Raymond’s sewing up a complete plan

Raymond Ltd has set aside Rs 70 crore for the next two years as part of an aggressive retail expansion plan. The Rs 2,500 crore Mumbai-based textile and apparel firm has also struck strategic tie-ups with global players to enter new product categories.

Raymond, which now has 433 stores across the country, plans to have 594 stores by fiscal 2008, 739 by fiscal 2009 and 947 retail network across the country by the end of fiscal 2010 and with over 2 million sq ft retail space.

It expects the branded apparel segment to record revenue CAGR of 25%, over the next two years.

Analysts said margins in the branded apparel segment could be negatively impacted due to the high rentals and increasing real estate price though market for textile and apparel business continues to be buoyant.

Aniruddha Deshmukh, president, Retail and FMCG, Raymond, told “There is not much margin pressure due to increase in real estate price. The consumers are growing at rapid speed and footfalls are increasing every quarter.”

Recently, the company opened its flagship store in Mumbai and Pune and is also increasing exclusive brand outlets for various brands in its portfolio. It opened its 350th store of Raymond Shop on Thursday at Atria Mall in Mumbai.

Raymond owns five apparel brands — Park Avenue (formal wear), ColorPlus (premium casual wear), Parx (casual wear), Manzoni (premium formal wear) and ZAPP! (kids’ wear).

While organised retail in India is only 2.85% of the total $300 billion retail industry, it is expected to grow 25% annually, driven by changing lifestyles of consumers, rising income and favourable demographic patterns. Industry experts said apparel retailing is the country’s second-largest segment for organised retailers. It is no longer an urban phenomenon and companies are now quickly penetrating to smaller cities in an effort to cash in on the consumer spending boom.

Apparel manufacturers were among the first to foray into organised retailing. Raymond, Arvind Brands, Madura Garments (Indian Rayon) and Zodiac Clothing have built an extensive retail network over the years. The clothing market is highly fragmented with numerous players operating across a wide variety of formats.

Fashion has also played an important role in shaping apparel consumerism. As lifestyle changes, fashion in countries like India is becoming more stratified, as in the West.

The core segment of the apparel market comprises menswear, women’s wear and children’s wear. The segment which has been growing at a faster pace is the women’s wear market (at about 9%) which is at a much higher pace than both the men’s and the kid’s wear. The reason is obvious - more and more women are working and there has been a rise in disposable incomes in general.

Disclosure : have exposure.