FASHION RETAILERS finally have a reason to celebrate. Cash registers are ringing after a pandemic-led slump lasting over two years when many were forced to scale down operations. However, LifeStyle International (which owns Max, LifeStyle, Home Centre and EasyBuy) is among the few retailers which have been growing robustly — net income grew 42.9% to ₹7,806 crore in FY22, while EBITDA rose to ₹1,294 crore. The company has made a strong comeback on the Fortune 500 India list with ₹269 crore profit in FY22, compared with ₹243 crore loss in FY21. Rank rose from 428 in 2021 to 205 in 2022.

Did LifeStyle grow because its biggest competitors, FBB and Central (owned by beleaguered Future Group), went bankrupt? While FBB competed with Max in Tier II-III cities, Central was a strong player in metro markets. Home Town competed with Home Centre. “Competition did help us but we were also cautiously steadfast. We didn’t react in a knee-jerk manner as we believed we didn’t need mindless agility. We became a lot sharper in our processes, expectations and products,” says Kabir Lumba, Group Director & CEO, Landmark Retail. “By the end of this fiscal, we hope to touch ₹12,000 crore in revenue with over 450 Max and 100 LifeStyle stores. We have strong operating cash flows and are profitable with no long-term debt,” he adds.

Lumba has a point. The pandemic forced retailers to re-examine formats and become more digitally savvy. The likes of Aditya Birla and Reliance even went on an acquisition spree. LifeStyle International, however, stayed the course. “We said it is important that our formats stand the test of time. You don’t get this scale unless you are steadfast and listen to customers and partners.” In past one year, Reliance Retail has spent $1.05 billion on buying Abu Jani Sandeep Khosla Designers, Purple Panda Fashions and Clovia, among others. Aditya Birla Group, on the other hand, has acquired majority stakes in designer brands House of Masaba, Sabhyasachi and Tarun Tahiliani. The acquisitions will help them look beyond casual fashion and build scale. These retailers have also signed licensing deals with global brands such as Michel Kors, Kate Spade, Emporio Armani and Hackett London. Aditya Birla has announced a partnership with French Galeries Lafayette for opening luxury department stores in India.

But inorganic growth doesn’t excite Lumba. “We are quite happy with existing formats and are seeing huge traction, relevance and room for growth,” he says. Acquisitions, he says, are a challenge. “If we have a few brands which can grow at a healthy 15-20% CAGR, we can almost double our turnover in three-and-a-half years to ₹25,000 crore. We are not closed to acquisitions but are not actively seeking (out companies to buy),” he adds.

Calibrated Growth

Retail industry experts estimate a huge room for growth as India has a huge mass of consumers which does not have access to brands. LifeStyle International also believes its portfolio has room for healthy growth. While Max, the mid-market format, leads its Tier II-III penetration strategy, the retail major has started taking its premium format, LifeStyle, to non-metros such as Indore, Salem and Patiala that have a decent appetite for brands.

But these markets are value conscious, too, which is why the company is expanding LifeStyle’s private portfolio. While almost 100% brands at Max and Home Centre are private, the percentage of private labels at LifeStyle (brands such as Ginger, Melange and Code) has been increased from 29% to 34%. “Tier-II markets expect wider assortment and lower prices. Even customers in Electronic City in Bangalore are more value conscious than, say, in Indiranagar. So, we have over-indexed private labels,” says Lumba. He says private labels have higher margins. “We have brought efficiencies. We offer products at lower prices and manage to get higher margins through more efficient sourcing. This is good for customers as well as our business,” he adds.

Apart from Max and LifeStyle, which deliver a bulk of revenue, the third growth driver is home and furniture retail arm Home Centre. The company has opened 40 standalone Home Centre stores in past two years. It is now in direct competition with Ikea as the Swedish retailer is also launching small stores. “Our furniture share is small, but our household share is stronger. We are seeing strong like-to-like double-digit growth. We have been seeing consistent traction in home segment.”

LifeStyle’s strategy is seen as cautious compared to competitors. Lumba does not agree. “If we are looking at ₹25,000 crore revenues, we can’t be conservative,” he says. “We will try to do things which are meaningful and impactful to our consumers and other stakeholders. It’s not a function of what you achieve but how you achieve it. I believe we are in a pretty good space. We are not conservative. On the contrary, we are fairly aggressive, but take calculated risks.”

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