The Complete Man, Raymond is now trying to get a complete makeover. Here's how
From silver cufflinks, leather shoes and travel bags to men’s ethnic wear, to concierge tailoring services, Raymond is going deeper into male wardrobe.
Suddenly, a speeding Toyota Corolla came to a screeching halt. The action shifted to the man in the driver’s seat: Gautam Singhania, chairman and managing director of Raymond. He swiftly moved inside the hall, interacted with traders and finished a television shoot in a few minutes. His brisk pace matched the restive look on his face.
“To be restless, hyperactive and to live on some level of paranoia is good,” he says, before turning his focus on the company’s performance, especially the quarterly results of this financial year. “Quarter-on-quarter performance has improved and the company is on right lane,” he adds. (See “FY18 has been the best over the last three years”)
The third-quarter results and nine months of the present fiscal have been the best in three years. While consolidated net revenue for Q3 stood at Rs 1,514 crore against Rs 1,331 crore during the corresponding quarter last year, the nine-month cumulative numbers also improved: Rs 4,370 crore as against Rs 4,004 crore last fiscal. However, what stands out is bottom line: from a net loss of Rs 7 crore during nine months of the last fiscal to a profit of Rs 82 crore this fiscal.
“There were almost 25,000 articles at the recently concluded trade show,” says Singhania. “We need to do more.” (See “To be restless and hyperactive is good”)
Sanjay Behl, chief executive officer of the lifestyle business, agrees. “Raymond is moving away from being a product-centric company to a customer-centric organisation. That’s Raymond 2.0,” he says, substantiating his claims by pointing to the company’s new verticals and services over last two years.
From accessories such as silver cufflinks, leather shoes and travel bags to men’s ethnic wear, from a range of khadi apparel to concierge tailoring services, Raymond is going deeper into male wardrobe.
“The fundamental shift is in making not what the company wants to sell but what the consumer wants to buy,” says Behl, explaining the new business strategy. If a consumer, he says, wants a tailored jacket in a particular format in 48 hours, then Raymond needs to deliver it. The company has shifted gear from Raymond 1.0.
Three years ago, says Behl, the focus was in turning around the company. A decline in operating margin had to be arrested, growth of revenue curve had to be ahead of the market, and the daunting task of cash flows had to be ensured. After meeting most of the targets, the company moved to Raymond 2.0: from turnaround to transformation.
Gaurav Mahajan, president (apparel business) at Raymond, says the apparel division made three key moves to assist the company’s transformation. Expansion of product categories for all occasions, creation of a cutting-edge, omni-channel retail network that blended physical with digital, and a nimble supply chain network were undertaken to sync with the overall churn. Gravitating towards consumers also meant a shift in work culture. Brand, marketing and product heads were asked to spend more time in the market.
“A brand and marketing manager needs to spend at least 100 hours in markets in a quarter,” says Behl, adding that department heads are required to spend anywhere between 50 and 100 hours every quarter interacting with consumers.
Challenges & Confidence
The transformation, however, is not happening from bottom. It’s percolating from the top, led by a leadership team of 25 officials, including Singhania. In 2016, Behl identified four critical pillars of leadership competency for future: learning agility, digital orientation, strategic thinking and integrated supply chain. The plan was to map the competency assessment of the top guys for future. Adaptability quotient, or AQ, of leadership, Behl says, is far more critical than intelligence quotient.
“It’s not IQ but AQ that matters,” he says, adding that a tie-up with Cornell University helped train leaders last year. Apart from leadership training, retail machinery was overhauled. Mini Raymond Shops were rolled out to penetrate deeper into tier-III, -IV and -V towns.
The majority of new stores were opened under the franchisee model, renovation of older stores was carried out, and multiple retail formats were done away with. Brand communication too underwent a subtle change. The Complete Man advertising weaved in product proposition to highlight the qualities of product. Global expansion was also identified as another key leg of Raymond’s makeover.
US, Europe, Japan and Middle East have been identified as markets for expansion. Raymond’s largest suit manufacturing unit in Ethiopia was geared up to service the global markets. Raymond, say marketing experts, has been smartly shifting from a company about suits, shirts and trousers to brands. As the company moves from wants and needs to desires and aspirations of the man, its value proposition climbs and deepens as well.
“Raymond is now making more money at the end of desire and aspiration,” says brand strategist Harish Bijoor. The Complete Man, he says, is a generic phrase even today and points to just one brand: Raymond. The challenge for Raymond might come from the trend of millennials to move away from fabrics.
“Growing ecommerce is hurting brick-and-mortar companies. This might also pose a challenge,” says Saurav Jindal, analyst with Bonanza Portfolio. Jindal, however, is quick to point to the upsides as well: the scrip has leapfrogged from over Rs 250 in 2014 to over Rs 980 in February this year. The mounting debt, he reckons, might not threaten the financials as the company achieved peak capex this fiscal.
“The key for Raymond is to be consistent in performance,” he adds. Behl, for his part, sounds confident. For the last 16 quarters, Raymond has had strong double digits, except during the demonetisation quarter, and is 1.5 times the actual market growth rate. “It’s galloping right now.”