The Economics of Fashion: Acquisition of the sector by Reliance

Is the Indian fashion industry, one of the greatest revenue creators for the economy, going to be leashed by the biggest investor, Reliance?

A) Reliance Supremacy

Recently, Reliance has made strategic partnerships with various known designers. They acquired a 51% stake in Abu Jani Sandeep Khosla . Reliance claims that this will help the AJSK label to build a stronger platform for Indian craft .

Prior to this merger, Reliance also went for a strategic partnership with one of the most talented designer, Rahul Mishra . It is a 60:40 joint venture with him .This partnership will introduce a ready to wear brand range, signing a similar agreement with Anamika Khanna.

The company also managed to have the most glamorous designer, Manish Malhotra in its basket by holding a 40% stake .This stake holding will help to democratize the brand . Sources reveal that this merger will ensure a differential price range .

Even the deep rooted designer, Ritu Kumar went in for a deal with the company .The partnership will make this fashion label into a lifestyle brand.

B) Competition -Aditya Birla Fashion and Retail

Aditya Birla Fashion and Retail is giving a cut throat competition to its biggest rival, Reliance. From recent partnership with Masaba lifestyles to Sabyasachi , Aditya Birla has kept it's portfolio balanced. Recent partnership with Masaba lifestyle will explore the option of making the brand scale through D2C channels.

ABFRL had acquired a 51% stake in Sabyasachi’s label . The designer claims that the partnership was made to ensure continuity and long term sustainability growth .The duo also claims to make it a true luxury global brand .

C) Is a merger a great opportunity for both the parties involved?

Experts have analyzed that these mergers and strategic partnerships will be of great value due to the demand of ethnic wear . Also, these partnerships will ensure to make these brands more visible on an international level.

One advantage to the companies acquiring the brands is that luxury never goes out of trend. Even the law of demand has an exception for luxury goods. So post pandemic, these mergers will ensure income growth.

D) The mergers – a creative option or an end to exclusivity?

With having hundreds of clauses in their MOUs it is hard to predict the fate of creativity of fashion houses. From having to ensure a certain amount of profits to exploring and digging into deeper Indian cultural and fashion roots can be a tough task. When a fashion label starts , it starts with an aim to weave a thread of exclusivity and intricacy in its couture .Making a brand too common can cost the brand its hype.

For any luxury goods consumer, exclusivity is indispensable.

Will the rest of designers like Abhinav Mishra, Aastha Narang, Seema Gujral work independently or give into similar mergers?