL will look to tap into the broader tech ecosystem and collaborate effectively with its ecommerce partners, tech service providers, digital marketing agencies to scale this business rapidly,” it says.
The company reported its third-quarter numbers on Friday. Its net profit rose over three-fold to ₹196.8 crore in the quarter ended December 2021 compared with ₹58 crore in the year-ago period.
Revenue soared 44% year-on-year to ₹2,978 crore in the third quarter compared with ₹2,076 crore in Q3 FY21.
The upsurge in sales across categories and channels was due to a sharp recovery in demand that was amplified by the wedding season, says the company.
While the onset of the third wave of the Covid-19 pandemic has affected sales, it expects normalcy to return in the following months as the pandemic wears down.
The company claims to have a network of 3,370 stores across approximately 26,744 multi-brand outlets as on December 2021. Last month, it acquired a 51% stake in 'Masaba' brand promoted by designer Masaba Gupta for ₹90 crore.
In February 2021, it had partnered with fashion designer Tarun Tahiliani and a month before that, ABFRL had announced the acquisition of a 51% stake in designer brand Sabyasachi.In 2019, the company acquired ethnic apparel and lifestyle retailer Jaypore for ₹110 crore.
