Aditya Birla Group’s TMRW to invest Rs 500-600 crore in 10-12 D2C brands by year end

Aditya Birla Fashion and Retail (Representative Image)

Aditya Birla Fashion and Retail (Representative Image)

Aditya Birla Group’s house of brands venture TMRW aims to become a $ 1 billion business, and will be investing Rs 500-600 crore altogether in 10-12 direct-to-consumer (D2C) brands by end of this year, a key executive told Moneycontrol. This comes at a time when the Indian start-up ecosystem has been witnessing a funding winter, signalling major consolidation, especially in a sector such as D2C, which has seen a spike in the number of emerging brands.

So far, the company has invested around Rs 289 crore on eight brands, per regulatory filings. The company acquired a ~73-80 percent stake in casual wear brand Bewakoof for Rs 200 crore. It also invested Rs 10-25 crore on an average into the other brands: women’s western wear label Berrylush, women’s casual and western wear brand Juneberry, teen’s occasion wear brand Natilene, kids wear label Nauti Nati, athleisure and active wear brand Nobero, casual and denim wear brand Urbano, and casualwear and fast fashion brand Veirdo.

Focus on fashion and apparel

After announcing majority stakes in eight digital-first lifestyle labels on November 28, Prashanth Aluru, co-founder and CEO of TMRW, told Moneycontrol that the venture focuses on fashion and apparel and the overall game plan is not to be an aggregator but to scale the brand.

“We started with fashion and apparel, but we will expand to other categories like footwear, accessories, beauty and personal care by next year,” said Aluru.

The eight new partnerships have helped the group achieve a revenue run rate of more than Rs 700 crore and the company claims to be on track to cross an annual revenue rate of Rs 1,500 crore over the next 12 months.

Not following the Thrasio model

Commenting on the house of brands strategy and its challenges, Aluru said, “The Thrasio model has been more about aggregation. And our strategy is not to do that. We have a very unique play in this market. Thanks to Aditya Birla Fashion Retail’s (ABFRL) backing, we bring in a lot of deep category expertise, brand building expertise, and as part of TMRW, the founding team that’s come together is also bringing in new-age digital, ecommerce, consumer tech capabilities.”

Thrasio is a US house of brands that acquires bestselling labels on Amazon.

He added that TMRW is not concerned about the challenges brand aggregators face as it’s not their thesis. TMRW plans to build a mix of different types of brands. “We are building the right mix of categories and also the right mix of types of brands. So, we’re playing both in large-item categories today, which are growing at high growth rates. And also looking at emerging categories.”

Brand evaluation

To partner with a brand, TMRW looks at the size of the market opportunity, product market fit or consumer insights that will help the brand to scale, and thirdly founders who want to build a large brand. “Beyond capital, it is how you locate a brand, which is balancing customer retention, successful acquisition, brand building versus performance marketing, deep category insights, product differentiation,” explained Aluru.

With a network of 3,468 stores, TMRW will also look at offline channels for its digital-first brands, depending on the category.

TMRW competes with other similar players, including Mensa Brands, G.O.A.T., GlobalBees and 10Club, Upscalio and marketplaces such as Nykaa, AJIO and Myntra among other online brands.