Ethnic labels book profits without discount strategies

Leading names in India’s ethnic wear like Fabindia and Manyavar have emerged as the country's most profitable apparel companies. And they have done this despite avoiding discount strategies, staying away from prime real estate and focusing on making products in-house. While Fabindia Overseas posted a net profit of Rs 54 crores 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, reported a Rs 49 crores profit. Levi's India was the only international brand that could post Rs 49 crores net profit. None of the other overseas brands, including Zara, Benetton and Marks & Spencer, were able to come close to the performance of the Indian companies.

Ethnic brands have managed to race ahead at a time when other national and international labels are offering steep discounts to grab a share of the competitive yet cluttered market. Both Fabindia and Manyavar have gradually spread their footprint across India offering youth-friendly merchandise and design options. Fabindia opened 17 new stores 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 crores.

To remain relevant to the demands and preferences of today’s young generations, Fabindia has launched a western wear line Fabels while Manyavar has been adding Indo-western merchandise in its collection. Ethnic wear, still mostly fed by the unorganised segment, has demonstrated steady growth over the past few years and is set to expand by 8.4 percent over the next decade from Rs 61,679 crores now, according to retail consultant Technopak.