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Last Updated : Nov 12, 2018 02:37 PM IST | Source: Moneycontrol.com

Opinion | Can Patanjali’s Paridhan be a threat to big apparel brands?

Baba Ramdev will undoubtedly give most established apparel brands run for their money in Paridhan’s initial years

Sounak Mitra @sounakmitra

After disrupting the packaged goods industry, yoga guru-turned-businessman Baba Ramdev has set his eyes on India’s estimated $67-billion apparel market, of which more than 90 percent is unbranded. On November 5, Patanjali Ayurved entered the branded apparel segment with Paridhan and three sub-brands -- Livefit, Aastha and Sanskar -- to sell every kind of clothes with his unique swadesi twist.

Ramdev’s ambition is to generate Rs 1,000 crore by March 31, 2020, or within a period of less than one-and-a-half-year, which will likely be record growth for any apparel brand in India, if not the entire world. But will cheap pricing, coupled with Ramdev’s unique marketing that comes with the swadesi twist, disrupt established brands in the apparel sector?

In apparel, Patanjali plans to start with some 3,500 stock keeping units (SKUs) of around 1,100 different clothes – from yoga wear to jeans – which will be priced around 40 percent cheaper than established brands in the market. Some would even be cheaper. For instance, jeans will retail at a starting price of Rs 500. This would, ideally, initiate an immediate price war.

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By March 2019, Patanjali will open 100 stores spread over 500 sq ft to 2,500 sq ft, mostly franchised, and 500 outlets by March 2020. That’s very fast.

Tata Group’s Trent took 10 years (from 1998) to open its first 40 stores under its flagship brand Westside. Kishore Biyani-founded Pantaloons (later sold to Aditya Birla Group) opened only 86 outlets since it started operations in 1997. Denim brand Levi Strauss, which entered India in 1995, has around 1,500 stores at present.

It is not clear how and where Patanjali will open 500 outlets by March 2020. Ramdev has also firmed up an arrangement with state-owned Khadi and Village Industries Commission (KVIC) which has, for the longest time, dominated the khadi segment, followed by Fabindia that primarily operates in metro cities.

With the arrangements with KVIC, Patanjali will have access to some 15,000 KVIC outlets across the country, making Paridhan the most-retailed apparel brand in the country. A couple of years back, Ramdev had submitted a detailed proposal to the Centre on how Patanjali can revive KVIC and ensure growth. This, however, was not approved by the government.

Besides, the company had, in October 2015, inked a pact with Kishore Biyani-led Future Group for retailing of Patanjali products across Future’s Big Bazaar outlets. Biyani’s company currently operates 1,123 stores across brands and formats in 339 cities, which the company wants to scale-up to around 10,000 over a period. It would not be tough for Ramdev to extend the collaboration beyond Big Bazaar to leverage Biyani’s retailing strength.

That’s not all. Unlike what happened in packaged goods, Patanjali has already received interests from established brands, including Raymond for collaboration. If a deal is sealed, such associations will undoubtedly boost Patanjali’s presence in this business.

To start with, Patanjali has arrangements with 90 sourcing vendors. Besides, as Ramdev had said in May 2015, the company had teamed up with a few hundred handloom weavers in northern India aiming to save them from distress and revive the khadi industry. If this is to be believed, apparel brands -- both multinationals and home-grown -- would have to gear up for a fight that could be tougher compared to what was faced by packaged goods firms.

However, it may not be an easy ride for Patanjali. The company’s first Paridhan store will open in Delhi. If Ramdev targets metro cities, Paridhan will be fighting with every big brand in markets where consumers are brand conscious and with high disposable income. Wooing them may not be very easy.

But if Ramdev primarily targets non-metro urban markets, especially smaller cities and semi-rural markets where most of apparel brands do not have presence, it will have better and much faster success, especially because it can play on three different metrics: Ramdev’s charisma, the swadesi trick and aspirations of consumers who are price sensitive.

Logistically, the apparel business is very different from Patanjali’s core packaged goods.

Last, but not the least, Patanjali has entered the apparel industry at a time when e-commerce has spread wings even in rural India – thanks to rapid penetration of mobile internet during the past couple of years. While the purchase rate in smaller cities and rural India is nowhere close to metro markets and large cities, it has made consumers ‘aspirational’, aware of big brands and ‘pricing’ across product segments. Any brand entering these markets with physical stores will have an edge. But they will have to be fair to consumers, offer quality at a very competitive price and keep pace with latest trends and fashion.

With all the above connecting well, Ramdev will undoubtedly give most established apparel brands run for their money in Paridhan’s initial years. But whether the success will sustain in the longer term or not, that time can only tell.

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First Published on Nov 12, 2018 02:37 pm
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