Myntra to take over Forever 21 via franchise model

Myntra, an online fashion store owned by flipkart is in advanced talks to manage the local retail chain of Forever 21, the US fashion brand targeted at teens and young adults, reported Economic Times.

The Indian company already sells Forever 21's products online in India under an exclusive tie-up. A deal to take over the 10 brick-and-mortar stores currently managed by a joint venture of Forever 21 and DLF Brands will mark Myntra's entry into offline retailing, a global trend among e-commerce firms. With such moves, e-commerce firms try to de-risk their business from online-only focus.

In 2011, Forever 21 entered India through a franchise route with Dubai-based Sharaf retail and the business failed to scale up for two years, prompting the Dubai company to close the lone store in New Delhi in early 2013.

While Zara's annual revenue was about Rs 720 crore in the fiscal year ended March 2015, at Forever 21, a person aware of the matter said, it was around Rs 250 crore.

However, Timmy Sarna, managing director of DLF Brands, said: "The Forever 21 business is totally in our control". Harminder Sahni, founder of retail consultancy firm Wazir Advisors, said DLF isn't too keen to invest in these businesses anymore and wants to focus only on Mothercare, the British brand with which it has a tie-up in India.

Forever 21 want to exit the joint venture and have a franchise operation in India. The talks are for Myntra to take over the chain, buying out both Forever 21 and DLF Brands. "Handshakes have happened with Myntra and currently the documentation is happening," said one of the people. Valuation details weren't available.

Myntra is exploring the possibilities of opening its branded offline stores as well. It is deliberating whether such outlets should sell products or function as a place where consumers can touch and feel the products. Myntra has been toying with the idea of having its own brick-and-mortar stores in the past as well, but it has now gained momentum, he said.

But Sahni of Wazir Advisors is unsure of its offline success. "It would be a tricky one for Myntra as they are trying to open exclusive stores for other brands while you have no experience of running stores, because running physical stores requires different skill sets," he said.

 

Salman’s Being Human to walk franchise route

Textile and apparels firm Mandhana Industries Ltd, which partners actor Salman Khan’s Being Human Foundation to manufacture and market the Rs 300 crore Being Human clothing brand, has plans for deeper penetration into domestic and international markets using the franchise route. It already has a licensing agreement with the foundation for a global presence.

Mandhana said it will add new products to its portfolio from April with the introduction of a boys wear line and a sportswear sub-brand called Being Active. Between 8-10 per cent of the Being Human sales revenue goes to the foundation. In the next three months, it will demerge its retail business and hive it off as Mandhana Retail Ventures to add more brands and scale up business.

“We have aggressive growth plans,” said Manish Mandhana, Managing Director, Mandhana Industries, in an interview with The Hindu . “We want to become a complete family clothing brand, and grow 40-50 per cent per year until 2020. We will be available at over 2,000 outlets in India and abroad, compared to 700 now.” International sales in 16 countries contribute 25 per cent of Being Human’s revenue.

“The concept of charity via retail sales is popular in advanced countries,” Mr Mandhana said. “When they buy our clothes, they know a part of it will help educate a child or meet someone’s medical expenses. This brings us more international customers.” This year Being Human will flag off a store in France, in addition to one in Mauritius and two in Nepal, where it already has one.

In 2012-13, Being Human was a Rs 60 crore revenue brand. By 2014-15, sales had risen to Rs 235 crore, and this year, it will clock in Rs 300 crore in retail earning.

The Being Active clothing line is aimed at the fitness market, currently dominated by Puma and Adidas. “Our first year sales target is Rs 50 crore,” Mr Mandhana said. “Salman Khan has a strong online presence with 40 lakh Facebook fans. Therefore, online sales are high. Over 10 per cent of the total revenue comes from online sales.” Incidentally, Mr Khan’s Twitter handle has 16.8 million followers, while his Instagram account has 3.5 million followers, and he promotes Being Human on both accounts.