As Raymond Lifestyle gears up to list on the stock markets on September 5, with plans to open 900 new outlets over the next three years and to launch new categories such as sleepwear and innerwear. It is important to note that RLL has underinvested in brand building over the past four years, but now the company plans to increase its advertising spending by up to 10 percent.
The Raymond Group’s lifestyle business entity aims for a 15 percent Compound Annual Growth Rate (CAGR) to capture around 7 percent of the fast-growing men’s wedding wear market by 2027. The company’s existing brands include Park Avenue, ColorPlus, Parx, Raymond Made to Measure, Raymond Fine Fabrics, Raymond Ready to Wear, and Ethnix by Raymond. The brand plans to enter new categories with SleepZ and Park Avenue innerwear.
In an interview with Storyboard18, Sunil Kataria, CEO of Raymond Lifestyle Limited, discussed in detail the company’s strategies to increase marketing and advertising spends, expansion into GCC countries, and combat counterfeiting of branded outfits.
Capitalizing on the Wedding Season
RLL, is aiming to become one of the top three global fabric suppliers by the end of this year, the company generated sales of Rs 2,550 crore from its wedding business in FY’24, which includes Raymond’s wedding and ceremonial attire and Ethnix, its Indian ethnic wear offering. RLL aims to double its EBITDA to over Rs 20 billion by 2028.
Despite a slow first half of the year, Raymond expects significant growth in the second half. Kataria explained, “The first half was a bit muted due to several factors, including heat waves and elections, which affected the April-May wedding season. However, we now see a large backlog of weddings scheduled for the second half, with 45 to 47 wedding dates expected over the next 4 to 5 months.”
Kataria added, “We anticipate a substantial increase in our business, with strong double-digit growth in the second half, as the wedding season continues into the next part of the year. The backlog of wedding-related spending that didn’t occur earlier is likely to happen now, in a very strong way.”
Increasing Ad Spending
Raymond pegs the Indian wedding market to be roughly Rs 11,00,000 crore in size, of which Rs 2.5 lakh crore (23%) is clothing. Of this, Rs 75,000 crore is men’s wedding clothing and that’s what Raymond aims to leverage. In FY24, it had sales of Rs 2,550 crore from the wedding business. Currently, 40 percent of RLL’s revenue comes from the wedding business.
Discussing RLL’s advertising strategy, Kataria said, “We believe we have underinvested in our brands over the last four to five years, partly due to COVID and partly because we haven’t focused on brand building as much as we should have. As we scale up our businesses, we plan to improve our advertising spend ratios. Expanding our stores in branded apparel and ethnic wear will require significant advertising, including mass media, digital, and local hyperstore marketing.”
Kataria continued, “Additionally, we are launching new categories, including innerwear, and sleepwear, which will also require advertising. We expect our advertising spending to range between 9 and 10 percent going forward.”
Expansion in Saudi Arabia
For the garmenting business, Raymond is betting on tailwinds like the China & Bangladesh+ phenomenon and the Free Trade Agreement (FTAs) that India is in talks for with the UK, EU and Australia.
On retail expansion, Kataria said, “We will only invest in company-owned stores at marquee locations where a flagship store serves as a marketing investment. Approximately 20-25 percent of our stores will be Company Owned Company Operated (COCO), while 75 percent will be Franchise Owned Franchise Operated (FOFO).”
Regarding international expansion, Kataria stated, “We are putting a blueprint together and we are looking at 2-3 geographies. We already have a presence in Bangladesh and we have 20-odd stores there already. We have some presence in GCC countries as well as in Dubai. I think what we are seeing is definitely a potential to expand our footprint now into GCC markets further and also look at Saudi market with a fresh lens.”
He said, “So, Saudi is a market which is in the cusp of opening further and becoming pretty bigger. In any case, UAE and Saudi are the two biggest markets of Middle East. So, I think our focus would be really expanding GCC more and looking at Saudi as a very possible disruptive expansion.”
Combating Counterfeit Products
A 2023 report by Crisil and the Authentication Solution Providers Association (ASPA) reveals that nearly 25-30 percent of all products sold in the country are counterfeit, with apparel and FMCG sectors being the most affected, followed by pharmaceuticals, automotive, and consumer durables.
According to the report, counterfeiting is most prevalent in apparel (31%), FMCG (28%), and automotive (25%) sectors, with pharmaceuticals (20%), consumer durables (17%), and agrochemicals (16%) also significantly affected.
Discussing the issue of counterfeiting in India, Kataria said, “India is a vast country, and we still have a large population with literacy challenges. Counterfeiting is a problem across all categories, and any large, iconic brand like Raymond must have a strong brand protection infrastructure in place.”
Kataria added, “Preventive measures are needed to educate consumers on how to identify genuine products, and we must also take corrective action. As soon as we become aware of counterfeit products being sold by unscrupulous operators, we have the infrastructure in place to take legal and regulatory action against them. We educate consumers and have a robust system to combat counterfeiting and take action against those responsible.”