Ethnic retail chains Fabindia and Manyavar have emerged the country’s most profitable apparel companies by avoiding discounts making products in-house in a market where most international brands are looking to grab share by offering price cuts. Fabindia Overseas posted a net profit of Rs. 54 crore in the year ended March 31, 2014, according to filings at the Registrar of Companies.
Kolkata-based Vedant Fashions, which owns ethnic wear brand Manyavar, made a Rs. 49-crore profit. Levi’s India was the only marquee international brand that could match them, posting a Rs. 49-crore net profit. This is the first time Levi’s India has made a profit since entering the country in 1994. None of the other overseas brands, including Zara, Benetton and Marks & Spencer, were able to come close to the performance of the Indian companies.
“We didn’t get into the trap of discounting even as others did to chase top line. To build a sustainable business, we need profits and cash flow,” Mr. Sunil Chainani, executive director of Fabindia said.
“There are instances where we didn’t open stores in prime localities or high-footfall zones at malls that guaranteed higher sales as rentals would have impacted margins.” Right from local boutiques to established traditional retailers and regional brands, every ethnic wear retailer is vying for a share of the consumer wallet in a market that is governed more by design than brand name.
However, both Fabindia and Manyavar have over the years expanded across India and are now finding acceptance even among younger consumers, a new development in a category restricted to older buyers. Fabindia opened 17 new retail outlets in FY14, taking the number of stores to 175. Manyavar has been more aggressive, adding nearly two stores every week on average, taking the count to 360 now, clocking annual sales of Rs. 373 crore.