Flipkart Acquires 7.8% Stake In Aditya Birla Fashion For Rs. 1500 Crore

Flipkart’s already-formidable fashion portfolio has yet another addition.

Flipkart will invest Rs. 1,500 crore for a 7.8% stake in Aditya Birla Fashion & Retail (ABFRL), which runs brands like Pantaloons, Allen Solly, Peter England, according to regulatory disclosures. “Fashion retail in India is set for robust long-term growth due to strong fundamentals of a large and growing middle class, favorable demographics, rising disposable incomes and aspiration for brands,” Kumar Mangalam Birla, Chairman of Aditya Birla Group, said in a statement. “Through this transaction with ABFRL, we will work towards making available a wide range of products for fashion-conscious consumers across different retail formats across the country,” said Flipkart CEO Kalyan Krishnamurthy.

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Flipkart already scores heavily over arch-rival Amazon in the fashion category. Apart form its own fashion arm, Flipkart runs Myntra, and had earlier acquired Jabong and then merged it into Myntra. Earlier this year, Flipkart had spent Rs. 260 crore to purchase a significant minority stake in Arvind Fashions, which runs brands including Flying Machine, Arrow, US Polo, and Tommy Hilfiger in India.

Aditya Birla Fashions includes some equally prominent brands, including Allen Solly, Louis Philippe, Peter England, People and Pantaloons. The group also has a network of 3,004 stores, a presence across 23,700 multi-brand outlets,  and 6,700 points of sales in department stores across India. Like other clothing companies, Aditya Birla Fashion and Retail has been suffering through the coronavirus pandemic. ABFRL says it plans to use Flipkart’s capital to strengthen its balance sheet, scale-up its existing businesses while increasing presence in emerging high-growth categories such as innerwear, athleisure, casual and ethnic wear. Flipkart, on the other hand, will likely be able to negotiate better contracts with a clothing company that runs some very popular brands, and perhaps bring them online. “This deal also provides a tremendous opportunity to build scale of existing brands and expand its brand portfolio into emerging consumer segments,” Ashish Dikshit, managing director of ABFRL, said.

The deal will ensure that Flipkart maintains its lead over Amazon in the fashion sweepstakes — Amazon had purchased a 5% stake in Shopper’s Stop for Rs. 180 crore in 2017 . Having a partnership with Aditya Birla brands will also help Flipkart compete with Reliance’s JioMart, which has already launched electronics on its platform, and will likely bring Ajio’s portfolio to its platform as well.  Reliance has tie ups with 45 brands including Armani, Burberry and Jimmy Choo in India, and also has a host of its own brands which it sells through its retail fashion arm Reliance Trends. E-commerce companies clearly seem to think fashion in an important category in India, and are all making moves to position themselves for a future in which fashion, like many other categories, will probably primarily be bought online.