The 10-year-old fashion brand Max Fashion wants to increase its revenue to Rs 5,000 crore by 2020, backed by a robust yearly growth.
The brand that's growing at a CAGR (compound annual growth rate) of 32 per cent year on year is likely to increase its revenue from Rs 2,450 crore FY17 to Rs 3,200 crore in current fiscal.
Operating over 190 exclusive Max stores, the brand aims to launch 60 more by the end of this fiscal to take the number to 250 across India, including tier II cities.
Vasanth Kumar, Executive Director, Lifestyle International, Max Retail Division said, âBeing a leader in value fashion, Max is poised to capitalise on meeting the fashion aspirations of young contemporary family segment in India, maintaining the current 32 per cent CAGR trend and becoming a Rs5,000 crore brand in the next three years.â
This festive season is expected to bring about 20 per cent more sales compared to last year. Jiten Mahendra, Vice-President, Marketing, Max Fashion, said the 45-day festive season between Durga Puja and Diwali would contribute about 15 per cent to the annual sales. âWe are entering the second phase of the festive season and are hopeful to achieve growth targets. We are looking forward to getting new consumers in the top seven markets, especially on the back of the new communication."
The average selling price at any Max Fashion store is around Rs 599 and an average cash memo is Rs 1600-1800 with an average basket size of three and half apparels. The brand is a family fashion company with product ranges in kidsâ wear, menâs wear and western and ethnic wear for women, including footwear and accessories.
âAll the four categories contribute almost equally to the turnover that makes us an androgynous brand, which is our strength. Kidsâ wear contributes 23 per cent to our business while western wear and menâs wear contribute 20 per cent each. Ethnic contributes 22 per cent to the business. Hence, emotional building of Max as a brand is extremely important for us as it helps us to cater to audience across categories,â added Mahendra.
The company also operates the multi-brand retail store chain LifeStyle, which deals in fashion products of higher prices. Asked how he keeps the two brands separate, Kumar answered, âLifestyle is in the premium segment with 75 per cent other brands whereas Max is in the value fashion segment with 96 per cent private labels. Max price points are 35-40 per cent below Lifestyle.â
To grab another set of audience, the company had launched Easybuy, another brand in the fashion segment two years ago. Kumar explained the performance saying, âEasybuy was launched in the value apparel segment for tier two/ three segment. This year, Easybuy will reach Rs 250 crore top line across 30 stores and 15 shop in shop (SIS). The separate private label brand is 30 per cent below Max pricing with 100 per cent franchised out exclusive store network.â
The brand aims to be positioned as a peer level, light and friendly. About 70 per cent of the total business of the company comes from buyers less than 35 years of age.
So, how does the brand plan its marketing strategies to make sure that the focus on this huge chunk of its customer base stays?
Mahendra answered, âWe use various channels for marketing and brand communication. Apart from all the ATL, the brand experience aspect includes the retail store level initiatives. Another one is the loyalty programme, which is a customer relationship management where around 10 million customers are a part of our loyalty deals who contribute 65 per cent of our business. The fourth aspect is the brand propertyâour own IPRs majorly targeted towards 18 to 24 year olds.â
So, the idea of marketing for Max Fashion is to go horizontally connecting all these different verticals.
The company recently launched its first television commercial with a tinge of humour.
The overall marketing spend of the company stands at about 3.5 per cent of the total sales and it is equally divided between brand experience/ communication and property and later digital.
While digital makes up for an important part of the companyâs marketing strategy, it still looks at digital as a facilitator. Mahendra explained the role of digital in the business, âThe buying funnel in fashion has changed drastically with huge amount of research online and considerable amount of purchase offline. Earlier, it was about hopping from one store to another and going through the trends and then making a decision. We completely acknowledge the âresearch online and purchase offlineâ pattern as a brand.â
The brand also unveiled a new web platform maxfashion.com this year to strengthen its online presence. The brandâs another initiative was a digital ecosystem to speak about the designers/ models and the influencers working with the company. This concept got acknowledged in Indian Retail Forum among the top 10 innovations in the retail industry.
âOur digital sales are almost equal to a large size offline store. We got around 2.4 million views on this video on YouTube, around 1.45 million views on Facebook,â added Mahendra. He explained, âThere is a difference in purchase patterns â every third person who walks in the brick-and-mortar store is a buyer while on digital every 10th person is a buyer. But the reach of e-commerce is much more than the offline store.â
While the company wants to reach 250 exclusive stores, it is not present in any multi-brand retail store. Initially, the brand was seen at the Lifestyle Stores, but now it doesnât want to get into the multi-brand stores. Mahendra explained why.
âThe business of fashion is majorly driven by the range of products that you can showcase. Getting into a retail chain restricts that and it doesnât justify the variety that we offer. Even our communication is talking about 3,000 styles and to showcase these requires a certain size of store. The product cycle is mere 45 days in the fashion industry, unlike many other industries where the product remains the same and the communication changes. Here, the communication remains the same and the product has to change.â
The immediate competitors for the brand are Pantaloons, fbb and Reliance Trends. South is a strong market for Max Fashion.
According to recent reports, Patanjali is planning to launch a khadi and desi garment segment. Patanjaliâs entry in apparel segment can be a big competition as the brand has disrupted the categories that it has entered in the past.
âI think more players in the category, be it online or offline, only leads to an increase in consumption. Looking at it from a fashion point, people thought that e-commerce will kill brick-and-mortar completely but both co-exist. There will be new subcategories.â
To count the challenges faced by the category, Mahendra points out three major things â ensuring that international fashion is brought in India and sticking to the core values of fashion and staying true to the price. The brand doesnât aim to launch any premium segment brand or sub-brand. âWe do have exclusive collections as we launched Tavish and Tavisha for women's for Diwali,â he added.
GST, which posed a huge challenge to many categories and brands, was taken very positively by the brand. Kumar explained, âGST will create a level playing field for organised players like us. Will help increase overall consumption in the market for value fashion.â Demonetisation in November last year had a minimum impact on the brand as it operates in the value fashion category.