NEW DELHI — Fashion retail is booming in India.
Take Kimaya, which has grown quickly in major cities and now has more than 35,000 square feet of retail space. The chain, which sells Indian designer fashion, is now looking at adding more affordable price points and will launch a new chain of stores this month targeted at the fast-growing market in smaller towns.
“We have signed licensing deals with 12 prominent Indian designers already,” said Pradeep Hirani, chairman of Kimaya Fashions.
In addition, the expanded Kimaya portfolio will include an online presence with an e-commerce site.
When Hirani set up the high-priced designer label Kimaya chain of stores nine years ago, he came to fashion retail armed with a masters degree in business management and much negative advice from friends and well-wishers, some of whom categorically told him he was ruining his future.
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Recently, Kimaya’s position as a premium retailer was bolstered when Franklin Templeton Private Equity Strategy spent 600 million rupees, or $13 million at current exchange, to buy 20 percent of Kimaya, which they evaluated as being worth 3 billion rupees, or about $65.2 million. Hirani’s belief in his chosen business model was vindicated.
Since founding the retail chain in 2002, Hirani and his wife Neha, who own Kimaya, have been heralded as business visionaries. The new investment arms him with the ammunition to take his concept further and look at both local and global markets on a much bigger scale than the 16 stores that Kimaya currently has in India and Dubai.
“This money is an investment not only in Kimaya, but in the Indian fashion industry,” Hirani said. “It is the beginning of an era, a small investment, but focused and I believe it will be the steroid for the fashion industry, the trigger that takes the Indian fashion industry to its right place under the sun.”
“Our investment recommendation was based on the high growth potential of the sector and confidence in the management’s expertise in sustaining its leadership position,” said Deepa Sankaran, managing director at Darby India, which is adviser to Franklin Templeton Private Equity Strategy, a rupee-denominated private equity portfolio managed by Franklin Templeton Asset Management (India) Private Ltd.
Further details of the transaction were not disclosed.
Kimaya stocks more than 183 of India’s top designers under one roof, which was a novel concept when it was launched in that it offered only premium designer creations in multiple outlets. The labels are relatively unknown in the West, but include brands such as Rajesh Pratap Singh, Abraham & Thakore, Gaurav Gupta, Ranna Gill, Anamika Khanna, JJ Valaya and Gauri & Nainika.
“When I started the first store, I took an oath that I would not open one retail outlet without signing another. Scalability in business is very important,” he said.
The scalability has indeed worked in his favor, with major cities being the main focus, with stores in New Delhi, Mumbai, Gurgaon, Ludhiana, Chennai and Bengaluru. Two months ago, a Kimaya opened in the smaller town of Surat, the first move by the retailer into second-tier cities in India.
The investment by Franklin Templeton is expected to fuel growth for Kimaya in a number of ways and Hirani shares a plethora of plans that would indeed give fashion designers and customers more options: more Kimaya stores, the lower-priced chain and the e-commerce site. “Web commerce is a Pandora’s box — nobody can estimate (even wildly) the projections…but our gut feeling is extremely positive about this. Our expectations are in the region of 150 million rupees [about $3.3 million in sales] in the first year,” he said of the online store.
Global expansion is also in the cards, with one store in Dubai and a serious look at New York, where an earlier store plan did not materialize. Other possible markets include Japan, Abu Dhabi and South Africa.
“We are looking at global expansion both as a store-owned and a franchised concept. There are 16 Kimaya stores at this time and we plan to add 12 to 14 additional stores in the next three years,” he said. Kimaya will continue to target the affluent, fashion conscious woman.
The lower-priced stores, on the other hand, will target the fast-growing upper middle class market in India, with an emphasis on smaller towns like Pune and Chandigarh. Hirani aims to open 50 to 60 of these units in the next three to four years. “Although the growth has been in the metros so far, the most acceleration has been happening in smaller towns,” he said. “Today, fashion is becoming the third religion in this country, after Bollywood and cricket. It is no longer just in metros but important in cities all over the country.”
He sees this trend as growing at a rapid pace, looking at the historical growth of different cities, from Paris to Milan to New York. In his view, in 10 years’ time, India will be that center. “China will be the pret capital, but India will be the couture [or high-end designer] fashion capital — it has its strength in craftsmanship, which many of the major brands have already experienced by sourcing from here,” Hirani said. “It is also the land of celebrations — perhaps 365 days out of a year, with our secular festivals, weddings, family events and festivities. Fashion here is really an eight- to nine-year-old industry and has grown to 9 billion rupees (about $195.5 million) in this time. It has the capacity to grow to 90 billion rupees ($1.9 billion) in the next 10 years.”