Indian retail’s big daddy Kishore Biyani has clearly gone from being an e-commerce skeptic to loving it.
On July 04, Biyani’s Future Lifestyle Fashions (FLF) said it has agreed to buy (pdf) a 29.9% stake in London-headquartered fashion e-commerce portal Koovs for an estimated Rs140 crore (approx $20 million).
“This investment would complement the existing value chain for FLFL as an integrated branded fashion player,” Biyani, group CEO of Future Group, said in a filing to the stock exchange.
FLF currently owns and markets about 30 fashion brands, which are sold through the retailer’s large-format fashion chains such as Central and Brand Factory.
This deal strengthens Future Group’s presence in online fashion, which is among the fastest growing e-commerce categories in India’s $33 billion online market. For Koovs, the backing of Future Group could go a long way in establishing a presence in an industry which is currently dominated by Flipkart, along with its subsidiaries Myntra and Jabong.
Koovs was launched in 2012 by Waheed Alli, former chairman of British online fashion and beauty retailer, ASOS. Even as it was headquartered in London, most of the company’s business was—and continues to be—focused on India.
At its inception, the company sold affordable global fast fashion to young Indian shoppers, and manufactured garments crafted by a team of designers based in London. But over the years, its business model has come to rely heavily on private labels, apart from selling the latest clothes of London-based fashion designers.
In 2014, Koovs listed on London’s AIM exchange, a stock exchange for smaller companies. For the financial year, 2017 Koovs registered net sales of Rs108.6 crore (pdf).
The deal with the Future group, which counts itself among the top 10 (pdf) fashion apparel companies globally—selling 300 million garments annually—will now help Koovs access a strong network of physical stores in India.
Biyani has been trying to scale up Future Group’s online retail presence for some time now.
In 2016, the company bought online furniture retailer FabFurnish.com, which was subsequently shuttered. More recently, it has been experimenting with a grocery delivery app for its EasyDay format of daily stores, apart from exploring a tie-up with American online retailer Amazon.
Dabbling with fashion comes as a natural choice for Future Group, as the number of online fashion shoppers in India is estimated to more than double to 130 million by 2020, according to estimates by the Boston Consulting Group.
Fashion retail in India was estimated at $70 billion in 2016. Of this, between $7 billion and $9 billion is already digitally influenced, which means shoppers are buying, browsing, and searching for such stuff online.
Future Group already sells some fashion brands online via its website, Fbbonline.in, although it is no match for the likes of Myntra and Jabong. But investing in Koovs could certainly take Biyani one step closer to his new ambition: “We hope to become one of the largest online fashion retailers.”