Aug. 26--BANGALORE -- Private label clothing chain Max Fashions is planning to sign an exclusive deal with either Flipkart or Amazon to sell online, becoming the latest brand to tap an increasingly popular channel of shopping.
Over the past year, brands in various businesses including fashion, mobile phones and tablets have been signing up with the likes of Flipkart, Amazon and Snapdeal to boost sales, as shoppers are flocking to e-commerce sites, primarily because of attractive discounts.
Clothing brands, especially, are embracing e-commerce. Last week
Max Fashions will sign a deal within the next month and sell online only through that e-commerce platform, executive director Vasanth Kumar said in an interview.
"We will go online through a marketplace, either Flipkart or Amazon. We will have an agreement with one marketplace that will include terms on pricing. I can't stop them discounting, but I can control it to some extent," Kumar said. "As long as you are associated with one of the top two you'll reach most places. If you go to multiple platforms you're adding more complexity in your business. We are also not interested in opening our own site."
Max Fashions, owned by the Dubai-based Landmark Group, has helped its owner show strong results in India over the past two years despite a drop in sales growth at its Lifestyle department store chain.
Slowing economic growth and rising product prices forced shoppers to curb spending on apparel, especially the pricier variety. Many shoppers have shifted some of their apparel spending to cheaper retailers such as Max Fashions and Reliance Trends, which have improved their product assortment and marketed themselves as "affordable fashion" peddlers. Max and Reliance are often referred to as "value fashion" retailers that sell products priced anywhere between Rs.150 to Rs.1,200.
Offline retailers such as Shoppers Stop and Lifestyle have also taken a hit because of the growth of e-commerce firms such as Snapdeal and Flipkart, which also owns online fashion retailer Myntra.
"What brands are realizing is that e-commerce has to be part of their strategy. It can add significant incremental sales," said Harminder Sahni, managing director at Wazir Advisors, a retail and consumer goods consultancy. "E-commerce sites are able to reach people in smaller cities and towns that offline retail can't reach and it has become big enough that brands cannot afford to ignore it."
Max Fashions' Kumar, however, said that the company's sales hadn't been affected by the boom in online shopping.
"Being a private label we haven't seen any hit. Multi-brand retailers will have an issue because you get the same products offline and online," Kumar said.
Max Fashions is now looking to double its revenue to nearly Rs.2,000 crore by March 2016, partly by adding 100 stores, he said. The company ended last year with 80 stores and revenues of Rs.1,000 crore.
The Bangalore-based company is reporting same-store sales growth of 17% this year even as most retailers are struggling to show growth in same store sales of even 7-8%. Same-store sales is a key metric in retail that measures sales at stores open for at least a year. "We think we can keep same-store sales growth at 15% over the next few years. As we increase the number of stores the brand becomes stronger and your market share grows," Kumar said.