Positive business lures investors to women’s ethnic segment

India’s ethnic wear market doubled sales in the last three years. With immense popularity and growing business, ethnic wear brands are now attracting huge investments from PE players. Almost Rs 2,000-crore-plus PE investments were made in the last two to three years, with more deals are in the offing. And as Ankur Bisen, Senior Vice-President, Retail and Consumers Products, Technopak, explains, from designer to value, ethnic wear is today a part of every woman’s wardrobe. However, some experts point out only branded ethnic women’s wear has seen PE funding. Investors are mostly looking at exiting these investments after five years with as much as three times the return.

Brands take centrestage

The size of the ethnic wear industry is estimated at Rs 70,000 crores, 70 per cent is dominated by unorganised players. This is soon going to change with the pace at which the industry is getting organised. Leading fashion brands including Biba, TCNS Clothing, FabIndia, Soch, House of Anita Dongre (Bridal) and Ritu Kumar have been performing well and are clocking in a CAGR of 30 per cent plus compared to the single digit growth of unorganised businesses.

For example, Biba’s business grew five times to Rs 210 crores from 2007. The brand started with a single standalone store in Mumbai in 2004, and today, it boasts of 232 stores in 103 cities, besides being present in leading chain stores such as Shopper’s Stop, Lifestyle, Pantaloons and Central. It is also going steady on online platforms. In the next two to three years, the brand plans to open 150 to 200 stores. Vishal Mahadevia, MD & Co-head India, Warburg Pincus, one of its investors says that over the last two decades, Biba has built a leading women’s ethnic wear brand in an industry that continues to demonstrate positive growth trends.

In 2016, global PE fund TA Associates invested $140 million for a minority stake in TCNS Clothing, a women’s ethnic wear company that started in 2002 with a single store. The company added brand ‘W’ in 2006 and Aurelia in 2009. Today, it has 400 exclusive stores, and is planning to add 100 stores a year across brands. According to Anant Daga, MD, TCNS, as of FY17 end, the company has crossed Rs 1,000 crores in consumer sales.

Technopak reports, designer wear category is also booming. It is expected to cross $1 billion by 2020 growing at 20 to 25 per cent. And as Ritu Kumar says their growth is well above the market growth rate for the last five years. The customer movement towards branded apparel and their discernment of what good quality is what helped them grow. The designer has around 60 stores across Tier I and II cities. They are looking to have over 100 touch points this year. PE firm Everstone invested Rs 100 crores in the Ritu Kumar label for around 35 per cent stake. The company is confident that Ritu Kumar will continue to grow strongly in the modern ethnic wear category.

Another eminent designer wear brand, The House of Anita Dongre received an investment of Rs 150 crores from General Atlantic in 2013. Founder Anita Dongre’s plan is to expand globally by opening stores across international markets. Having said that, there’s enough and more growth potential for other players to enter the market and capture their share of growth.

Despite the women ethnic wear industry doing extremely well, there’s still immense scope for the established brands to become more successful in the coming years compared to new players who want to enter the sector now.