In search of loyalty, engagement, D2C brands adopt ‘House of Brands’ model

Yatti Soni Bengaluru | Updated on November 21, 2021

LensKart, Nykaa in plans to take ‘house of brands’ approach   -  Businessline

The product is the primary brand rather than the parent brand

In a bid to inspire brand loyalty and better engage with their target group, a growing number of D2C brands are moving to a “house of brands” model. MyGlamm (Good Glamm Group), Furlenco (House of Kieraya), EatFit (Curefoods) have already moved in that direction.

Even unicorns like LensKart and Nykaa are in plans to take a ‘house of brands’ approach. In a pre-IPO address, Falguni Nayar, the CEO of FSN E-Commerce, which operates Nykaa had shared the company's plan to build a number of lifestyle categories and transition Nykaa into an umbrella entity for lifestyle products. Meanwhile, LensKart is planning to set up an independent entity focusing on acquiring eyewear brands across European countries.

Most consumer product companies follow a House of Brands model wherein the product is the primary brand rather than the parent brand.

Talking about the growing use of ‘house of brand’ approach in the D2C space, Ishpreet Singh Gandhi, Founder and Managing Partner, Stride Ventures told BusinessLine, “The environment of consumption in India is changing dynamically. At present, brand awareness is at an all-time high, however, brand loyalty is not the same. As a result, the companies that possess a certain set of customers have to work hard to retain them as well. At the same time, the engagement is equally critical so D2C brands are trying all the ways and means possible to achieve this.” Venture debt firm Stride Ventures has been an active investor in D2C companies across its two funds. Some of its D2C portfolio includes Good Glamm Group, SUGAR cosmetics, Spinny, Healofy, Mensa and HomeLane among others.

Benefits of the model

Talking about the benefits of a house of brands model, Ankit Nagori of Curefoods said that the overall approach of having multiple brands under one roof helps in improving the chances of customers ordering and increasing the revenue per square feet, which is an important metric for running a cloud kitchen business.

“If you are offering all these options on your app, customers don’t just see a pizza menu, or breakfast menu - they see a multi-cuisine menu. So it is good from the customer point of view and from the business model point of view, it improves sustainability if you get orders throughout the day. This has been possible because of the ‘house of brands’ approach that we have taken,” he added.

In addition to unicorns like Nykaa and LensKart adopting the ‘house of brands’ approach, the very model has also helped D2C brands to touch unicorn valuations. The latest is the Good Glamm Group, which has hit unicorn valuation in two months of announcing its ‘house of brands’ model. The company’s valuation has jumped 3.8 times in the Series D round announced in November as compared to its $310 million Series C post-money valuation in September 2021.

As of now, Good Glamm Group includes six brands under its umbrella entity — MyGlamm, MomsCo, Baby Chakra, ScoopWhoop, BabyChakra, and POPxo. Interestingly, most of these acquisitions have an overlap with MyGlamm’s existing target group of women between the ages of 18 to 35 years old. Having multiple brands/SKUs targeting the same target group has the potential to help Good Glamm Group better engage its customers as well.

In an earlier conversation with BusinessLine, Darpan Sanghvi, Founder and Group CEO of Good Glamm Group had said that the company was working on bringing all its assets together, be it the content assets, creators or beauty and personal care products; and offer a common loyalty reward programme across them.

With the launch of Furbicle and UNLMTD under Furlenco’s umbrella entity House of Kieraya, the company has also been looking at engaging its customers for a longer period of time.

Following the launch of new brands, the company has reported it is growing about 100 per cent per month in September 2021 and is now targeting ₹2,500 crore in revenue by 2026. House of Kieraya (HoK) is also working on launching its fourth brand to further accelerate its growth.

Published on November 21, 2021

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