Chennai Alum Case Statement

8/10/2019 Chennai Alum Case Statement

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Where legacy meets tradition: Raymond Ethnic Wear

Introduction:

Raymond, since 1925, is the leader in branded clothing for men in India. It has an OTC fabrics business

that offers a spectrum of products across such a wide price range, catering to the needs of consumers

across age groups and socio-economic profiles, that it is needless to say that Raymond is the No 1 textile

brand in the country. It is one of the few companies in the world, fully integrated to manufacture the

finest quality of wool and wool blended fabrics.

The brand enjoys high level of trust in the mind of the consumers and is strongly recognized as one that

makes high quality products- a position of strength that it has attained overs years of consistent efforts

in product development, advertising and retail development. It must be mentioned that, in OTC fabric

category, there is no other fabric brand that enjoys strong consumer pull at the point of sale that is

comparable to Raymond. Firmly established as the leader in the fabric business, the brand has made its

entry into the readymade space- this of course, is in line with market trends in India today which is in

favor of readymade apparel.

It was the beginning of 2013 and the last couple of years have been witnessing intensified competition

in the marketplace. Input costs have been going up- be it the import of the finest Australian Merino

Wool or the high manufacturing costs. It was only due to the strength of the brand that Raymond was

still able to command a premium in terms of price over the other players in the market and stay number

one player in menswear. As the Marketing Director of Raymond pondered over the future, he couldnt

get past a few thoughts which had been playing in his mind for the past few weeks. Would it suffice for

Raymond in just being a leader in worsted suiting fabrics? Was it relying too much on its strengths and

forgetting that the domestic apparel and textile landscape was changing at a break neck speed with the

influx of foreign players?

With the brand deriving a large share of its consumer equity through textile business, as against

readymade apparel- it had always enjoyed preference in usage occasions that lend well to planned

purchases. With the booming mall and plastic money culture, is Raymond adequately geared up to tap

in on the changing shopping trends in India? Raymond enjoys a very strong connect as a wedding and

celebration brand- should he not be building on that-does this not augur well for an ethnic wear line

from the brand?

In the last season, Raymond has already done a pilot marketing for ethnic wear in a few select territoriesby putting a small collection in the market just to test out the acceptability of products. Results prima

facie from this pilot initiative seem to be positive.

The Brand Manager has done some ground work in terms of analyzing the market scenario in the ethnic

wear space. He conducted a market survey, the results of which are available now with the team-

though it was just a small dipstick and not an elaborate research, it still gave the team some food for

thought. The board is keen on making inroads into the ethnic wear category, and anecdotally this looks


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like a strong possibility. However, the brand is very strongly associated with western wear, and will this

be a baggage? What about a new brand altogether- but Raymond has very high equity in special

occasions for men, where Sherwanis and Bandhgalas have become a significant part. With a strong

brand like Raymond, should he be even considering a new brand, given the investments required to

build scale for it.

The Marketing Director has to make a few vital decisions. He has a presentation to the board.

-Should Raymond enter ethnic wear category?

-What are going to be the key challenges?

-What should be the branding strategy?

-What should be the go- to-market approach?

- What kind of strategy he would adopt on product mix?

Company Background:

Today Raymond is one of the largest players in suiting and shirting fabrics, readymade, denim fabrics,

cosmetics & toiletries, engineering files & tools, prophylactics and air charter services in national and

international markets. The Raymond group is vertically and horizontally integrated to provide customers

total textile solutions with highly respected fabric and apparel brands under its umbrella: Raymond- in

both textile and apparel form, Park Avenue, ColorPlus, Parx, Makers.

The fabrics are exported to over 55 countries in the world; including European Union, USA, Canada,

Japan and Australia amongst others. A trendsetter and an innovator in the Indian textile market, their

expertise has been brought forth by the in-house research & development team. Their innovations have

become milestones in the worsted suiting industry.

They have mastered the craft of producing the finest suiting in the world using super fine wool count

(from 80s to 250s) and blending the same with superfine polyester and other specialty fibers, like

Cashmere, Angora, Alpaca, Pure wool and Linen.

Raymond has also created the worlds finest worsted suiting fabric from the finest wool ever prod uced

in the worldthe Super 250s fabric made of 11.4 micron wool.

Recognized as a pioneer in Wool and wool blended products, called Polywool in industry parlance,

Raymond has also got a good presence in the Poly Viscose category, which has many other competing

brands and operates normally at lower price points compared to Polywool products.

Raymond: A Vertically Integrated Conglomerate State-of-the-art Manufacturing Facilities

Unparalleled Retail Presence


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World-class facilities

Raymond's manufacturing facilities include world-class fully integrated plants in India, deploying state-

of-the-art technology modern quality management systems like ISO 9001 and Environment Control

Systems (ISO 14001). All the plants are self-sufficient and provide staff welfare measures such as

education, housing, recreation and support systems for employees.

Raymond Suiting plants are located in India at the following locations:

Chhindwara in Central India

Vapi in Gujarat, near Mumbai

Jalgaon in Maharashtra.

The Raymond Chhindwara plant, set up in 1991, is a state-of-the-art integrated manufacturing facility

located 57 kms away from Nagpur in Central India. Built on 100 acres of land, the plant produces

premium pure wool, wool blended and polyester viscose suiting fabrics. This plant has the distinction of

being among the largest integrated worsted suiting unit in the world.

Modeled to meet international standards, the Vapi plant has been set up on 112 acres of lush green land

with Hi-tech machinery such as warping equipment from Switzerland, weaving machines from Belgium,

finishing machines, automatic drawing-in and other machines from Italy.

The Jalgaon plant also embodies all the values that go behind giving consumers the very best, when it

comes to suiting fabrics in India.

In addition, Raymond has a world-class shirting plant in Kolhapur that is a joint initiative with an Italian

partner.

Unparalleled Retail Presence

Raymond manages its retail presence primarily through its flagship chain called The Raymond Shop

(TRS). It has also introduced the Made-to-Measure store concept to provide unique premium service

based on personalized fits, primarily in the bigger cities. Raymond has an extensive distribution network,

comprising over 700 TRSs including 39 in the Middle East and the SAARC region- this extends right from

the metros to tier 4 towns- with this reach, you are never too far from a TRS. Raymonds clothing

business is present in around 20,000 Multi-Branded Outlets too, largely driven by the fabric business

wholesale channel.

The Raymond Shops offer complete wardrobe solutions to its customers with a fine range of fabric and

ready to wear collection from brands in the group roster. This includes well-known brandsRaymond,

Park Avenue, Color Plus and Parx, which are available throughout the chain. These brands have theirown exclusive stores also, and are managed as different brands with business goals of their own.

Brand Strength:

Raymond is the leader in OTC fabrics with huge equity in Woollen products like no other brand. The

brand Raymond is all about showcasing The Saga of a Complete Man. At every point in the complete


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mans life Raymond has had a special role to play. Be it professional like Graduation, Interviews, a big

day in office, or personal like a close relatives weeding or a party.

In a large number of Indian families, Raymond and The Raymond Shop are integral parts of the wedding

shopping and the gifting associated with it. For the groom also, it is a destination store when it comes to

the wedding suit. When it comes to a Sherwani, he has other options where he can shop from.

Raymond Textile and its other four businesses i.e. RaymondReadymade, Color Plus, Park Avenue,

and Parx, enjoy significant presence across the semi-premium and premium segment ranging from

formals to semi-formals and casuals. The company has positioned each of its brand in such way that it

will help in avoiding cannibalization.

According to the syndicated research on Raymonds equity, the brand is on top of the league with over

maximum spontaneous recall and top-of-the-mind recall survey. (Suit/Suiting -2013)

Raymonds Brand Equity scores are lower among branded readymade preferers as against fabric

preferers, though it still occupies a leadership position among them too.

Score-Suits/Trousers Fabric Preferer Readymade Preferer Overall

Raymond Nearest Raymond Nearest Raymond Nearest

TOMA 48 12 29 15 37 11

Spontaneous 84 52 66 43 73 33

Total Awareness 100 92

Last I year purchase 77 49 58 51 66 40

Currently in

wardrobe86 59 67 64 74 51

Indias Textile & Apparel Market

The current domestic textile and apparel market is worth Rs 2,73,750 crores (USD 58 billion) and is

expected to grow at 9% annually to reach Rs 6,63,800 crores (USD 141 billion) by 2021.

The overall domestic textile and apparel market consists of the following broad categories:

Apparel

Home Textile

Technical Textile


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2011

2016

2021

CAGR

2011-21

Menswear Market:

Apparel

USD 40 bn

INR Cr 1,90,300

Home Textile

USD 4 bn

INR Cr 18,400

Technical Textiles

USD 14 bn

INR Cr 64,650

Total

USD 58 bn

INR Cr 2,73,350

Apparel

USD 98 bn

INR Cr 4,62,250

Apparel

USD 63 bn

INR Cr 2,94,000

Home Textile

USD 6 bn

INR Cr 27,350

Home Textile

USD 9 bn

INR Cr 40,800

Technical Textiles

USD 24 bn

INR Cr 1,13,200

Technical Textiles

USD 34 bn

INR Cr 1,60,750

Total

USD 93 bn

INR Cr 4,34,550

Total

USD 141 bn

INR Cr 6,63,800

9% 8% 10% 9%


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Indian Ethnic Wear Market

The traditional ethnic wear subcategory had started witnessing the entrance of a growing number of

organized players, a market which was mainly restricted to the unorganized sector till a few years ago.Modern retail, especially large format retailers are ramping up their expansion plans across metros and

Tier I & Tier II cities. This will contribute significantly to the growth of the Indian ethnic wear market.

The womens segment currently accounts for an overwhelming 87% of the total ethnic wear market and

is expected to grow at 8% in the coming years. This, however, does not look like a possibility right now

for Raymond.


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The ethnic kids wear segment is projected to grow at a CAGR of 10% for the next few years. Even within

kids wear, it is interesting to note that the girls ethnic wear market is two and a half times the size of

the boys ethnic market.

While the market for men is expected to grow at a CAGR of 8.5%, this will largely be within the high

value segment that is heavily guided by occasion-based purchases. The opportunities thrown up by the

wedding/bridal market in India are tremendous. Right from local boutiques to established traditional

retailers and regional brands, every wedding wear retailer is vying for a share of the loyal consumers

wallet in a market that is getting highly competitive.

Competitors:

Niche brands such as Manyavar, Diwan Saheb, and Vastra are few examples of players that have

managed to command a premium for their services. Among these Manyavar is the brand which can be

considered the leader in the branded space.

Manyavar is a 300+ Crore brand currently growing at 60% y-o-y. It has a cumulative retail presence of

2,00,000 sq. ft. i.e. EBOs, MBOs and LFS combined. The number of EBOs is around 200 spread across 80+

cities pan-India.

Owing to the religious and cultural diversity of India, a wide range of occasions are celebrated. Such

celebrations typically start early in the year in January, when Northern India celebrates Lohri, and

culminate around October-November with Dussehra and Diwali. On such festive occasions, consumers

tend to purchase ethnic wear for both personal use and for gifting, as brands typically bring out new

trends and designs to coincide with a festive occasion. These occasions typically drive the growth for

womens, kids, and mens ethnic wear.

Ethnic wear was initially a category that was largely restricted to the older age segment. However, it is

now finding acceptance even among younger consumers. This has led to brands focusing on ethnic

fusion wear product offerings, in western styles and prints, in order to capture the opportunity. Withinteresting interplay of different fabric types, brands have completely redefined ethnic wear for younger

consumers.

Although traditional markets shall continue to be of importance, a consequence of the above factors is

the increasing salience of modern formats among consumers. Until modern retail opened its doors for

urban consumers, local tailors and neighborhood boutiques were satisfying the ethnic wear needs of

most consumers. Large format retailers were unheard of earlier. With the coming of modern retail,

consumers have easy access to branded products that straddle the tiered pricing segments

Challenges:

Ethnic wear, as a category, is quite specialized and complex to manage. There are various elements

involved in the making of something special. Todays customers are ready to pay for Hand Embroidered

garments, for instance. Exclusivity of design is also key- after all the groom has to stand out in the group!

There are many challenges in the category such as inventory management since it is a very seasonal

business.

Dead Stock:


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Dead stock is a major issue in readymade ethnic wear since it becomes necessary to stock all sizes of at

least the popular designs of the season

The initial survey shows dead stock to be an average of 25% in stores which are doing well and can

range upto 40% in stores where sale is duller.

Minimum of 50 or more designs are usually preferred per category (Sherwani, Indo-western, Designer

blazer sets) for the customer to make a choice, at a point of time in the store.

Incentives are given to salesmen to push such old season pieces which havent moved. A special

occasion product cannot be sold on discount during a sale!

Dynamics:

A very crucial pocket of growth will be the demand from the small towns, which are the metro cities of

the future. A large number of brands are already eyeing this opportunity. The demand for ethnic wear is

large even within these cities and this demand frequently drives small town consumers to big cities for

their shopping requirements. The onset of the e-commerce revolution is also changing the game.

Consumers are able to purchase many, if not all, popular ethnic wear products from the comfort of their

homes.

With many physical brands setting up online stores and others selling through online portals, customerswho do not have access to physical stores can purchase the brands online. Though there are issues that

need to be ironed out before the online space emerges as one of the preferred shopping destination for

ethnic wear, many ethnic wear brands have started to think of their online presence as a viable sales

channel rather than just a website.

As different channels continue to emerge and evolve in the ethnic wear market, the growth of brands

will be largely dependent on their ability to differentiate themselves across product and service

offerings.

Conclusion:

The Marketing Director has a presentation with the board in a weeks time in which he would belayingout the future course of the brand. Entry of Raymond into ethnic wear is, for sure, a subject of keen

interest-and anecdotally-it is clearly coming as an opportunity- but how to do it? Is the market lucrative?

How about possibility of extending the formal brand to ethnic wear? What kind of brand architecture

should he adapt- whats going to be the go-to-market strategy?

Annexures:

Annexure 1: Zone-wise sales pattern of mens ethnic wear product categories (Survey conducted by

Brand Manager among Raymond Customers)

Indo-Westerns Sherwanis Blazer Sets Kurta PyjamaNorth Zone 31% 29% 9% 31%

East Zone 18% 20% 24% 38%

West Zone 32% 27% 22% 19%

South Zone 25% 21% 25% 29%


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Annexure 2: Readymade vs. Stitched preferences according to Occasions (Raymond Customers)

Occasion Readymade(%) Stitched (%)

Close relative/Friend's wedding 38% 62%

Birthday 49% 51%

Festive Occasions 44% 55%Distant relatives/colleague's wedding 45% 55%

Anniversary 52% 47%

Inauguration ceremony 50% 50%

Annexure 3: Dressing habits according to occasions (Raymond Customers)

Close relative/Friend's

wedding

Birthday Festive Occasions

Outfit % Outfit % Outfit %

Any other westernoutfit (shirt, t-shirt,

suit etc)

73 Any other western outfit(shirt, t-shirt, suit etc)

73 Kurta-Pyjama 70

Sherwani 40 Others 41 Any other western outfit

(shirt, t-shirt, suit, etc)

28

Indo-western 24 Kurta-Pyjama 21 Sherwani 20

Kurta-Pyjama 15 Kurta on jeans 19 Others 14

Blazer set (with

embroidery)

11 Indo-western 5 Kurta on jeans 7

Others 10 Blazer set (with

embroidery)

4 Jodhpuri / Bandhgala 6

Kurta on Jeans 8 Others 2Jodhpuri/Bandgala 7

Mens ethnic wear

Kurtas

Pyjamas

Nehru Jacket

Indo western clothing kurta-shirt hybrid with stylized pyjama type thingy

Core competencies Structural Capital

o R&D: World leader in fabric manufacturing. Specifically Wool

o Processes

o Philosphoy + systems: Scale operations


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Relational Capital

o Channel: Massive retail presence in two channels: Exclusive outlets, multi-brand retail

o Brand: High brand recall. Association with classy Formal wear

Human Capital:

o Skills focused around manufacturing efficiencies

o

Strong fabric developing skills

Customer Segments

TargetDecision maker: Male

Decision influencer: Mother/sister/partner

Segmentation based on affordability: SEC A

Age: 20-35 marriageable agefor sherwanis. Friends/relatives get married. Disposable income

Rationale for the target:

Accessible: Parent brand target customers

Substantial: Target market size

Diff: Brand awareness, aspirations

Disposable income

Programs: Product range fit

PositionCelebratory Brand| Celebrate occasions| complete man interacts with family, friends colleagues in a

variety of

Close to roots and culture

Integral part of family

Has arrived in life

Effortlessly imbibes the spirit of the occasion

Wedding : Most important man on the day

Indo western: Indicates mold of mind - a perfect blend of western and Indian cultures

4PsProducts

SherwaisCelebrate Weddings

Indo Western WearFriend/Relative Weddings, Ethnic Occasion with colleagues


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KurtaFestive wear

Bahrain123

Place

Exclusive Retail OutletsSeparate from the Raymond Store. Store ambience will be celebratory

as contrasted with suave look of The Raymond Shop.

Multi-brand retailSell only kurtas since this is the only volume product

Direct SellingSend salesperson to client residency for garment consulting during weddings

Network effect since owing to presence of large number of relatives present in a

bridegrooms home

Can create pull for other products due to emotional connect established

E-commerce: Focus on product variety.

Price

Competitive Price Range keeping in mind purchasing power of target customer segment

Promotions

Store look to be revamped for each clothing design cycle based on tastes of each festive seasons

Brand Choice

o Brand Name Paramparaby Raymond

o Separate brand under the umbrella of Raymond

o Will be able to cash in on Raymonds massive brand equity which has high recall while

creating a separate identity for the new brand

Brand Awareness

o Message to be conveyed:

Brand building

o

Brand awareness building:

Curiosity Generation & Concept ElucidationPOS print ads, TV ads focusing on celebrations &

Raymond brand

Follow-up :

Time:

Documents

Chennai Alum Case Statement