Raymond: Turning The Wheel Of Fortune

The ninety-one-year-old Indian clothing manufacturer and retailer Raymond had been under some pressure. Between 2009 and 2013, the company’s operating margin reduced by 5 per cent, while its debt stood at Rs 1,347 crore (net debt as on March 2013). Besides, the brand was getting older in a country getting younger.

The lull lasted five years, before the company decided to reverse its losing streak. In 2013, Raymond started reinventing itself. Its sole focus is now on turning the entity into a customer-centric organisation from a product-only company.

The Big Change
In the past two years, the company has undergone a sea change. Starting from a complete transformation of the traditional family business into a professional organisation — for which Raymond hired Reliance ADA Group’s Sanjay Behl as CEO — to several operational and structural changes.

Soon after Behl took charge, the company’s business — earlier divided into textile and apparels — was reclassified into four strategic business units to cater to specific customer segments. Plus, shared service functions of brands, HR, finance, information technology were created to service the strategic business units.

Next, he took up ‘operation clean up’. To reduce debt, the textile major took tough calls with regards to divesting into non-strategic businesses. It shut down mass market brand ‘Makers’ as well as automotive and home furnishing units. A few other businesses that needed unique skill set and high capital investment over a sustained period such as ethnic wear and home segment were scaled down.

This was followed by outsourcing all non-core business processes to domain experts, to be able to divert all its energy to core businesses. Functions such as information technology, security and payroll were outsourced to specialist companies.

That’s not all. While at it, the company made some changes to its workforce too. Behl says, “As a company we want to think like a 19-year-old, so we hired a young leadership team of under 45 years of age with a diverse background.” The company appointed Mohit Dhanjal and Shantiswarup Panda from FMCG giant Hindustan Unilever to head retail and brand functions. Gaurav Mahajan who founded Trent, retail arm of Tata Group was hired to head apparel business, while Vijay Basrur from classified platform Quikr was brought on board to head the e-commerce channel for Raymond, RaymondNext.com.

Next in the reinvention process, San Francisco-based design firm Gensler was roped in to redesign the retail outlets. Last year, 36 stores were refurbished and 50 more will be done in the next six months. Another 30 franchised stores of Color Plus brand were redone in line with the overall design.

Over the last six quarters, the company shut down 50 loss making retail outlets. “This increased footfalls in stores by 15 per cent and the conversion rates went up by 90 per cent. Now, 90 per cent of the company’s stores are in black,” says Behl. Raymond currently has 850 retail outlets across the country and serves over 30 million customers a year.

Branding
As important as were the changes in reclaiming its position in the market, communicating them to the outside world was just as crucial. “What we wanted to do was clear the brand positioning of the company and highlight the uniqueness of each brand: Raymond is for classic formals, Color Plus for high-end casual wear and Parx is for casual fashion,” says Behl.

Different informative ads highlighting the positioning and innovativeness of each brand as well as an over-arching ad on “A Complete Man” — recontextualised to suit the present definition of an aspirational man — were launched, informs Ram Kamble of advertising agency Famous Innovations, which helped Raymond conceptualise the campaign. In one of the ads, a husband stays back home to take care of the baby, while the wife leaves for work; in another ad, a father supports his teenage daughter as she leaves for a party.

“I am still not convinced that Raymond has completely re-invented itself. The opportunity is staring at it in the face and it can do so much more with the brands,” says Harish Bijoor, founder of brand consultancy Harish Bijoor Consultants.

To promote its ads, Raymond tripled its television advertising budget. It also took sponsorship for the biggest properties such as Indian Premier League and World Cup. The company is also aggressively pushing its loyalty programme Raymond Rewards, which now has over two million members.

Raymond is now available online on Amazon, Jabong and Myntra to get access to markets that shop online. Last year in October, it also launched its online store, RaymondNext.com, which integrates all the Raymond products under one e-commerce platform.

However, “we don’t follow any deep discounting strategy as other brands. It is the same price at the physical outlets and the online store,” says Behl. Two to three per cent of their sales now comes from online.

With all these changes, the company has managed to make its way back into the black. Apart from a loss of Rs 31 crore in the first quarter, the company posted Rs 40-45 crore as profits in every quarter of FY 2014-15.

sonal@businessworld.in @sonalkhetarpal7

(This story was published in BW | Businessworld Issue Dated 11-01-2016)