Reliance wants to beat TATA's Zudio! Can they win?

Finshots TV

7 Sept 202407:45

Summary

TLDRThe video discusses the changing landscape of retail, where many fashion retailers are struggling, but India's Trent Limited is thriving. Despite the challenges in the sector, Trent, part of the Tata Group, has seen a 150% stock increase and hired thousands of new employees while others downsized. Trent's success is attributed to its fast-fashion chain, Zudio, which focuses on low-cost, trendy fashion, skipping expensive marketing, popular designers, and high-rent locations. As global players like Shein re-enter India, partnerships with companies like Reliance aim to compete with Trent's growing dominance in fast fashion.

Takeaways

📉 Most fashion retailers are losing money, with stock prices plummeting, but one Indian company is bucking this trend.
📈 Trent Limited, a Tata Group company, has seen its stock rise by 150% in 2024 and added over 8,600 new employees.
🛍️ Trent operates fashion and lifestyle retail stores like Westside and Zudio, with Zudio playing a key role in their success.
💰 Zudio has been a major driver of Trent's growth, contributing significantly to revenue with its low-cost, trendy fashion offerings.
🏪 Zudio uses a cost-effective business model by avoiding expensive locations, high-end designers, and extravagant marketing.
🤝 Zudio operates on a franchise model, where store ownership is handled by independent entities while the company manages operations.
👀 Other retailers like Reliance are now trying to emulate Trent's successful strategy in the fast-fashion sector.
🇮🇳 Reliance is teaming up with Shein to make a mark in India's fast fashion space, despite Shein being banned in 2020.
🚫 Government regulations, such as strict FDI norms, pose challenges for foreign retailers looking to enter the Indian market.
🔄 Shein's partnership with Reliance bypasses some local sourcing rules, giving them an edge in offering competitively priced products.

Q & A

What is the current trend in the retail fashion industry?
-The retail fashion industry is seeing a trend where most fashion retailers are looking at many, and the stock prices are plummeting. The employment tech boom is also impacting the retail sector.
How has the Bloom World Retail Index grown recently?
-The Bloom World Retail Index has only grown about 10% since the beginning of the year, indicating a slower growth in the retail sector.
What is the impact of the Indian fashion retail market on the industry?
-Indian fashion retailers are also on the same path, growing about 15 to 30% in the same time, with one Indian company backing this trend.
Which Indian company is supporting the trend in the retail fashion industry?
-The stock of this Indian company has sold around 150 from the start of the year and has added over 8600 new employments while companies like Reliance and Aditya Birla Fashion have downsized by 1400.
What is the strategy of Trend Limited, a retail company under the Tata Group?
-Trend Limited operates fashion and lifestyle retail stores like Westside and Jadio. The company's success in the past few years has been phenomenal, with a 50% jump in revenue and a 275% jump in profits in the financial year 2024.
How has Jadio been performing in the retail market?
-Jadio has been crushing for astronomical success, and its ability to deliver ultra-affordable, trendy fashion and do this because of the cost-cutting rigour you see here.
What are the three major places where fashion retailers spend money?
-The three major places where fashion retailers spend money are development of new designs by employing popular designers, extra wagon marketing, and setting up stores in fancy locations like malls and piers.
Why doesn't Jadio follow the same strategies as other fashion retailers?
-Jadio does not follow the same strategies as other fashion retailers because it just makes small quick adds to popular designs and does not spend much on any kind of marketing.
What is the focus model of operation for Jadio?
-The focus model of operation for Jadio is to actually operate on the focus model and the franchisee-operated model, where the ownership of the store belongs to a franchisee, but the company is responsible for staffing, inventory management, and overall store operations.
What challenges do fashion retailers face in India due to government regulations?
-Fashion retailers in India face challenges due to strict FDI norms for retailers, so retail is basically of two types: single brand retail which includes stores that sell products from only one brand, and this is like Apple's or by a single retailer, and sold under a single roof like Selfo now.
How does the government's FDI policy impact multi-brand retailers in India?
-The government's FDI policy restricts multi-brand retailing to 51%, which means any multi-brand retailer cannot start a company all by themselves; they need an Indian partner to do this coming to single brand retailers, 100% FDI is allowed in this segment.

Outlines

00:00

📈 Retail Fashion Industry's Struggles and a Surprising Success

Most global and Indian fashion retailers are experiencing financial losses, with stock prices dropping and employee layoffs. However, Trent Limited, part of the Tata Group, stands out as a major exception. While other companies are shrinking, Trent has expanded, adding over 8,600 new employees and seeing a 150% increase in stock value since the start of the year. This success is largely attributed to its fast-fashion brand Zudio, which has performed exceptionally well in comparison to the company’s other brand, Westside. Zudio’s strategy of offering affordable, trendy fashion through a cost-effective model has been key to Trent’s impressive growth.

05:01

💼 Zudio's Cost-Effective Business Model Drives Growth

Zudio has emerged as a driving force behind Trent's success, thanks to its ultra-affordable fashion offerings. The brand saves costs by avoiding expensive designers, marketing, and prime retail locations. Zudio operates on a FOCO (Franchise Owned, Company Operated) model, where franchisees invest in store ownership while the company manages staff, inventory, and operations. This efficient model has allowed Zudio to thrive without the high expenses faced by its competitors, helping Trent become a standout in the Indian retail landscape.

🚀 Reliance's Ambitions in the Fast-Fashion Market

Reliance is trying to enter the fast-fashion market by learning from Zudio’s playbook. Companies like Zara and H&M, which pioneered fast fashion, have been outpaced by brands like Shein, now one of the biggest players in the market. Reliance wants to bring Shein into India to compete with Tata's dominance in this space. However, regulatory challenges, particularly around Foreign Direct Investment (FDI) rules, limit how foreign companies can operate in Indian retail.

🌍 India's FDI Challenges for Foreign Retailers

FDI regulations in India create a complex environment for foreign retailers. Single-brand retailers like Apple can operate with 100% FDI but must meet strict local sourcing requirements. Multi-brand retailers face even stricter FDI limits, requiring partnerships with Indian companies to operate. Despite meeting these requirements, foreign companies must still seek approval from the government’s FDI panel, adding another layer of challenge to entering the Indian market.

🔄 Shein's Return to India Through Strategic Partnerships

Shein is re-entering the Indian market after being banned in 2020, not through direct investment but by licensing its trademarks to Reliance. This strategic move helps Shein bypass strict FDI rules and local sourcing norms. Shein’s ability to source and manufacture goods cheaply in China gives it a pricing advantage over competitors. The partnership with Reliance could disrupt the Indian fast-fashion space, potentially challenging Tata's dominance. The question remains whether Shein and Reliance can make a significant impact in this competitive sector.

Mindmap

Keywords

💡Retail

Retail refers to the sale of goods to the end-user as opposed to sale to retailers or wholesalers. In the context of the video, retail is the main theme, discussing the trends and changes occurring within the fashion retail sector. The script mentions various retail companies and their strategies, highlighting the importance of retail in the fashion industry.

💡Fast Fashion

Fast fashion is a term used to describe the rapid production and consumption of affordable clothing. The video discusses the growth of fast fashion retailers and how they are adapting to market trends. The term is used to illustrate the speed at which these retailers can turn out trendy clothing at low prices, competing with traditional fashion cycles.

💡Trend

A trend in this context refers to a general direction in which something is developing or changing. The video talks about emerging trends in the retail sector, such as the rise of certain retail companies and the decline of others. Trends are important for understanding the dynamics of the fashion retail market and how consumer preferences are shifting.

💡Stock Prices

Stock prices represent the current market value of a single share of a company's stock. The script mentions stock prices in relation to the performance of retail companies, indicating how well they are doing financially. Rising stock prices, as mentioned in the video, suggest that a company is performing well and is likely experiencing growth.

💡Employment

Employment in the video refers to the number of jobs created by retail companies. It is mentioned that certain companies have added thousands of new jobs, which is a sign of their expansion and success. Employment is a key indicator of a company's growth and its impact on the economy.

💡Revenue

Revenue is the total amount of income generated by a company from its business activities. The video discusses the revenue growth of certain retail companies, which is a key financial metric indicating the success of their business operations. Increased revenue is often a sign of a company's ability to sell more products or services.

💡Profit

Profit is the money a company has made after subtracting all its costs. The script mentions profit jumps as a positive indicator of a company's financial health. High profits suggest that a company is managing its costs effectively and is successful in its business endeavors.

💡Fashion Retailers

Fashion retailers are businesses that sell clothing and fashion accessories. The video focuses on fashion retailers and their strategies in the market. Examples from the script include specific companies like Tata and Reliance, which are expanding their operations and contributing to the growth of the fashion retail sector.

💡Investment

Investment in the video refers to the money put into a company or project with the expectation of achieving a profit. The script discusses investments made by various companies in the retail sector, indicating their commitment to growth and expansion. Investment is crucial for the development and success of retail businesses.

💡Market Strategy

A market strategy is a plan for reaching a desired goal in the market. The video talks about different market strategies employed by fashion retailers, such as focusing on affordable fashion or opening stores in high-traffic areas. Market strategies are essential for companies to compete effectively and attract customers.

💡Real Estate

Real estate refers to land and the buildings on it. In the context of the video, real estate is discussed in relation to the location of retail stores. The script mentions the importance of choosing the right real estate for store locations, as it can significantly impact a store's success and customer footfall.

Highlights

An interesting trend is playing out in the world of retail, with most fashion retailers looking at many, dear stock prices are plummeting in their range.

Employment tech is blooming in the blue world retail, with the index having only grown about 10% since the beginning of the year.

Indian fashion retailers are also on the same path, growing about 15 to 30% in the same time, with one Indian company backing this trend.

The stock of this company has sold around 150 from the start of the year and has added over 8600 new employment while companies like reliance and Aditya Birla fashion have downsized by 1400.

Emerging as a bright spot in India's detail story, we are talking about Trend Limited, a retail company under the Tata Group.

Trend operates fashion and lifestyle retail stores like Westside and Jadio, with the company's success in the past five years being phenomenal, reporting a 50% jump in revenue and a 275% jump in profits in financial year 2024.

All of this has been on the back of the company's fast fashion vertical, Jadio, but you could possibly point out the date trend operates both Jadio and Westside.

So, what I'm giving all the credit to is just Jadio, the Dutch a head-on competition bit between both the stores, Westside has been operating since 1998, it has a little over 200 stores with revenue per square foot of around 12,000 sounds.

This much more could contribute well, as it has been around since 2016, it has over 564 stores with an average revenue per square foot of ₹1.

You can clearly see why I see Jadio has been crushing for astronomically, success, joined by its ability to deliver ultra-affordable, trendy fashion and the area is able to do this because of the cost-cutting regime.

Are the three major players where fashion retailers and up spending money, this is development of new designs by employing popular designers, extra wagon marketing, and setting up stores in fancy locations like malls and pier.

Jadio does not do any of this, it just makes small quick adjustments to popular designs, it's all ready in the market, and it also doesn't spend much on any kind of marketing.

Lastly, it doesn't even open stores in areas with expensive real estate, in fact, it doesn't even lease or own the stores, it's operated by the company in this case, Jadio, the company is responsible for staffing, inventory management, and overall store operations, and in return, gets a share in the profits of the retailer.

All of these measures have made Jadio the highly efficient monster that it is now, retailers have been noticing how Tata Trend is raking in profits, and they are also taking a page from just's playbook.

And also wants to start their own fast fashion chain, Mukesh Ambani pack, reliance, but nothing seems to have struck a good chord so far.

Shine has founded in China, Shine has outgrown, legacy fast fashion retailers like Zara and H&M, these are the companies that actually invented fast fashion, Shine is now bigger than them and wants to now take Shine to make a mark in India's fast fashion spaces.

This is the first time so many other retailers in the past few years, if you are wondering why none of these companies are directly selling the products in India, it's actually because of the government strict FDI norms for retailers.

So, retail is basically of two types, single brand retail which includes stores that sell products from only one brand, this is like Apple's or own by a single retailer, and sold under a single roof like Selfo now.

Foreign retailers want to sell their products, you might think it's very simple, right, but it's not that simple as per the rules set out by the government FDI in.

Multibrand retailing is restricted to 51%, which means any multibrand retailer cannot start a company all by themselves, they need an Indian partner to do this coming to single brand retailers, 100% FDI is allowed in this segment.

But strict sourcing requirements with up to 30% compulsory local sourcing and extremely stringent investment thresholds, and it's not like if a company has fulfilled all these requirements, they are good to go, they are still expected to present their case in front of the government FDI panel.

Most Indians are just one hospitalization expense away from bankruptcy, it's important to have a comprehensive health plan in case you don't have one and want to review your assisting health plan.

Now, back to China, this is the second time the company is entering the Indian markets, before now, the company was operating in India since 2018, but its brand from doing business in 2020 along with 58 other Chinese apps.

To pair with this, one move of the biggest digital businesses of China has now lost access to one of its largest markets for the internet.

Now, that Shine is back in India, it's just like reliance, sourcing is currently done from China, the might not change this, but how can Shine bypass all of FDI regulations to enter India?

The partnership is sort of a first of its kind, technically no money has exchanged between Shine and reliance, instead, Shine is licensing its trademarks and IP to reliance for a share in profits.

And based on the tech, Shine is not necessarily bound to follow local sourcing norms that are applied and under FDI, and it makes sense to the prices of Shine products are lower than its competitors because they are able to source.

And manufacture in China where material and labor is extremely cost-effective.

Do you think Shine and reliance can actually make a dent in the fast fashion space in India, can they beat Tata's dominance? Let us know in the comments and subscribe to us for more.