PINNACLE

2014

THE BUSINESS
OF FASHION

The Business of Fashion

Lead the launch of the next big brands for MFL - Grow MFL profitably from 4000 crore in 2014
to 12000 crore by 2020!
The global fashion industry reached approximately $2,560 trillion in 2010. Apparel, luxury goods and accessories,
which accounts for over 55% of the overall market, is expected to generate $ 3,180 billion in 2015, with a yearly
growth rate in excess of 4%. The Indian apparel industry, estimated to be worth INR 3,270 billion in 2011-12 is
expected to grow at a compounded annual growth rate of 8.7 per cent till 2016.
In a market dominated by unorganized players, Madura Fashion and Lifestyle is the market leader and is
one of the fastest growing branded apparel companies with a turnover of more than Rs.4000 crore growing
at a blistering rate of over 30% per annum. MFL is a division of Aditya Birla Nuvo Ltd, part of the Aditya Birla
Group. A US $40 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is anchored by
an extraordinary force of over 136,000 employees belonging to 42 different nationalities. The Group has been
ranked Number 4 in the global Top Companies for Leaders survey and ranked Number 1 in Asia Pacific for
2011.
Ashish Dikshit, the CEO of MFL remembers joining the company as a Supply Chain Manager as if it were
yesterday. He was just a few years out of college then, and the company was smaller than most of the brands
it owned today. Over the years, the company has grown from strength to strength, consistently clocking growth
rates in excess of 25% with a healthy double-digit profit margin and return on capital in excess of 50%. From
when he took over the top post in 2012, the company has been on track to becoming the most valuable apparel
company in India. But in order to stay at the top and to lead the growth of the industry itself, he knows MFL
needs to constantly reinvent itself and dominate fast-growing segments and channels. His immediate target is
to make MFL an INR 6000 crore company by FY16 and an INR 12000 crore company by 2020.

The Consumer and Market Landscape

The Indian fashion retail landscape is currently at an evolutionary phase, with radical changes in consumer
behavior, retailing & distribution
models and regulatory models. Some key trends observed in the last few years
1
have been as follows :

Success of Corporatized Retail

The share of corporatized retail in apparel led by large, organized fashion retail companies has increased from
14%, in 2008, to 19% in 2013.

Rise of occasion led purchases

While the fashion consumer base has always been heterogeneous due to income disparities, regional preferences,
and ethnicity, in recent years, there is a growing rise in occasion-led purchases where category segments have
sprung up to cater to specific occasions/needs such as wedding, party, office, fitness, sleep, casual etc. Within
these categories, one can find products with a wide price range, including both branded and unbranded apparel,
purchased from multiple channels. Further, a new consumer base has emerged that demonstrates heterogeneity
even within this classification. The womens apparel market is a case in point demonstrating the trend of brand
heterogeneity. The wardrobe of a typical urban Indian woman comprises a blend of ethnic wear, fusion wear,
and western wear. With such degrees of differentiation, sharp consumer profiling is key to any brand.
1 Source: Technopak Compendium - Textiles and Apparel, March 2014 and Internal Sources

Evolving Channel Dynamics

In the future, it is expected that the growing reach beyond the major urban centers into the upcoming markets
and the development of alternative retail channels will continue to drive the growth of the apparel category.
The disruptive growth of direct selling, home shopping (through TV) and e-tailing channels are the factors
contributing to the growth of alternative retail. Fashion and fashion accessories have a 15% share within the
~USD 0.2 billion Home Shopping market in India. Lifestyle categories have a 35% share in the overall e-tailing
market, which is worth ~USD 1 billion. The rapid penetration of Internet-supporting devices is contributing
immensely to the growth of alternative retail. The world of e-commerce has sped up the evolution journey from
incremental progress to quantum leaps, and is forcing every single offline business to rethink its growth strategy
for the future. The classic purchase funnel of Awareness, Interest, Desire and Action is completely irrelevant
today and this has, in turn, led to ever-changing consumer expectations.

A Primer on the Fashion Industry

The typical processes in any fashion company can be depicted as follows:

DESIGN
&
PRODUCT
DEVELOPMENT

MERCHANDISING
& DISTRIBUTION

SOURCING AND
SUPPLY CHAIN

Design and Product Development

The branded apparel industry (or even non-organised sector) operates in two major seasons: Spring-Summer
and Autumn-Winter. Designers and Product Managers continuously track customer preferences, buying patterns,
global fashion trends, design concepts and ranges based on these and place orders with internal and external
suppliers. Apparel retailers typically segment their products into different models on the basis of the speedcost
trade-off. For each of the three models described below, there is a unique value chain that maximizes gross
margin by addressing the most important needs of the garment.
1. Trend: White-hot items that have a short shelf life, sometimes only weeks. Womens tops typically fall into this
category. The average lead times for these products from design to shelf cannot be more than 4 to 6 months.
2. Style: Fashion-oriented collections that can last through 2 to 3 seasons, often with more original design.
Examples include form-fitting trendy denim jeans.
3. Core: Garments that endure over time and can potentially live over many years examples include a perfect
white or plain blue shirt.
Retailers that have a range of products incorporating items from the trend, style, and classic categories
segment their development model into multiple streams to accommodate each product segment. The key driver
of profitability influenced by design and product development is effective management of the prime cost to
maximum retail price you can command (PC: MRP). This needs to be balanced with the brand equity and the
need to ensure freshness of stock in stores at any point of time.

Merchandising and Retailing

The apparel merchandising process begins with sales forecasts based on past performance, expected organic
growth and new expansion. A merchandiser plans inventory as per the sales plan at sub category, product and
item level. He/ She links it to shelf life and sourcing timelines and achieves desired stock turns to manage
the working capital in better way. The merchandiser ensures availability of garments in stores in the right
quantity, time and price and manages the stores aesthetics freshness and balance of stock. Product managers
work closely with channel partners (described in next section) to maximise profit and ensure that stock is
properly monitored and available, and that underperforming lines are stopped and stock of popular products is
increased. To generate superior returns, specialty apparel retailers need to keep inventory off the mark-down
and clearance racks.

Distribution Channels

The distribution is led by 5 major channels: Retail, Department Stores, Trade Sales, Depletion Chanel and
E-Commerce. A brief description of the channels is given below:

Retail Channel

Also called Exclusive-Brand-Outlets (EBOs - Comprises outlets selling primarily MFL products - such stores
may be solely company owned or could be owned by franchisees. Most of these stores do not buy stock from
MFL MFL picks up both the risk and accountability of selling the products to the end consumer. The key
challenge in running a successful retail chain of stores is to maximise Same Store Like-to-Like Growth year on
year (LTL). Typically, rentals in India are very high and can amount to 15% to 25% of retail revenue, sometimes
even higher. Also, due to supply constraints in good retail locations, rentals keep rising by 6% to 8% p.a. In this
context, profitability is not easy to achieve and even more difficult to sustain.

Department Stores (DS)

Store Chains such as Shoppers Stop, Lifestyle and Central that offer a wide range of consumer goods and
allows shoppers to choose between multiple merchandise lines across product categories. Most of these stores
buy stock from MFL and then sell to the end consumer. Department stores also experience the same challenges
of the retail channel and have struggled to maintain profitability.

Trade Sales

Also called Multi-Brand-Outlets (MBOs) - distribution channel that covers all stores from the neighbourhood
apparel stores to large textile showrooms that also buy stock and in turn sell to the consumer. While the Trade
channel has been the primary channel for the apparel sector, it has lost out in the last decade with retail
expansion. However, trade stores are modernising and reinvesting to improve customer experience. A typical
trade outlet stocks multiple brands and products, often on the same shelf. Understanding of customers and
customer trends is considered to be the highest among owners of these stores. While the trade sales channel
managed to survive the onslaught of exclusive stores, it remains to be seen if it will survive the e-commerce
revolution.

Depletion Channel

Heavily discounted stores focusing on selling previous seasons unsold merchandise.

E-Commerce

Through In-house website TRENDIN.com and other external e-commerce players. With Indian consumers now
confident enough to make online purchases of up to INR 25000 p.a. from INR 2000- 5000 p.a. in the recent
past, this channel is slated to change the way the industry operates. The convergence of stores, e-commerce,
social media and mobile has opened up possibilities of creating an Omni-channel experience for consumers.

Sourcing

Sourcing is sub divided into the procurement of finished goods, trims, fabrics and accessories. On an average
one piece of shirt requires around 40 trims and accessories (starting from threads, buttons, collars to brand
label and so on) for manufacturing. They work with 40000 style codes, 150 types of fabric and 80 types of trims.
The major role of sourcing lies in meeting the production calendar, managing the lead times of the various
vendors, textile mills, manufacturing units, etc. The objective is to keep the product cost within the budget at the
desired specifications and to manage the inventory level at warehouse so that the cost of holding raw material
(fabric, trims and accessories) before the manufacturing starts, does not go beyond the optimum level. The
various roles associated with the function are to get efficient fabric makers, suggest better garment construction
methods and to work closely with factories to provide technical support and with designers to understand trends
and fits. Given that sourcing forms a key component of the value chain, segmenting products by volume, style,
complexity and source will help identify differentiated supply chains for key segments.

Supply Chain

The fashion industry is characterized by its complex supply chain - sourcing is highly fragmented and finished
goods travel to the entire length and breadth of the country. For instance, MFLs sourcing & distribution is
supported by 400+ raw material suppliers, 300+ factories (in-house + outsourced), 17 warehouses and 7
transportation partners distributing to 5 distribution channels.
Supply chain function is extremely critical to the business, this can be emphasised by the fact that on an
average the company has to produce/procure 38 lakhs of finished products (all categories) per season.
Balancing forward booking of capacity with the flexibility to handle market changes, thus ensuring freshness
of merchandise in store, define a successful and agile supply chain. The diverse demographic nature of Indian
markets, evolving variety in consumer profiles, regional preferences, festivals etc. results in demand variability
prediction of demand is critical in any season. With fashion & lifestyle products sold in almost all existing
distribution channels the supply chain needs to have the width to handle the demands of all the channels. Large
format warehouses are typically the entry point for primary distribution - small format warehouses and Carry
and Forward Agents (CFAs) enable the supply chain to be more responsive in nature as some of the stocks are
stored with these warehouses which are closer to customers.

MFL - Current State

MFL is one of the few vertically integrated apparel organizations in the country. The in-house manufacturing
works under Madura Clothing (MC) and Madura Garments Exports (MGE) - These in house manufacturing
works as preferred vendors to MFL. It designs and manufactures most of its products in-house and markets
them through key channels. Always at the cutting edge of fashion and innovation, it has set up its own design
studios to keep abreast with the rapidly changing world of fashion. Here, latest developments from across the
world, related to fabric, washes, colors, designs etc. are researched.
MFL has been steadily expanding its retail footprint across the length and breadth of India and has touched
even small cities and towns in the interior parts of India with its strong distribution model. Today, MFL has pan
India presence across all metros (8), 345 cities and towns through 1586 EBOs, 3750 MBOs, 662 DS and 2.2
million sq. ft. of retail space giving its customers the ease of access to its products and services. MFL has
recently started its operations in Middle East, Nepal, Maldives and Sri Lanka as well. About two years ago, MFL
took the first steps in establishing a strong presence in the e-commerce space through its online site, TRENDIN.
The TRENDIN platform is expected to hit a turnover of INR 100 crore in FY16 in less than 2 years.
MFLs portfolio includes product lines that range from affordable and mass-market to luxurious, and caters to

youth, men and women. The main brands of MFL are Louis Philippe, Van Heusen, Allen Solly, Peter England,
People, Planet Fashion, The Collective, Hackett and Trendin.com. The key products are formal and casual
Shirts, T-Shirts, Trousers, Denims, Suits and Blazers with our increasing presence in womens wear domain as
well. In July 2012, ABNL has acquired a controlling stake in Pantaloons, thereby establishing its presence in the
big-box retailer space and opening a further avenue for MFL to take its brands to consumers.

Outlook - Key Challenges

Ashish realizes that in order to become an INR 12000 crore company by 2020, MFL needs to grow revenues
significantly faster than market and create a future-ready portfolio. In the last 5 years, the Indian fashion industry
is undergoing a significant transformation with large, new segments are emerging fast and key competitors are
taking strong position on future market segments. While the current brands are expected to deliver a part of this
growth, it is imperative to expand into new categories and capitalize on emerging whitespaces.
These changes will further accelerate over next 5 years & may bring about a structural change in the industry,
threatening our leadership. The following are the key challenges he foresees:
1. Driving aggressive growth requires building new businesses in many areas where MFLs current capabilities
are limited and delivering healthy same-store (LTL) growth despite saturated market conditions.
2. In terms of profitability, the key challenge is balancing the need for large investments in new businesses
which takes longer to turn profitable versus short term profitability. Rising costs, decreasing availability of real
estate and rising competition from discount-led models such as e-commerce puts further pressure on retail
profitability.
3. With the spurt of digitization in recent years, channel strategy is changing dramatically - not just in the
way consumers communicate and interact, but more importantly in the way they buy. This has dramatic
consequences for any business whose existence and success has been rooted in the offline world. While the
channel has managed to expand the apparel market itself dramatically, purchase cycles, search for information,
recommendations and fulfilment - all the key aspects of how we transact have changed beyond recognition.
Undeniably, these changes are permanent and their pace and sophistication will only grow at a much faster rate.

Questions to Answer
As a team, share a business proposal advising Ashish on the following areas, using the following questions as
thought-starters:

Where to Play

What are the whitespace opportunities that that MFL should focus on? How will the final portfolio play
be? In particular:
1. How should the MFL portfolio in the market look like in 2020, split in the following manner:

a. Revenue split by price category and consumer category

b. Distribution channel mix

c. Revenue from organic growth and new categories
2. What are the new opportunities MFL should target to achieve the above? In order to retain focus, we
recommend you pick maximum of 2 whitespaces that will prove to be the next big elephants.
3. Within the identified space(s), what are the major sub-segments and product categories? What are the
consumer preferences for the particular segment/category?
4. What is required to win (key success factors) in the identified space(s)? What are the requirements
(capabilities, assets, etc.)? How do we leverage our current strategic advantages, capabilities, assets, etc. in
terms of existing brands/ distribution network/ supplier/vendor relationships etc.?
5. What are the strategic options (acquisitions/ licenses/JVs/Organic growth etc.) to pursue these opportunities?
What are the key risks and risk mitigation plans for each option?
6. Who are the current competitors? Do we anticipate any new competitors? What are their brand positioning
and competitive advantages?
7. What might an implementation table look like? Illustrate with a high-level time table.

How to Win:

What are the key Corporate-level enablers / transformations required to deliver the projections above?
In particular:
1. What should be the channel strategy for MFL with your strategy? How do we ensure a seamless integrated
brand experience between offline and online entities? What will it take to bridge consumer expectations across
online and offline and how can best practices from both be leveraged for greater growth?
2. What should MFLs strategy be to ensure greater consumer connect with its brands (current and recommended
whitespace)?
3. The pressure on the offline business is expected to intensify. Consumer walk-ins to physical stores will be
constrained due to changing lifestyles and pressures on infrastructure. Malls and High Streets that have housed
MFL brands for years will begin to see lower footfalls. How can MFL counter this?
4. Should MFL continue its strategy of adding stores and expanding its physical distribution at todays pace, or
should it focus all its energies on online accessibility?
5.How should MFL play the game in the online space similar to entities like Jabong and Myntra (covering a
wide spread) or should it develop a specialised MFL model that provides greater depth and expertise in the
fashion category?

Appendix 1: Category Growth Estimates

Overall Market Size
Source: Technopak Compendium-Textile & Apparel_March 2014
FY20-RS. CR IN OOO

FY13-RS. CR IN OOO

Key Category Indicators

CAGR Cumulative Annual Growth Rate
SSPD Sale per Square-feet per Day (Used for Retail Stores primarily)
GM Gross Margin (Definition in Appendix 3)
CATEGORY

DESCRIPTION

MARKET SIZE
2013-(INR000
Crore)

CAGR
(2013 to 2010)

SSPD
(INR)

GM%

Mens Shirt

Woven shirts (full- and half-sleeve)

28

7%

Low

High

Mens Trousers

Woven trousers (formal wear, casual wear)

22

8%

Low

High

Womens Tops

Woven tops/shirts/dresses mostly for formal wear

11%

Low

Medium

T-shirts

Knitted T-shirts for Men and Women

14%

Medium

Medium

Womens Trousers/Skirts

Trousers (formal and casual), Capris, Skirts, etc.

10%

Low

High

Sportswear, Gymwear, Swimwear, etc.for men and 3

women
Wedding Wear (sliced from Shirts, Suits, Lehengas, Sareers etc. focused on the 4
other categories)
wedding market
Time Wear
All timewear products for men and women
5

13%

Low

Medium

12%

Medium

High

3%

High

Low

Accesories

Ties, Socks, Handkerchiefs, Gloves, bags etc.

12.5

12%

High

Low

Womens Ethnic

Sarees, Salwaar-Kameez-Dupattas,
Lehengas, Churidars, Dresses, etc.

58

11%

Low

Medium

Kidswear

45

11%

Medium

Low

Innerwear

All categories of apparel targeting boys/ girls <14

years of age
All categories of mens and womens innerwear

18

12%

High

Low

Denim

Jeans, Denim tops for men and women

11

15%

Medium

Low

Active Wear

The quoted ranges of GM and SSPD are overall

averages and will vary based on target segment.

INDICATOR

SSPD (INR)

GM%

Low

<25

>65%

Medium

25 to 35

55% to 65%

High

>35

<55%

Appendix 2: Current MFL Portfolio, Category Mix, Reach and

Penetration
Current MFL Portfolio

Appendix
2: Current
FL Portfolio,
Category
Mix, Reach
nd
Penetration:
Appendix
2: CM
urrent
MFL Portfolio,
Category
Mix, aR
each
and Penetration:
Current Current
MFL Portfolio
MFL Portfolio

Category and Segment Mix

The
following
Category
and
Segment
Misix: a split
Category
and Segment
Mix: of revenue (after discount)

Split
Revenue
BRAND

ofThe
MFL
by category
and
segment.

The following
is a split io
after discount)
of MFL boy f cMategory
and segment.

following
s f ar sevenue
plit of r(evenue
(after discount)
FL by category
and segment.

REVENUE
CONTRIBUTION %

Louis Philippe(LP)

20% to 25%

Category
Mix
Category

Mix

Segment
Segment

Mix

Mix

Van Heusen(VH)

20% to 25%

Formals Formals
51.3%

51.3%

Men's

90.8%

90.8%

Casuals Casuals
39.2%

39.2%

Women's Women's

4.1%

4.1%

Denim

Denim4.9%

4.9%

5.0%

Others

4.6%
Others

4.6%

Kids/Accessories/
5.0%
Kids/Accessories/
Others Others

20% to 25%
15% to 20%
4% to 5%
4% to 5%

Total

Total 100%

100%

Total

100%

Peter England(PE)
Allen Solly(AS)
People
Others (Collective,
Hackett)
Total

Men's

Total

100%

Reach Reach
aReach
nd Penetration:
and
Penetration:
and
Penetration

Reach and
Penetration
Reach
and Penetration

Total no. of Towns = 596

No of
of Markets
No No
of o=f 1192
No of
Total No.

No of No of
Reach Reach No of MNo
arkets
Penetration
of Markets
Penetration
BrandBRAND
Towns NO.
Towns
Markets
Brand
Towns
Towns
Markets
OF
NO. OF
REACH
NO.
OF
MARKETS
NO.
OF
PENETRATION(%)
%
%
%
%
TOWNS
TOWNS
%
MARKETS
RelevantRelevant
Present Present
Present
Present
HIGHRELEVANT
PRESENT
High-Street
Mall
Total Total PRESENT
High-Street
Mall
STREET
MALL
TOTAL
LP
135
58
43%
42%
LP
135
58
43% 27243 272
272149
149421 421
421163
163163
42%
LP
135
58
149
42
VH
135
50%
VH
135 67
67
50% 272
272149
149421
421171
171 41%
41%
VH
135
67
50 272
149
421
171
41
AS
135
41%
AS
135 55
55
41% 272
272149
149421
421128
128 33%
33%
AS
135
55
41 272
149
421
128
33
PF
161
40%
PF
161 65
65
40% 351
351 48
48399
399111
111 29%
29%
PF
161
65
40 351
48
399
111
29
PE
223
60%
PE
223133
133
60% 480
480154
154634
634305
305 49%
49%
PE
223
133
60 480
154
634
305
49
People People 223
21%
223 46
46
21% 480
480154
154634
634 80
80 14%
14%
People
223
46
21
480
154
634
80
14
Total number
f towns
= t5owns
96 = 596
Total noumber
of
Total number
f markets
= arkets
1192 = 1192
Total noumber
of m

100%

Appendix 3: Cost Estimates

Definitions
Gross Margin: Margin after Discount and Product Cost
Selling Expenses: All selling expenses including commissions/ rentals/ ` staff salary costs/ electricity etc.
which can be directly linked to sales of a product - includes margin given to Wholesale partners
Marketing Cost: Communication/ Advertising cost that is linked to building brand equity
Overheads: Management cost/ office expenses etc.

Costs incurred for a running business

CHANNEL WISE

GROSS MARGIN
% OF REVENUE

SELLING EXPENSES
(% OF REVENUE)

Trade

55%

6% to 8%

DS

50%

8% to 10%

Retail
Exports
E-Commerce
Depletion
Overall

65%
60%
60%
40%
60%

35% to 45%
10%
50%
30%
35%

MARKETING COST
(% OF REVENUE)

OVERHEAD
(% OF REVENUE)

4% to 5%

8% to 9%

EBITDA

12% to 13%

Estimated Channel Growth (Industry)

CHANNEL GROWTH
(INDUSTRY)

CAGR
(2013 TO 2030)

MFL- CHANNEL-MIX
Revenue Terms

Trade

10% to 15%

27%

DS

15% to 20%

14%

20% to 25%
15% to 20%
50% to 100%
15%
18% to 20%

46%
4%
2%
8%
100%

Retail
Exports
E-Commerce
Depletion
Overall

Key Assumptions
Marketing Cost for a new set up (brand or category) can be assumed to be around 10-15% of targeted
average 5 years sale for the first 3 years. This includes only communication costs digital marketing costs
are captured as a part of selling expenses.
Assuming that all new stores will be taken on a rental basis, a cost of
expenditure will be incurred to set up a premium brand store

4000 per sq. ft. for capital

Inventory to be held in store for a running business would be around 3 months of sale (value terms)

Appendix 4: Potential Categories To Explore

DENIM

A typical Indian consumer will always plan two big investments in life one on
Housing and other on Wedding. The overall wedding market in India is highly
unorganised. Competition offered is from regional, conventional localised stores
on one side or a niche, well publicised and marketed private labels or designers
on the other side. Modern retail, especially large format retailers are ramping up
their expansion plans across metros and Tier I & Tier II cities. This will contribute
significantly to the growth of the Indian wedding wear market. Overseas sourcing
has definitely facilitated greater diversification in terms of product development
raising expectations of season-wise developments with proper color trends. But
globalization should be accompanied with local taste in terms of design collection,
innovation in terms of cost effectiveness and perceived value of the fabric, time
bound deliveries and continuous development in terms of quality.

INNERWEAR

ACCESSORIES

The denims market is symbolic of the success of the branded apparel industry in
the last 2 decades. Denim companies managed to create highly brand-conscious
consumers with a strong urge for upward movement across segments from brand
perspective. While most players are integrated denim manufacturers and retailers,
some major players have licensing agreements with global brands. Increased use of
denims as office-wear, especially by women contributes to further category growth.
While the most preferred format for sale is retail, seconds/ discount stores have
made a mark in this category. While most of MFLs brands operate in this space, is
there scope for a pure-play denim brand? Or are there ways of improving upon the
companys existing model in this category?

WEDDING MARKET

Ashish has listed down the following potential categories and his top-line thoughts on each of them for you to
think about. MFLs presence in all these categories today is either zero or insignificant in revenue terms. We
think that these categories have considerable potential and play to MFLs strengths however, feel free to
pick any categories beyond these!

Due to higher levels of discretionary spending in recent years, accessories proves

to be a promising market. While this market has also primarily remained an
unorganized category, each organized apparel player merchandises accessories
as retail space filler. The vendor base for the category is highly fragmented. Growth
in organized retail has inspired exclusive accessory players, though not at a very
large scale. With an estimated CAGR of 12% on a base of 12500 crores today, this
can prove to be a highly attractive market, if we can develop a winning proposition.
Internationally, exclusive accessories players cater to either a specific segment or
seasonal trend. The big question is whether MFL can organize a highly unorganized
industry, and run a profitable business doing so.
Improving Indian demographics (brand preferences, rising disposable incomes)
and increased preference for proper fits, sizes, etc. lend credence to the growth of
organized players in the Indian innerwear market. A large part of the market was
dominated by the low, economy and mid-market segment offerings of domestic
suppliers. The entry of foreign players has revamped the way the industry operates.
The innerwear segment was earlier not as bold in terms of advertising and product
display. With the increasing presence of modern retail, innerwear products are

displayed through exclusive brand outlets and also in malls. Mass segment is
catered to by small departmental stores, street shops and hosiery stores and
requires an extensive distribution network.

ETHNIC WEAR
TIMEWEAR

Big-box retailers operate in the attractive segments of casuals, youth & women
through large format stores and afford scale and profitability through significant
leverage in space acquisition costs. The market in this space is expected to
change dramatically - While some foreign players are entering the market through
partnerships with Indian apparel companies, some others are planning for 100%
direct investment. Pantaloons is present in the affordable retailing category, but
there is a significant market in the premium space that exists. With several options
of entering the space for MFL, the question is on which model will deliver the best
value to the consumer and be an engine for company growth and profitability in the
long run.

ACTIVE-WEAR

KIDSWEAR

Watches today are a lifestyle product while they traditionally were perceived as
just a utility product The consumer base of time wear market is stagnant with the
biggest player in India having grown 2-3% in last fiscal year. But with only 27% of
Indian population owning a watch, it is an underpenetrated market. Currently MFL

has no expertise around specialised design, manufacturing and distribution of time

wear. Front end delivery and service is also very different from fashion apparel.
The big question lies in whether entering into this category shall help in enhancing
an existing brand image or whether it should be explored as means to increase
revenues.

BIG-BOX RETAIL

The womens ethnic-wear market can broadly be classified across two sub-segments
hand woven and machine made. While this is largely an unorganized, fragmented
market in the mass segment where regional manufacturers and distributors
dominate, recent forays by retailers have proved successful. Emergence of private
labels in the machine made segment through departmental stores is also a key
trend. With a regionally diversified customer preference, is there scope for a large
retailer to take up significant share of this space profitably?

With 50 Million babies in the age group of 0-2 years and 304.8 Million children
are in the age group of 0-12 years, kids-wear is a market of unlimited potential.
Growing Exposure of Parents and Children to Fashion Trends and evolving buying
behavior of kids make branded retail an attractive proposition. Currently, the market
is characterized by largely unorganized players with variety and price being offered
as proposition. Is the market too saturated to enter, or is there a winning proposition
in this segment? And how does this fit in with MFLs existing brand portfolio?

Is active-wear the new Denim? Much like denim before it, active-wear is
increasingly being integrated into daily attire- just as the denim industry had been
successful in marketing denim for the office, formal, weekend, seasons, locations
active-wear makers should be able to do the same. Over the past two-three years,
the growth of athletic apparel companies has consistently outpaced the growth of

traditional
apparel companies. MFL has presence in the fashion wear for sports
through its sub-brands like LP-Sports, Allen Solly Sports and VH Sport. The kind
of premiumisation that gave rise to the highly successful designer jeans category
is also picking up in active-wear. Variety in styles and designs, along with the
high quality of products remains the top priority. So does active-wear offer fashion
brands the same kind of growth potential that designer denim did a decade ago?

SEASON 2

PINN CLE

The Business of Fashion

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