The Hindu Business Line : Raymond wants to Be: with it

OF LATE, Raymond Ltd has been getting generous with its consumers. The benevolence has more designs than one - it's not just a consequence of the economic downturn where companies are doling out freebies and incentives to draw consumers, it is firming up plans to make a go of its apparel brands more than ever.

As part of its 75th birthday celebrations Raymond has decided to give away bounty worth Rs 10 crore , enabling its customers to win more than 30 lakh prizes. Christening it the `Once in a Lifetime Rewards' programme, this is the first time the Rs 1,400 crore Raymond group has decided to spend so lavishly to ensure consumer trust and loyalty.

Though it's aiming for a 40 per cent increase in sales turnover through this one-time offer, the worsted suitings major is steadily building up its portfolio of apparel brands and pins its success on spending big bucks on such promos. Luckily, Raymond is not strapped for cash. In fact, after the restructuring of the group and divestiture of its unallied businesses such as steel and cement, the group is cash-rich. Today it wants to consolidate and expand its existing range of apparel brands and is open to the idea of takeovers and acquisitions as long as its speeds up its growth process. Emphasising the strengths of the group, Nabankur Gupta, Group President, Raymond, claims, ``We are basically good at two things - building brands and retail distribution.'' Leveraging its knowledge of the businesses in these two areas, Raymond is ready to tackle the readymade segment with these strengths. But selling fabric and garments are not entirely the same.

Sitting pretty as a market leader in the worsted suitings category, the focus is now on its apparel brands where acceptance and growth are hurdles any player in this segment has to face. While Park Avenue continues to be its oldest formalwear brand, the recent additions of Parx, Manzoni and Be: to its portfolio goes to show that the textile major wants to replicate the success it enjoys in its fabric business.

However, in the highly cluttered readymade segment, obtaining a `clear leadership' position is not going to be entirely possible. Although Raymond is counting on its retail network for acceptance for these readymade brands, buying both fabric and readymades under one roof is not something the consumer likes to do, the company feels. Although Raymond has 260 exclusive showrooms across the country, it has to make fresh investments in rapidly launching new retail stores for its readymade brands. Its two leading apparel brands, Park Avenue and Parx, are thus expected to have 50 exclusive outlets in the next two years.

But, somehow, in spite of being a cash-rich company, Raymond has been slow to establish an exclusive apparel distribution network. Observes Madhusudan Sarda, an analyst at Renaissance Securities, "The company's earlier channel of fabric distribution is not going to help it. Even after having launched these new brands, it is taking too much time to establish a new distribution network considering the kind of money the company already has."

Raymond is also making ambitious global forays into the highly competitive European garment market. Its recent acquisition of a Portuguese garment firm indicates that it is serious about making an entry into the highly dynamic European market.

The company has always exported its fabric and it is time it brought forth its own brands in the international markets through this acquisition. Meanwhile, Raymond Apparel, the subsidiary under which Park Avenue, Parx and Manzoni exist, recently repositioned its brands, aligning both Park Avenue and Parx under a single ad agency - Ambience D'Arcy. The Rs 170-crore Park Avenue, its oldest and largest menswear brand, underwent an image change two years ago with the baseline `Start something new', addressing the young entrepreneur who could belong to any part of the world, devised by its earlier agency, Lowe Lintas & Partners.

The purpose was to shake off the stodgy image associated with the old brand. The account, which has just moved to Ambience D'Arcy, also continues with almost the same theme - `Belong' - implying the man could `belong' to any part of the world by wearing the brand. Says Gupta, ``Park Avenue is now taking a global platform. It is meant for the global citizen who is at ease wearing the brand in any part of the world."

Its two-year-old Rs 89-crore casualwear brand of Parx has also undergone a change in positioning since launch. From a platform of comfort , `Look sharp, be comfortable', it has moved to more of a desirable and aspirational brand with a new baseline - `Men in Parx, girlfriends beware.' "Parx was treated as a derivative of Park Avenue. Today it is specifically addressing the aspirational levels of youngsters and is moving into design fashion clothes," states Gupta.

Manzoni (after an Italian street), the premium Italian-designed shirtings brand which sources fabric from Morarjee Brembana and others (Raymond does not make shirting) has already registered a turnover of Rs 15 crore. It was meant to target the customer who buys his brands from abroad and typically adopted a baseline (`Return of the Roman Empire') to connote the same. Another ambitious project in recent times has been the group's foray into womenswear with the unleashing of `Be:' - the pret-a- porter line of ready-to-wear affordable unisex designer clothing. Almost 50 Be: boutiques have been planned for the next two years.

However, competition does not think too highly of its moves into designer wear. States a competitor, "Raymond should not get frivolous just because it is sitting on a pile of cash. It has to get more focused and spend more on advertising and marketing its readymade brands."

According to an industry observer, being presumptuous is not going to help the group. Lineage, goodwill and knowledge of the fabric business will not necessarily make things easier for it, say critics. It has to learn the ropes just like any other branded apparel player. Its strong equity should not make it complacent in the marketplace. It should be aware of the pitfalls and cannot take things for granted just because it is a big textile player, they say. For instance, there was a period when Parx was going through a `low growth mode' before it shook off its complacency and got more aggressive. Today both Park Avenue and Parx have been growing at the rate of 15 per cent compared to last year - a healthy rate, according to Gupta. Admits T. R. Venkatesh, President, Raymond Apparel, "Unlike Park Avenue which is a well accepted brand, the casualwear brand of Parx has to struggle to establish itself.''

Advising Raymond is KSA Technopak, the retail consultant. States Rajan Chhibba, Deputy Managing Director, KSA Technopak, "While there are more challenges in the readymade segment, Raymond should find a new niche. For instance, it could explore more segments within womenswear like mass Western wear or ethnic wear.''

Meanwhile, Raymond well realises that it has to continue to use its strengths to get into more areas. Line extensions have always helped the company, which has in the past stretched its Park Avenue brand to men's toiletries. There may be more such Raymond may consider getting into - premium accessories such as watches and leather accessories.

Getting into lifestyle products could well be the thrust of the group which is already into premium products such as its Kamasutra brand of condoms, manufactured by group company JK Ansell. The other group company, JK Helene Curtis, is also into lifestyle products - toiletries and cosmetics with brands such as Premium and Park Avenue. "As long as they are products which can synergise with our retail space we are open to line extensions and acquisitions,'' states Gupta. However, Chairman Gautam Singhania does not favour acquiring brands. At the Parx launch he had questioned, ``Why should we buy brands when we are capable of building our own?"

Since Parx, the other brands like Manzoni and Be: have been developed by the group. Today, the best part is possibly the fact that the group is still not affected by the downturn and is in fact ready to surge into the retail arena with its new apparel brands. "Money is not an issue. It is one of opportunities to move forward in the area of our core activity," claims Gupta.

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Raymond wants to Be: with it