In the light of Aditya Birla Fashion and Retail acquiring designer brand Sabyasachi, we explore the tenets of building a luxury versus a mass market brand.
Aditya Birla Fashion and Retail (ABFRL) has announced a strategic partnership with Sabyasachi by signing a definitive agreement for acquiring 51 per cent stake in the latter. Sabyasachi is India’s largest and most influential luxury designer brand, with strong Indian roots and global appeal.
The brand straddles categories such as apparel, accessories and jewellery, and has a strong franchise in India, US, UK and the Middle East. The ABFRL platform will complement Sabyasachi in its journey to becoming a global luxury house out of India.
A press release mentions that the partnership will add significant weight to ABFRL’s growing ethnic wear portfolio. It is an attempt to accelerate the company’s strategy to capture a large share of ethnic wear market through a comprehensive and attractive portfolio of brands across key consumer segments, usage occasions and geographies.
The release also mentions the company’s ambition of building a large ethnic wear business over the next few years to complement its portfolio in western wear segment of the Indian apparel market.
Commenting on the partnership, Ashish Dikshit, managing director, ABFRL, said: “We believe that over the next few years, ethnic wear is going to be an increasingly important category as young Indians rediscover their culture and heritage. The Sabyasachi brand, through its emphasis on design and craftsmanship - has set new benchmarks and captivated the imagination of the sophisticated global Indian consumer.”
“We are proud to partner Sabyasachi in its journey to become the only global luxury brand from India. We see a ‘Made in India’ global brand like Sabyasachi occupying the pinnacle of our ethnic wear portfolio. Over the next few years, ABFRL intends to craft a portfolio that addresses the entire gamut of ethnic wear segments: value, premium and luxury.”
Sabyasachi Mukherjee, CEO and founder, Sabyasachi (brand), added: “Over the course of the last couple of years, as my brand evolved and matured, I began searching for the right partner in order to ensure continuity and long-term sustainable growth. I am excited to have found that partner in Kumar Mangalam Birla and ABFRL.”
Devangshu Dutta, chief executive, Third Eyesight, points out that mainstream brands target a set of customers who make up the middle to upper-middle market.
“When you look at Sabyasachi as a brand (and most other designers in the country too), they tend to target a much smaller group of people who are typically wealthier. A brand has to be relevant to the lifestyle of their specific target customer, and the lifestyles of the upper class tend to be very different from the lifestyles of the middle class,” he says.
Dutta adds that this isn’t to say that top-tier customers may not buy a mass-style product, but they demand a difference in the product quality and in the retail buying experience too. “Too often, we look at a product as just a physical product, but the reality is, a brand is much more than that.”
Dutta points out that Aditya Birla has been building a portfolio that has a retail footprint across the country, and there is a certain scale-related efficiency to its business. He adds that ABFRL is much more process-oriented than most designer businesses operating in the country right now.
“There is always the danger of the brand being diluted, but I don’t see that happening right now. With this investment, the brand can potentially reach a much wider segment. It would get more capital and help create a footprint to reach wider into the market.”
Dutta adds that the acquisition will not change the brand’s image in the core target consumers’ minds in the short term, provided the product and experience isn't watered down. On the other hand, he also theorises, it’s not necessary that Sabyasachi would have a positive rub-off on the other brands in Aditya Birla’s portfolio.
Hamsini Shivakumar, founder of LeapFrog Strategy Consulting, opines that its possible that Sabyasachi brand's prospective customers, viz the wealthy elite of India would know that ownership has changed hands.
“However, as long as the product and shopping experience don't change for the worse (as perceived by them) and the branding stays the same (there is no effort to add the Aditya Birla name to the Sabyasachi name), the merger may have no effect at all on the brand's TG.”
She adds that the only context in which the brand’s perception in the minds of its TG could get affected is if there is an attempt made to bring in ABG branding visibly along with Sabyasachi's branding or if the product and experience are made more 'mass'.
Shivakumar adds that from this acquisition, there may be no cross over between the two brands at all. A cross over might happen if ABF tries to leverage the Sabyasachi brand name for its own portfolio.
“It will be very difficult to effectively create a brand merger (unlike a company/financial merger) between these two. If the premium brands in the portfolio e.g. Louis Phillippe offer a designer collection from Sabyasachi, that could be a good crossover effect. Sabya widens its reach and LP elevates its status. But this is not a new idea. It has been tried before by men's apparel brands,” she explains.
Talking about the tenets of luxury brand building, she explains that said luxury brand has to be elitist and exclusive. It is meant for the few and not for the masses.
“Luxury brands build more 'exclusive' narratives that appeal to the discerning and privileged few. They leverage platforms such as craftsmanship, rarity, one-of-a-kind experiences, total personalization etc. Luxury brands don't sell 'benefits', they sell membership into a 'way of life', a sub-culture,” she explains.
Whereas mass brands sell features and benefits and value for money. The brands may also leverage stereotypes and use celebrities to enhance their appeal. “They tap into the everyday lived culture of the people. They aim for an 'aam-aadmi' image, something that is relatable to the large majority of people. Mass premium and mass-stige brands anchor themselves in the signs, symbols and narratives of the mass and try to borrow a few of the symbolisms of luxury to give themselves a more upscale or upmarket image,” she concludes.
Vishwajeet Singh Rana, a former adman who has started his own designer label, says that it (big companies acquiring designer brands) is becoming a common occurrence these days.
Rana adds that it’s important that the designers are passionate about their work when creating their brand. “It’s important that you know who you’re talking to and how to communicate with them. Always remember what the brand stands for in all forms of communication.”
Rana tells us that the main difference between building a luxury brand and a mass market brand lies in volumes and numbers. “The main difference between the products by a luxury brand and a brand like, say, Zara is the quality of the garment itself. The process of making the luxury items is also more sustainable, ensuring that customers are purchasing a high quality item that won't tear or get damaged in any way,” he concludes.