Reliance Retail Buys Stake in Ritu Kumar's Collection

It looks like Reliance Retail has a real eye for fashion labels. Less than a week after Reliance Retail bought a 40% stake in Manish Malhotra’s company, MM Fashions, they have made their next big purchase. Reliance Retail has now bought a 52% stake in the Ritu Kumar Label. While Manish Malhotra has become the first port of call for ravishing Bollywood celebrities, Ritu Kumar has focused on the upper end market with more of ethnic lines.

The price at which the stake has been bought in Ritu Kumar label has not been made public. What is known is that Reliance Retail will buy 35% from the PE fund, Everstone, and the balance 17% from other stakeholders. Ritu Kumar is generally credited with introducing designer wear and upmarket label brands in the Indian scenario. It has been in existence since the late 1960s.

The Ritu Kumar brand broadly covers 4 critical sub-brands. These include Label Ritu Kumar, RI Ritu Kumar, Aarke and Ritu Kumar Home & Living. For Reliance, this acquisition gives them a huge brand image and reach in the ethnic designer wear with an established name in the upper end of the market. For the Ritu Kumar label, this gives them the opportunity to corporatize and grow with a bigger balance sheet.

The trend in fashion brand marketing in India is gradually moving towards the European model where large brands are corporatized. For example, the promoters of Zara and LVMH are among the wealthiest people in the world and have been driven by a corporate culture introduced into the fashion industry. For Reliance Retail, this is an answer to Aditya Birla Fashions buying stakes in big brand lines like Tarun Tahiliani and Sabyasachi.

In a way this is a marriage of boutique stores and corporate scale, which is likely to be the future paradigm. Designer labels are constrained for want of a larger balance sheet. For Reliance Retail, this is one more step towards the larger omnichannel dreams. Under the Omnichannel approach, offline, online, proprietary labels, outsourced labels, ethnic labels and chic labels will coexist under the same roof. It is the balance sheet that really matters.

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