Mar, 29 2016

Myntra to take over Forever 21 via franchise model

In 2011, Forever 21 entered India through a franchise route with Dubai-based Sharaf retail and the business failed to scale up for two years, prompting the Dubai company to close the lone store in New Delhi in early 2013.

By Franchise India Bureau
Myntra to take over Forever 21 via franchise model

Myntra, an online fashion store owned by flipkart is in advanced talks to manage the local retail chain of Forever 21, the US fashion brand targeted at teens and young adults, reported Economic Times.

The Indian company already sells Forever 21's products online in India under an exclusive tie-up. A deal to take over the 10 brick-and-mortar stores currently managed by a joint venture of Forever 21 and DLF Brands will mark Myntra's entry into offline retailing, a global trend among e-commerce firms. With such moves, e-commerce firms try to de-risk their business from online-only focus.

In 2011, Forever 21 entered India through a franchise route with Dubai-based Sharaf retail and the business failed to scale up for two years, prompting the Dubai company to close the lone store in New Delhi in early 2013.

While Zara's annual revenue was about Rs 720 crore in the fiscal year ended March 2015, at Forever 21, a person aware of the matter said, it was around Rs 250 crore.

However, Timmy Sarna, managing director of DLF Brands, said: "The Forever 21 business is totally in our control". Harminder Sahni, founder of retail consultancy firm Wazir Advisors, said DLF isn't too keen to invest in these businesses anymore and wants to focus only on Mothercare, the British brand with which it has a tie-up in India.

Forever 21 want to exit the joint venture and have a franchise operation in India. The talks are for Myntra to take over the chain, buying out both Forever 21 and DLF Brands. "Handshakes have happened with Myntra and currently the documentation is happening," said one of the people. Valuation details weren't available.

Myntra is exploring the possibilities of opening its branded offline stores as well. It is deliberating whether such outlets should sell products or function as a place where consumers can touch and feel the products. Myntra has been toying with the idea of having its own brick-and-mortar stores in the past as well, but it has now gained momentum, he said.

But Sahni of Wazir Advisors is unsure of its offline success. "It would be a tricky one for Myntra as they are trying to open exclusive stores for other brands while you have no experience of running stores, because running physical stores requires different skill sets," he said.

Related: Paytm brings furniture & large appliances on board

Click Here to add Comment
Please add your Comment
Rating
Insta-Subscribe to
The Franchising World
Magazine
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
OR Click here to Subscribe Online
Sell Franchise 2017
Daily Newsletter

Submit your email address to receive the latest updates on news & host of opportunities.

Most
Entrepreneur The Franchising World Retailer 2017




Newsletter Signup
Submit your email address to receive the latest updates on news & host of opportunities.
Franchise India Holdings Ltd

Copyright © 2009 - 2017 Franchise India Holdings Ltd.

The information contained herein is of generic nature only, and Franchise India is not, by means of this website or any part thereof, rendering professional advice or services. Before making any decision or taking any action that might affect your finances or business, you should consult a qualified professional advisor. Your use of this website or any of its pages or links given, is at your own risk and you assume full responsibility and risk of loss resulting from your usage. With respect to use of the website, kindly visit www.franchiseindia.com/terms.

X

Tell us what you think!