Beyond Fame

Companies are not relying on star factor alone to drive sales. Will this break the jinx for celebrity brands?

Manish Mandhana gets a lot of attention from those who command it otherwise — the celebrities. “A lot of people approach me with proposals,” he says. Why not? Success as they say is the most powerful magnet and Mandhana’s claim to fame is Being Human. The force behind Salman Khan’s popular clothing range, he has not just turned it into a recognisable brand but also demonstrated that celebrity businesses can be sustainable. A string of short-lived ventures by cricketers, Bollywood and other celebrities had led one to believe otherwise. 

Branching out
Considering that the clothing line was first commissioned barely four years back, Being Human has done well to scale up. From net sales of Rs.40 crore in 2012, the brand clocked sales of Rs.216 crore last year. “We have followed an omni-channel policy, selling at Shoppers Stop, Central and other chains besides using e-commerce, and have 600 touchpoints today,” says Mandhana. The company also launched exclusive retail stores.  Today, it has 55 stores, of which 30 are owned by the company. 

All this gives an impression that Mandhana has had it easy. But the brand business, he says, can be tricky. “It’s very competitive, you need to be in the right place. There has to be consistency in terms of performance. A lot of thought has to go into developing the brand and its DNA, the collections have to be trending and the pricing has to be correct. With social media, you need to reach out to as many people as possible.” That’s a long list of things to go right. Clearly, Mandhana hasn’t stopped at Khan’s appeal, but relied on a sound business plan.

That’s the reason behind Being Human’s success, feels Harminder Sahni, managing director, Wazir Advisors. “It’s not like they were running many lines of businesses and experimented with a star-based brand, like others in the past. They invested heavily in Being Human, opened stores and created distribution — that kind of commitment was missing in most other cases.” 

Most experts consider Being Human to be the exception though. Arvind Singhal of Technopak says, “Mandhana Industries being an established garment exporter helped the brand.” 

Thing of the past 
Their bearish stance on the segment stems from the past, which has been anything but inspiring. When it comes to the business turf, celebrities have — more often than not — failed to click. The God of Cricket, Sachin Tendulkar, has been clean bowled each time. His restaurant and café, Tendulkar’s and Sachin, with partner Mars Hospital Group’s promoter Sanjay Narang, opened amid much fanfare in Mumbai in 2002. But they soon shut shop in 2007 and 2009, respectively. Then, in 2010, Future Group launched the ‘Sach’ brand of toothpaste, where again Tendulkar was a stakeholder. This, too, failed to take off. “Not one of the many businesses he ventured into scaled up,” says Singhal. Teammates Sourav Ganguly and Kapil Dev haven’t fared any better. 

While these endeavours weren’t into clothing, the underlying fact is that lack of expertise has proven to be the Achilles heel. Even globally, there are only a handful of success stories. Lacoste, the iconic brand established by French tennis player Rene Lacoste in the 1930s is one. Victoria Beckham is another.  But despite the massive craze for music, American pop singer Jessica Simpson is only the first to clock billion-dollar sales for her label. 

For celebrities, Gaurav Marya, president, Franchise India Holdings says, “The best way to do business is to tie up with a credible organisation/operator, who runs the business on a day-to-day basis.” However, given the scarcity of names that have worked, Mandhana has reason to be proud. Having a celebrity on board is not a guarantee though, he says, even if it is Salman Khan.

Renu Prasad, COO, owned-brands, Genesis Colors adds, “Long-term success will remain the same whether you have a celebrity or not. A celebrity will only hasten the acceptance in the first couple of years.” Genesis retails international brands such as Jimmy Choo, Hugo Boss, Armani, Burberry in India. When building a brand, Prasad says the focus should be on making relevant and competitive products, and drilling down to figure out the category, pricing and location. By the looks of it, Mandhana and Being Human did exactly that. They narrowed it down to men’s and casual wear. 

Setting the bar 
To an extent, Being Human’s success has had a positive rub off effect. New entrants are now focusing more on sustainability than the celebrity quotient. “At the end of the day, people forget the consumer is looking for the right product at the right price,” says Anjana Reddy, who founded Universal Sportsbiz (USPL) in April 2012.

USPL’s portfolio includes Wrogn, a premier fashion brand inspired by Virat Kohli; Imara, a contemporary women’s ethnic fashion brand with Shraddha Kapoor and Collectabillia, which e-tails sports and fashion accessories. It received initial funding of Rs.17.5 crore from Accel Partners in July 2012, topping it up with Rs.46 crore funding in its second round last year. 

Though the company counts Tendulkar as a co-founder, it chose Kohli as its face. “I think the marriage between the celebrity and the brand is very clear, whatever Wrogn stands, Virat stands for,” says Reddy. Kohli, too, is an investor in the brand.

But while USPL is counting on the celebrity-fashion combo to work, the focus is on following trends and building a distribution network. “We have international designers,” says Reddy. Wrogn and Imara are already sold in 73 stores across 33 cities via Shoppers Stop and online on Myntra. But like Being Human, Wrogn is also looking to expand its offline presence. The company opened two exclusive stores in Hyderabad and Bombay, barely three months back. Considering the high real estate costs in India, this seems like a costly way to grow. But Reddy says, “Offline is very essential to build a personal wear brand. It has taken a lot of research to come up with the right store size that makes economic sense.” According to Reddy, the stores should break-even in 18-24 months.

Besides their own stores, USPL also has an exclusive tie-up with Shoppers Stop. Prasad feels this strategy offers the two fledgling brands much needed space to grow. “Shoppers Stop is responsible for the traffic, private space and to a certain extent blocking direct competition. Additionally, they have a customer service model, with a loyalty customer program.”  

For Shopper’s Stop, too, the association has merit, adds Prasad. “It is experimenting with the two brands. So far, they are doing better than their private labels. If you are a multi-brand business, you have to balance it out. You need to have your own brands as well as exclusive ones.” Reddy says both Wrogn and Imara are expected to clock sales of Rs.95-100 crore this year.   

Going the e-way
But where others are going the conventional route, some are tapping the e-commerce frenzy. Hrithik Roshan was among the first ones to co-own an online brand — HRX. While the idea first came about in 2010, it took about two-and-a-half years to narrow down the category. The fitness and activity wear brand was launched on Myntra in 2013. It is estimated to be worth over Rs.100 crore now. “HRX is one of our top five brands. It has grown fairly aggressively, upwards of 40% over the years,” says Abhishek Verma, head, fashion brands, Myntra, refusing to share the actual figure.  

Considering the e-tailer is planning to ramp up the revenue contribution from private labels to 35% from 20% currently, HRX fits in well. And it is focusing heavily on the brand’s active wear segment, which according to Verma “fits well with Hrithik’s persona.” 

Myntra also seems to have aggressive plans both online and offline. It recently acquired its competitor Jabong in a $70 million dollar deal. Besides, it has plans to take HRX offline, shares Verma. 

Will this strategy work? Prasad says that in the US, both online and offline exist but at different price points. “Cheaper products sell online and expensive products retail offline.” Moreover, she adds, “In the last two years, the online space has been dominated by discounts. There were almost unlimited budgets for customer acquisition. All those things are changing rapidly now. People are rolling back discounts and are not spending so much on ad campaigns. So we will see stability emerging between online and offline.” 

Pricing it right
Not restricting itself to HRX, Myntra also started an apparel brand with Deepika Padukone last year called ‘All about you’. “We started it about 7-8 months ago. It is more of a premium brand, offering both western and ethnic wear for women. It’s early days, but the initial response is good and the average price it commands is double that of similar labels,” claims Verma. 

But can higher prices be sustained, just riding on the celebrity quotient? Industry consultants don’t think so. In fact, they say, it has been one of the reasons for past failures. “Obviously, they price it higher because celebrities are used to making money. There are minimum guarantees. The other guy (operator) will not pay that out of his pocket,” says Sahni. This is another area where Being Human has scored. “Salman Khan only wanted 5-10% for charity and there was no minimum guarantee involved,” shares Sahni.

USPL’s Reddy sides with the consultants. “We don’t increase the pricing 25-30% just because a celebrity is associated with it. While a signature piece can be priced higher, it won’t work for the entire line.”

The trends, however, are changing here too. Increasingly, celebrities are not insisting for a minimum guarantee but charging an annual fee. “There is an equity plus fixed fee arrangement, which means if the operator doesn’t reach the levels he proposed to but the celebrity has put in his/her time, they still get an annual fee,” says Marya of Franchise India.

But how involved are celebrities in these businesses? Verma and Reddy say that Padukone and Kohli dedicate a good amount of time. However, experts differ. “The celebrity extends the name and mostly comes to openings and press events. In the combination, the operator is more important. If you take an A-list Bollywood star, the first three would have the same kind of following and status. But the operator creates the difference,” adds Marya.  

Star appeal
While that is true and one can question the level of engagement, celebrity appeal has been tapped by advertisers for ages. “MRF has had a long association with Sachin. They picked him early, never moved on to somebody else, built on with him. It works if you are committed and believe that celebrity adds value. If you are using them for publicity and visibility then it is a short-term relationship and doesn’t work,” says Prasad.

Genesis, itself, had roped in Gauri Khan for designer brand Satya Paul. “A lot of celebrities wear our collection on their own. But we tied up with Gauri Khan for three seasons, couple of years back. We were expanding beyond Bombay and Delhi, so we felt the need for a reasonably recognisable face for the brand.” While the brand still counts Delhi and Mumbai as its biggest markets, it has now expanded to 12 cities. 

And now that Khan’s contract is over, Prasad still finds it wise to continue with the strategy and get another celebrity on board. “It will be someone who can romanticise the saree, a product which we sell the most,” she adds. 

But established brands like Satya Paul still don’t feel the need to engage with celebrities at the co-ownership level. It works better for start-ups, opines Prasad. “I doubt whether Satya Paul will co-own a brand with somebody. I know anything is possible, but so far we haven’t considered that option.” 

As Prasad says, the new breed of entrepreneurs are indeed relying on celebrity magic to build brands from scratch. But, unlike earlier, they aren’t stopping at just roping in celebrities and are using advertising to make further inroads. One might think that Being Human need not spend money on advertising. But that’s neither true, nor the right approach, says Mandhana. “We spend 4-5% of our turnover on ads. In fashion, you need to communicate regularly. It has to be rubbed into the minds of people time and again,” he says. 

That makes sense. There are several Rs.500-800 crore brands in India. Being at the forefront and in your face is important. Co-owning a brand with a celebrity gives you that edge, but it is not without risks. A lingering question is what happens to the brand when the celebrity faces a downturn or controversy. This is where Mandhana says focusing on the product helps. While Khan has always been a controversial figure, he says, “We have not seen the business go down even during the rough patches. They are buying it for the product. That shows in the last four years’ performance.” Myntra’s Verma concurs. “While the celebrity can help initially, the brand has to develop a philosophy of its own,” he says. 

Bright spot
The industry as a whole is also maturing. “We go the other way around now. We have a business, locate a celebrity, then pitch. Otherwise, it just becomes an endorsement which is short-lived,” says Franchise India’s Marya, who has been working with 5-6 celebrities including Kohli (Chisel Fitness) and Abhinav Bindra.

Reddy says celebrities too are looking for business opportunities than mere endorsements now. Brands aren’t shying away either. “We are going to launch our third brand with a Bollywood celebrity. It will be women’s western wear,” says a confident Reddy, adding that they are targeting a Rs.1,000 crore business between the three existing brands by FY19-20.

Mandhana, too, is bullish. There is no reason, he says, why a celebrity brand can’t become as big as a conventional brand. “We will add 30-40 exclusive stores every year. Established brands have 300-400 stores. So, we still have a lot of ground to cover,” he adds. With massive expansion plans and a shift in stance, it seems flowers can actually bloom from the mound of  previous failures.