Oswal Group is a premier textile group of northern India having its corporate office at Ludhiana,Punjab. The organisation has been for the last 40 years with spinning as its core competency. Earlier, they were part of the Vardhman Group but, after family settlement between two brothers in 2003, they named themselves as Oswal Group. The group is mainly into spinning and dyeing of all types of yarn in different blends and manufacturing of garments. In 2004, Oswal group forayed into innerwear business under the brand of ‘Sensa’ with a view to cater to the growing ready-to-wear fashion apparel market. Thereafter, the company renamed its retail innerwear business as ‘Straps’, offering lingerie, nightwear and maternity wear in 2006. And finally in 2008; Oswal Retail decided to wind up its innerwear business and close down its 22 exclusive outlets of ‘Straps’.
Market still in nascent stage
As per reports of study conducted by leading retail consultants, Oswal group had pegged the intimate wear retail market in India at a whopping Rs 2,200 crore and it was expected that it would touch Rs 4,000 crore mark by 2009. The company had planned to capture five per cent share of this market by 2010. Commenting on the market scenario, Pradeep Seth, CMD, Stadia Group, says, "The main reason for suddenly deciding to shut down all stores could be the financial losses in the business and not seeing the growth potential as was envisioned. The markets chosen for Indian Lingerie were probably right but there could be a reason that the more elite class still prefers to wear foreign brands which they purchase from abroad. The other population may still be having cheaper options. However, the reasons for closure could also be mismanagement."
Too many stores too fast
Oswal group had ambitious plans to open ‘Straps’ stores across the country. They opened 22 stores across Delhi, Gurgaon and Ludhiana and had committed investment of Rs 60 crore in this venture and planned to open 120 exclusive stores by 2009. It even tied up with several premium foreign intimate wear brands including Italian ‘Parah’, Rene Rofe, Wonder Bra and Women Secret of USA, Body Line and Moon Dance, which were sold through Oswal retail outlets.
for stores’ closure |
Re-branding did not work
Re-branding is an exercise requiring meticulous plans and execution in order to retain its brand identity in the market. A company generally goes into re-branding after 10 years or more, when they feel that, with changing times, their brand too needs to be upgraded and consumer too needs the fresh look. Commenting on re-branding as a solution, Devangshu Dutta, Chief Executive, Third Eyesight, says, "The particular reasons behind Oswal’s decision to close down the chain will be best given by the company itself. Normally, if a company wishes to sustain the retail business, specific store-related decisions (changing the design, closing some stores, re-branding etc.) can certainly help. On the other hand, if the management wishes to exit the entire business for some strategic, operational or personal reasons, then there are essentially two options: either to sell the business or to close it down and book the losses."”
Lack of consumer interest
With everything being right in order, one very important thing the company skipped on was tile customer behavior commenting on consumer preferences, Mr Seth says “one reason is that more elite classes still prefer to wear foreign brands, which they purchase from abroad. Another reason lies in the possibility that people are still having cheaper options. However, reasons for closure could also be mismanagement. "
Is there a possibility that the company can be saved from such sudden closures of outlets? Can closing down of non- performing outlets or re-branding the brand be an option for survival? Or, is shutting down all the stores the only possible option? Talking about feasible solutions to this problem, Shubranshu Pani, President Retail Advisory Services, Jones Lang LaSalle Meghraj, says, "Normally the solution for such cases is a merger possibility with a known chain that is either into similar business in India or merger/acquisition by a foreign brand that may be looking for a foothold in India. Re-branding and shutting down of non-performing stores are solutions sometimes exercised by retailers to boost performance and cut losses. But many a time, retailers resort to sales and discounting. Some retailers abroad also resort to rationalization of format-size.and merchandising. For example, many ‘mom & pop stores’ and medical stores have started keeping other products like CDs, stationery and FMCG products. Getting a store chain out of trouble needs introspection and’ innovation. While reworking on space strategy is definitely required, it also calls for an overhaul in operations and client interaction." Giving his opinion, Mr. Seth says, "Normally, the solution to such cases is a merger possibility with a known chain that is either into similar business in India or merger-acquisition by a foreign brand that may be looking for a foothold in India."