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ITC Plans Exclusive Shops for Fashion Sub-Brands
The Economic Times - 29 Apr 2014

ITC Ltd is foraying into the ecommerce business with its Wills  Lifestyle retailing business and plans to set up standalone exclusive outlets  for its sub-brands such as casual wear Wills Sports, work wear Wills Classic,  and exclusive men and women wear stores. While ITC says the strategy is to  expand penetration at a time when consumers are segmenting their wardrobe with  apparel to suit each occasion, analysts say this will boost non-cigarette FMCG  business margins since the apparel business as a category has one of the  highest contribution to profitability. The lifestyle retailing business sales  is reported as part of ITC's non-cigarette FMCG business.

"We will soon roll out the pilot phase of sub-brand exclusive  outlets across markets," said ITC Ltd's lifestyle retailing business division  chief executive Atul Chand. "The potential for such outlets is immense even in  smaller towns, especially for casual wear. These concepts have been already  tested at our Wills Lifestyle stores," he said. These sub-brand stores will be  set up over 1,500 square feet as compared to the 2,000-2,500 square feet for  the flagship Wills Lifestyle outlets. It has already set up one exclusive men  wear store in Chennai.

"We want to build each of the Wills sub-brands as a brand in  itself, the way we have done with John Players Jeans. The overall wardrobe of  the consumer is getting segmented basis the occasion which is where every  sub-brand is positioned. There would be dedicated advertising as well," Chand  said. At the same time, ITC is foraying into online sales for its lifestyle  retail business. The company has just launched the Wills Lifestyle estore with  plans to double revenue through this channel every year. It is also selling  through e-commerce sites such as Jabong, Myntra and Flipkart. ITC currently  runs nearly 100 Wills Lifestyle stores across 40 cities and the brand is also  sold at more than 700 leading multibrand stores, including retail chains such  as Central, Lifestyle and Shoppers Stop. There are 400 John Players stores,  apart from 20 exclusive John Players Jeans outlets.

Chand said the company will open 20 new Wills Lifestyle store this  fiscal, with focus on tier II markets such as Guwahati, Jodhpur, Jamshedpur,  Udaipur and Gangtok. "The aspiration level is high in smaller markets and is a  big growth driver for lifestyle retail. Even our e-commerce sales trend reflect  buoyant demand originating from smaller markets," he said.

The lifestyle retailing business grew revenue by  20% in 2013-14, which doubled over the last fiscal. Same-store sales growth has  been around10%lastfiscal as compared to lower single digit growth rate the  year-before. The retail business is already generating profit for the company  and is providing significant impetus to the non-cigarette FMCG business  profitability along with the packaged food business which is the main driver.  ITC is lowering losses of the non-cigarette FMCG business every year, which is  expected to breakeven in 2014-15. The business lowered losses from Rs 195.49  crore in 2011-12 to Rs 81.26 crore in 2012-13. Analysts estimate that while  Wills Lifestyle contributes 60% to ITC's lifestyle retail revenue with balance  40% generating from the franchisee-led mid-segment brand John Players chain, in  terms of profitability Wills Lifestyle contributes almost80%duetohigher average  selling price of the products. An analyst with a leading brokerage said ITC has  been driving premiumisation in its lifestyle retail business, the same way it  has been doing with its FMCG business. "ITC's priority is to drive margins with  the retail business and it has been increasing the average billing value 15-20%  year-on-year with a more premium mix," he said.

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