MUMBAI-BASED HOME textiles brand Welspun has its task cut out for FY2017-18. With an aim to be a $2 billion, debt-free company by 2020, the company is weaving strategies for global growth and expansion. Reeling from the after-effects of the Egyptian cotton controversy last year, the brand is treading carefully albeit firmly. Setting up Wel-Track, which traces cotton from its source to the point-of-sale, the company is bringing in traceability to the fore with plans to chart the brick-and-mortar route ahead. “We had a major setback in August, 2016, but we are back on track. Except for one retailer, we are working with everyone and are forming strong partnerships. It’s not just going to be brick-and-mortar; these are the times of omni-channel and we have started working on it since last year,” informs Dipali Goenka, CEO and JMD, Welspun India.
Biting into the Big Apple
With 95% of its products being exported, the US continues to be a key market for Welspun. Currently, the US contributes around 65% to its business with 25-30% coming in from the rest of the world and 5% from India. Talking about the US market, Goenka says, “That economy is a guzzler of consumption and it will be a big consumer market for sure,” adding, “but there are more countries and channels in the pipeline.” While a consumer in the US is far more evolved, consumers are highly price sensitive in markets like Europe and some other parts of the world.
But Goenka believes that India is at a threshold where the housing sector is going to be far more dominant. With GST rolling out from July 1, doing business is going to get much easier in the country and Welspun is all set to cash in on the opportunity.
“We will be taking Spaces strongly into the country. We are also rebranding our English brand Christy and taking it to new markets like South Korea and India,” reveals Goenka.
Set to debut in a couple of months, Christy will be on trial mode in the country, launching a limited range to ascertain consumer feedback. The company initially aims to set up four stores starting with Mumbai, followed by Delhi and Bengaluru. However, Spaces and Christy will be positioned and priced differently. While Spaces is aimed at the evolving new Indian consumer and focusses on comfort, Christy is positioned as a luxury item.
Welspun plans to only explore mom-and-pop stores for Christy in Mumbai, to begin with. “We are just setting up four stores right now to see how they perform,” adds Goenka, “which will help us roll out Christy fully by summer next year.”
Into new spaces
Welspun’s other home-grown brand Welhome will be phased out gradually.India’s contribution to Welspun’s overall revenues is 5%. “We want it to be Rs 1,000 crore by 2020. We are looking at Spaces to take on that spectrum,” Goenka says. In smart textiles, Welspun’s new initiative in home décor features augmented reality-infused duvet covers and rugs for kids. Called Spin Tales, it has launched in Toys “R” Us in the US and on Amazon. It has also recently launched in Lifestyle stores in India, and will be followed by Hamleys and QBC in the US.
“The kids category is growing by 25% month-on-month for us, and it’s just the tip of the iceberg right now,” mentions Goenka.
Welspun already has licenses for Minions, FC Barcelona, Wimbledon and Royal Ascot. Goenka mentions that in India, Welspun clocked Rs 125 crore in revenues in FY17, registering a growth rate of 25% y-o-y. With the target for FY18 set at Rs 250 crore, e-commerce too will play a key role for the company, not only in India but globally as well. To this end, it has got on board e-commerce directors in the US and the UK. However, getting into the discounts’ game is not something Welspun wants to focus on. “There is a strategy; there would be some discounted products but it’s a value market and how you create that value will be important,” shares Goenka.
As a result, the brand has not only partnered with big e-commerce players but specialised platforms like Pepperfry in India and Wayfair in the US as well. It also intends to get into the QR codes play going ahead.
Welspun is also eyeing hospitality solutions as an area of growth. It is currently working with chains like Starwood Hotels and Resorts, Holiday Inn, etc across the US, West Asia, India, Europe and soon in South East Asia, to introduce products like Hygro Cotton bed and bath linen and its bedding line Stay Well with Deepak Chopra. Furthermore, it is also eyeing the flooring solutions space where it is investing around `600 crore. The products under this vertical are set to launch in the third quarter of 2019.
With national and international market dynamics like GST, demonetisation, Brexit and the changes post the Trump regime, it seems like a mixed bag of challenges and opportunities for Welspun.