The big fat Indian wedding: How Manyavar owner Vedant Fashions created INR 30,000 crore plus business on the back of wedding wear!
The big fat Indian wedding season is back again - from November to January, the entire country is set to witness lakhs of young Indians getting married. This wedding spree is probably one of the biggest contributors to the Indian economy. So much so that the market of Indian weddings is pegged at over $50 billion! The 3 month extravaganza is set to generate tons of revenue for hotels, jewelers, wedding planners, caterers & clothing brands - which is where the focus of this story lies. Although the Indian wedding wear industry is largely unorganized, with just 80-85% of the entire entire market comprising small players. Despite this, one brand has been able to dominate the wedding apparel market in India. Although you might not have heard of Vedant Fashions, chances are that you’ve heard about their flagship brand, Manyavar. The brand has been able to make itself synonymous with weddings in India, creating a multi billion dollar apparel giant in the process. This is the story of how Vedant Fashions created INR 30,000 crore plus business on the back of wedding wear!
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The story of Vedant Fashions is one of trials and tribulations. In 1998, a young man named Ravi Modi, who came from a family of garment merchants based out of Kolkata, had a fallout with his father & decided to venture out on his own. With a loan of INR 10,000 from his mother, Modi set about creating an apparel business from scratch, selling men’s ethnic wear. For the first decade, Modi focused on selling his apparel to multi-brand outlets including organized players like Shoppers Stop & Westside. However, over the years, Modi realized that this strategy disconnected him from the customer, thus making him out of touch with the needs & aspirations of the customers. Thus, after a decade of selling to other stores, in 2008, Vedant Fashions set up Manyavar’s first exclusive brand outlet, giving Modi a chance to directly interact with customers, as he used to do in his family business. Initially, Manyavar relied on a Company Owned Company Operated (COCO) business model, which was proving to be highly capital intensive. So by 2016, the company decided to pivot completely to a Franchise Owned Franchise Operated (FOFO) business model, which completely changed the trajectory of the wedding apparel brand!
The FOFO model enabled Vedant Fashions to quickly scale the brand across the county. Today, there are nearly 600 Manyavar exclusive brand outlets. However, what is even more interesting & commendable is the fact that the company has been able to retain great profit margins despite scaling so quickly. The company’s revenues have been growing at an astonishing rate of 24% for the past decade, with an industry leading net profit margin of 26%! No other player in the wedding wear industry, including some of the other big names in the category like Jahanpanah Clothing or Nalli Silk Sarees, which are languishing at low single digit profit margins. So what did Vedant Fashions do differently? For starters, the company has positioned Manyavar as an aspirational brand, with its cheapest wedding attire starting at INR 12,000. This has in turn enabled the brand to invest heavily in advertising, roping in Anushka Sharma & Virat Kohli as their brand ambassadors. Being a customer facing brand, Manyavar has access to lucrative customer data, which has enabled them to limit slow moving inventory to less than 4%, which is unheard of in the industry!
Another important aspect of the company’s success is its location. The company has created an extensive network of suppliers & vendors in and around Kolkata, enabling them to create products more efficiently & at a lower cost. All this has worked spectacularly for the company till date - the company’s share price jumped 60% post IPO, and the company’s stock is currently trading at 100 times its earnings, valuing the company at well over INR 30,000 crores, which is unheard of in the fashion industry! However, the strategies adopted by the company could very well turn out to be its Achilles heel. The geographical concentration of its supply chain is prone to disruption in case of any natural calamity, which could potentially halt the company’s entire operations. Furthermore, other big players in the world of fashion are now eyeing a piece of the market, with giants like Reliance Retail & Aditya Birla throwing their hats in the ring. Reliance in particular has been aggressively acquiring brands & designer labels in the space, including Manish Malhotra, Ritu Kumar & Satya Paul. This could potentially be a thorn in the side of Manyavar & Vedant Fashions as it would eat into their revenues & profit margins if they were to compete head on with a behemoth like Reliance. It would be interesting to see how the wedding wear wars pan out in the near future, and who comes out on top!