- Meenakshi Kumar |
When Myntra CEO Ananth Narayanan had put forth his private label game plan, one couldn’t have imagined the idea could augur so well. With close to 13 in-house brands, owned and distributed by Myntra, Myntra Fashion Brands (MFB) is now looking at positive growth ahead. MFB is a Rs 2,000-crore gross sales run rate segment, which accounts for about 23 per cent of the company’s sales. For Narayanan, the number has to go up to 30 in the next 6-12 months. MFB products churn out about 2,000 new designs every week.
Narayanan points out, they work on ‘design to value’ concept. This essentially means there may be 2,000 styles but the fabric can be common. The buttons or zippers can be common. It is a little bit like the auto industry where you have options, but the basics remain the same. Now, eight private brands, including Roadster, Mast & Harbour (annual revenue run rate of Rs 190 crore) and HRX Rs 170-180 crore revenue run rate), which it bought from actor Hrithik Roshan last July, figure among the 20 bestselling brands on the platform.
Growing focus on private brands
With private brands, companies can control everything—from design to sourcing of raw materials to manufacturing. In fact, Myntra isn’t the only ecommerce company to fall back on private brands in pursuit of profits. Tracxn, a startup tracker, says only three such startups were founded this year, as against 118 in 2016 and 244 the year before—private brands are increasingly gaining prominence in categories such as grocery, electronics and beauty. Flipkart, for instance, has two private brands, Billion and SmartBuy, for electronics and home products. For grocery startup BigBasket, private brands in staples, gourmet food, vegetables, bakery and meat account for about half of its sales. Beauty and personal care startup Nykaa expects its private brands portfolio for products like nail enamels, lipsticks, kajal and body mists to account for about one-fifth of its business in future.
In Myntra’s private brands business portfolio, Roadster has become one of the most sought-after brand, with annualised gross sales of Rs 650 crore. But the road to growth wasn’t easy either. Even after celebrity endorsement the brand was not matching up to the customers’ expectations. Then the company decided to deliver a wide assortment of designs in outdoor denims that are high on fashion and marketed through digital channels instead of the traditional ones. Also, it would launch a fresh range of apparels every six to eight weeks. In early 2016, a revamped Roadster launched two new collections, Machinist and Pocketman, and the brand started getting due from thereon. Today Roadster can safely compete with any global denim brand be it Levi’s which clocked Rs 753 crore or Pepe Jeans reporting net sales of Rs 348 crore.
The strategy ahead
Nitin Chhabra, Chief Executive, Ace Turtle feels private brands are a big differentiator because they will not be available elsewhere. Most people who have tried building in-house brands have treated those products like labels. Myntra is spending money on building the brand, which is necessary. It doesn’t help if you own the distribution but don’t invest in building the brand.
Myntra believes in analysing consumer behaviour data, studying what sells, predicting demand and offering buyers a wide assortment of designs periodically. Roadster and Mast & Harbour, the top two private brands from Myntra’s stable, stock 7,500 and 3,500 designs, respectively. With firm aim in sight, Myntra plans to tread the strategy cautiously and win the race.