The road ahead for Sanjeev Mohanty, Jabong’s new CEO

Sanjeev Mohanty, chief executive officer, Jabong.

Sanjeev Mohanty, chief executive officer, Jabong.

Bengaluru/New Delhi: By taking up the role of chief executive officer (CEO) at online fashion retailer Jabong, Sanjeev Mohanty has moved to the other side of the bargaining table in the ongoing tug-of-war between e-commerce companies and fashion brands.

On Saturday, Jabong named Mohanty, head of Benetton India, as its new CEO effective early December. Jabong, owned by Global Fashion Group (GFG), was forced to search for a new CEO after an exodus of leaders over the past year.

It chose Mohanty, a veteran of 20 years in the apparel business with experience at Levi’s India, Madura Fashion and Lifestyle and Benetton India. He made his name at Italy-based Benetton, which owns the United Colors of Benetton and Sisley brands.

After joining the company in November 2004, Mohanty, who holds a degree in apparel marketing and merchandising, fashion and retail marketing from the National Institute of Fashion Technology, was promoted to India CEO in 2007.

Since then, Mohanty drove a store expansion spree and customized product assortment to suit Indians’ shopping preferences and made Benetton one of the country’s fastest-growing and largest apparel brands. Under his leadership, Benetton expanded (mostly through franchisees) to more than 700 stores from just 30 eight years ago.

Organized retailers generate a majority of their sales from men in India, unlike in many other markets where women tend to be the biggest spenders. Ditto with Benetton in international markets, where its core customers are women; to do well in India, however, it was essential for the firm to design a lucrative product offering for men.

Mohanty—who is skilled at merchandising and brand building, according to several people who have worked with him—set up local merchandising and design teams to launch clothing lines that would appeal to Indian men. While the firm’s product lines for women and children were imported from global teams, some men’s products, which drove sales, were locally created in initial years, the people cited above said. He also kept a tight control over quality and enforced consistency in product, they said.

Mohanty, a motorcycle buff, is known to be decisive and fast-moving, someone who doesn’t micromanage and gives decision-making power and responsibility to his team, these people said on condition of anonymity.

“He’s a great networker and he is really good at cultivating talent, especially those people he has faith in. He’s also one of those CEOs who moves fast after deciding on a particular strategy. You can see that with Benetton’s expansion. He would also give a lot of responsibility to his team and backed them to the hilt, so he was well-liked among Benetton employees,” said one of the people who worked with him.

Mohanty’s speed is reflected in Benetton’s numbers. It’s also evident Benetton got its products right. Sales at Benetton India jumped as much as 64% to Rs.596.49 crore for the year ended March 2014 from Rs.363.48 crore in 2010, according to documents with the Registrar of Companies. During this time, many apparel brands struggled because of an economic slowdown and high inflation.

Another factor that boosted Benetton’s success in India is the company’s willingness to work with online retailers. Many fashion brands first ignored or disdained online retailers, which they thought Indians would never take to in any meaningful way. Later, as e-commerce exploded because of discounts, brands reluctantly accepted they needed to work closely with Internet firms.

Benetton, along with Puma and a few others, however, were among the first e-commerce adopters. Benetton’s assortment is widely available online and online retail has been a key driver of Benetton’s sales over the past two years.

In the eight years that Mohanty led Benetton, he did make a few mistakes.

Benetton launched its fashion label Sisley in the country in 2006. However, the brand has struggled and become a drag on the company. Some retail executives also say he offered higher-than-usual margins to franchises in order to expand fast.

Some analysts also say that while Benetton’s embrace of online retail helped boost sales over the past two years, it has also made the firm overly reliant on e-commerce and created friction with its franchise partners.

Armed with billions of dollars in funds, online retailers such as Flipkart-Myntra, Snapdeal, Amazon India and Jabong have become popular with shoppers by offering discounts of anywhere between 30% and 80% through the year. This growth has come at the expense of the offline businesses of apparel brands. Stung by the online shopping boom, wholesalers and offline retailers are putting pressure on brands to make e-commerce sites cut discounts.

Mohanty will carry over this baggage to his new job. And this time, he’s going to be on the other side of the table, trying to convince his former colleagues and peers to commit large amounts of inventory and trust Jabong to protect their brand value. It is no mean task, especially as many apparel brand owners, such as Arvind Lifestyle and Madura Garments, have started becoming stricter with online retailers, forcing them to cut discounting and penalizing those who don’t toe the line.

“Many brands are now enforcing strict agreements with online retailers and not allowing them to discount current-season merchandise,” said Harminder Sahni, managing director at Wazir Advisors, a retail consultancy.

Then there’s the challenge of managing a retail business. For the first time in his life, Mohanty, whose expertise lies in building brands, will be running a multi-brand retail business—and one that is in constant conflict with fashion brands.

Jabong has also been losing market share to rivals such as Flipkart, Amazon India and Snapdeal, all of which have seen a surge in demand for apparel, shoes and jewellery this year. Jabong’s brand also seems to have lost so-called top-of-mind awareness among shoppers. Mohanty will also need his brand-building expertise to boost Jabong’s struggling private-label business.

“He has a massive task; restructuring Jabong and regaining market share is going to be very tough. All e-commerce firms have grown mostly because of discounts and that’s why firms such as Jabong and Myntra are finding it hard to compete with horizontal marketplaces (like Flipkart, Amazon and Snapdeal). Mohanty has to find a way to differentiate Jabong, but that is near impossible in this kind of market where businesses are only discount-led. Since he is a brand guy, he may not be a natural fit to run an online retail business. But he definitely comes with a great track record given his success at Benetton,” Sahni said.

[“source -livemint”]

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