Retailers on margin push with ad spend, better brand visibility

As fashion and lifestyle continue to be a revenue grosser, listed retailers are trying to improve gross margins by upping advertising spend and increasing stake and visibility of brands.

For Shoppers Stop, the share of fashion has gone up from six per cent to 16 per cent in the third quarter of the current fiscal, while for Reliance Retail the share of fashion stood at 15 per cent closely following food and grocery. Firms like Future Group fashion and lifestyle are among top margin earners on a per square feet basis.

Analysts note that the margins in the apparel segment are said to be about 40 per cent. “Fashion is scoring very well, it has grown by more than 34 per cent this quarter and now at a share of 16.1 per cent. It has also helped us to really ramp up our margin by 120 basis points,” said Govind Shrikhande, MD, Shoppers Stop. Future Group’s Future Lifestyle fashion operates about 5 million square feet of retail space across fashion formats. The company added 0.04 million sq ft of gross space during the quarter in the fashion category alone.

The company recently increased stake in clothing brand ‘Mineral’ from 22.70 per cent to 37 per cent. In October, Future Group acquired 60 per cent stake in footwear firm Elisir Lifestyle.

It also picked up minority stakes in brands such as Tresmode, Famozi, accessories brand Peperone and women apparel firm Desi Belle. FLFL has a portfolio of over 40 fashion and lifestyle brands.

A Reliance Retail official said that fashion and lifestyle were continuing to grow on a high trajectory with brands growing at a rapid pace.

Reliance said it had opened 11 Reliance Trend stores in third quarter. The company also formed partnership with brands like Cherokee, Juicy Couture and even Iconix India brand.

Retailers like Future Group have been increasing spend on fashion wear. Future Group owned chain, Central, had launched ‘Men of Style’, a promotion on the latest in men’s fashion wear.

Brand Factory had launched its Ethnic Festival with the widest range of women’s ethnic range, which brought together more than 2.5 lakh different products.

A Technopak report points out that the per capita consumption of apparels in developing markets like India is getting reflected in higher sales of apparels.