India’s retail arena is experiencing an open battle between two of its major houses, Reliance Industries including Mukesh Ambani, and Tata Group with Noel Tata. With the growing competition for cheap fashionable clothes two titans, Ambani and Tata group, the latter of which has emerged as a promising player in the fast-fashion segment, are tapping Chinese firm Shein for support.
Trent Ltd. – Detailed Chronological History of Fundamental Events & Analysis of Its Meteoric Rise
Trent Ltd., or Tata Group’s retail segment has revenue tripling its pre-pandemic amount having reached $165 billion. This growth has been facilitated by the success of its fast-fashion brand that is Zudio. As trendy and affordable clothing has become far below the keen interest of India’s young consumers, Zudio-Boohoo’s subsidiary has grown from 80 outlets four years ago to almost 560 covering nearly 164 cities.
High stock turnover and attractive positions, often attracting reasonable rent levels, explain the excellent Zudio’s performance while reporting slim margins. This vent has positioned Asia’s wealthiest man Mukesh Ambani in a tricky corner as he aims to capture a chunk of the fast-fashion business.
Reliance's Retail Ambitions
Essentially it is one of India‘s largest petrochemical producers, telecom entity, and media player, and also claimed to be the largest retailer in India. In the last year, Ambani has invested more than $2 billion into Reliance Retail with the ambition to take it to an expected IPO. To do this he must focus on the fast-fashion crown a field that has Trent Ltd dominating it.
In the course of the pandemic, Reliance Retail has secured over $6 billion from global investors like sovereign wealth funds of Middle Eastern and Singapore as well as PE Goliaths General Atlantic and Silver Lake Partners. Last year it still successfully raised capital, notably state authorities from Qatar and Abu Dhabi and the private American equity company KKR & Co, to achieve a value of $100bn.
Enter Shein: The Strategic Partnership Coordinating Council
But as a part of his focus on the youth consumers, Ambani has now cooperated with Shein, a Chinese e-commerce firm banned in India last year over unresolved border disputes. That is why, having softened its attitude towards Shein and Chinese companies in general, the Indian government is allowing the application to return to the market while staying under the control of Reliance when it comes to the platform, data, and operations. This could be the magic bullet for Ambini in the fast-fashion segment where Shein already has teenage fashion lovers in India.
The Launch of Youth
Still, to counter Zudio, Reliance came up with Yousta, a budget fashion brand with products that are all below Rs 999 ($12). But till now the outcomes have been mediocre at best. Revenues from operations of Reliance Retail jumped 8% year on year in the June quarter” As aforementioned the sales emphasis was towards air-conditioners, refrigerators, TVs and groceries; fashion and lifestyle products “ recorded tepid discretionary demand. ”
As much as Reliance Retail has posted over $36 billion in revenue, Trent has only $1. The $5 billion-a-year franchise has grown at a slower rate than its sales, which rose by 56% last quarter. Yet, this rapid expansion highlights the problem that Ambani now confronts in targeting the youth’s fast-fashion segment.
The Road Ahead for Ambani and Tata: A Commentary
Consulting firm Wazir Advisors estimates India’s value retail market, except for food and grocery, to grow to $170 billion by 2026, of which apparel will be the biggest part. Given the forthcoming public float, Ambani has to achieve certain success in the fashion arena. In his strategy towards succession, he seems to have packaged the retail business for his 32-year-old daughter – Isha Ambani. But if he wants to consolidate a mature and dominant segment, Kering needs to strengthen its position in the fast fashion segment.
On the other hand, Noel Tata, half-brother of Ratan Tata, has created successfully the cheaper and more numerous Indian version of Zara with Trent Ltd) Zudio has not only become successful for the company, but the positive experience of private labels began to be applied in other formats of the company, including the Star hypermarket chain, where the share of the company’s brands has increased to 72%.
Of course, Ambani’s partnership with Shein will indeed appeal to young consumers, the question is whether it will help him to considerably decrease the gap with Tata’s Trent. The battle is waged at the heart of India’s fast-emerging low-cost fashion market, and it’s extremely important for both conglomerates.
Conclusion
Mukesh Ambani and Noel Tata are now to escalate the competition as both these leaders look forward to capturing the young fashion-conscious Indians. The two conglomerates are poised to bring even more variety of stylish merchandise, all for $12 or less.
