Aditya Birla Fashion mulls 12 season cycle for Madura Fashion and Lifestyle Business

Pure-play fashion and lifestyle company Aditya Birla Fashion and Retail is considering moving to a 12 season cycle for its Madura Fashion and Lifestyle Business. The company management is of the view that the market demand for apparels is fast changing and the proposed move will help cater to the consumers' expectations by offering fresh merchandise every month.

Vishak Kumar, chief executive officer - Madura Fashion and Lifestyle Business, a unit of Aditya Birla Fashion and Retail Ltd (ABFRL), said this is being done as part of the company's model change approach. "It is to move towards a monthly model, which basically means 12 seasons in a year. Earlier, it was a two trade show model wherein orders were taken twice a year from wholesale partners, own retail channels and produced the merchandise accordingly. As we need to move ahead, we realised the importance of being more nimble in the market, being able to respond faster to changes keeping your inventory tighter. Hence the decision to move to a 12 season model," said Kumar during an earnings call on Tuesday.

With a monthly model, the new approach will attempt to bring freshness/newness every month throughout the year. The company has also designed a nimble supply chain that will deliver new merchandise to the market on a monthly basis. The plan includes rolling it out gradually/carefully, and pilots have been done in the last six months with tests being done, channel by channel across in multi-brand and department stores. The management expects to take another three months before moving fully into this model.

"This means significantly less lead time and a much faster play in the market. This is being enabled by a lot of investments internally on digital platforms and so on. A lot of changes have been made in how we work. Our channel partners have also been very encouraging. They're all excited with the entire prospect that they don't have to lock-in their buys eight months or 10 months in advance and can do so on a monthly basis," said Kumar, adding that the company sees this approach as a very gradual transition into a new process with huge benefits both for retailers and the company in terms of being able to adapt a lot closer to market.

While the multiple seasons' cycle approach is already being experimented in the Madura business, Ashish Dikshit, managing director, ABFRL, said that similar attempts are being made in the Pantaloons business as well.

"We are trying a similar thing in Pantaloons where we are dropping merchandise more often; the whole focus on planning and inventory management to reduce the markdown in the gross margin effect. In fact, the shortening of the supply chain and multiple drops is happening across the business. Pantaloons being a primarily wholesale business, it's easier to do and therefore happening at one level. It's more complex when you run multi-channel operations across multiple brands, which is the Madura business," said Dikshit during the earnings call.

Madura's revenues from the sale of formal apparels are not as significant as it is from lifestyle apparels. Having said that, according to Kumar, even in the formal space some consumers are not served enough if one does not have that kind of flexibility.

"I think consumer tastes are changing much faster. They are expecting brands to quickly respond to those changes and needs. Some of the colour, print and design directions are changing much faster and we need to have the ability to be able to keep pace with the consumer's aspirations. What it also does is to also allow our retail and wholesale partners to be a lot more flexible with their inventory so that they can order exactly what they want, when they want it," said Kumar.

Additionally, while the End Of Season Sale (EOSS) was contributing significantly to the company's margins earlier, there are attempts to shrink the EOSS event and introduce fresh merchandise at a faster pace. The ABFRL management is of the view that extending EOSS beyond a certain point doesn't really help and the entire industry has to understand that. Accordingly, the company is increasingly moving towards bringing fresh merchandise even when there are a few shelves in the store catering to previous seasons' clearance. "We find that the consumers are a lot more receptive to fresh merchandise if you give them innovative and nice exciting new products," Kumar added.