cover story THE WOMENSWEAR MARKET IN INDIA BY AMIT GUGNANI, SENIOR VICE PRESIDENT, FASHION- TEXTILE & APPAREL AND PRERNA KAUSHAL, SENIOR CONSULTANT, FASHION AT TECHNOPAK ADVISORS THE INDIAN APPAREL MARKET HAS DEMONSTRATED EXCEPTIONAL GROWTH OPPORTUNITIES IN RECENT TIMES. THE MARKET, ESTIMATED AT WORTH `207,400 CRORE (US$ 39.6 BILLION), IS EXPECTED TO GROW AT A CAGR OF 9 PER CENT TO TOUCH THE `321,800 CRORE (US$ 61.4 BILLION) MARK BY 2017. THE INDIAN APPAREL MARKET IS CLASSIFIED INTO THREE BROAD SEGMENTS, NAMELY, MENSWEAR, WOMENSWEAR, AND KIDSWEAR. MENSWEAR IS THE LARGEST SEGMENT WITH A 42 PER CENT SHARE, FOLLOWED BY WOMENSWEAR AND KIDSWEAR WITH SHARES OF 38 PER CENT AND 20 PER CENT, RESPECTIVELY. HOWEVER, THE TREND IS NOW CHANGING AND WOMENSWEAR IS GROWING MORE RAPIDLY THAN MENSWEAR. Historically, the womenswear market in India has remained limited to homewear and occasion-specific clothing. Prior to economic liberalisation, job opportunities for women in India remained limited to government sectors and, thus, the participation of educated women in the nation s workforce was comparatively low. However, with changing economic dynamics of the nation, the presence of women in the workforce and their lifestyle, especially in urban India, has undergone a sea change. Women s wardrobes have expanded from traditional ethnicwear to include westernwear items like denims, T-shirts, tops and shirts, dresses, skirts, et cetera. Many brands and retailers are now opening up to the potential of the relatively untapped but promising womenswear market in India. Most of them have already ventured into segment, and are optimistic about the available growth opportunities. 58 August 2013 IMAGES Business of Fashion
Womenswear market size and growth projections The Indian womenswear market is worth `78,500 crore (US$ 15.0 billion) (2012), making up 38 per cent of the overall apparel market. The segment is expected to grow at 9 per cent over the next five years, to reach `121,030 crore (US$ 23.1 billion) in 2017. This growth will primarily be driven by an increase in penetration, and per capita consumption, of women s westernwear. It has been observed that women largely view shopping as a fun, satisfying, and joyful activity. This importance given to shopping also creates a constant demand for clothes, thus giving this market a great potential. Furthermore, women, especially in the age groups of 20 to 24 and 25 to 34, are paramount to marketers as they are less anxious about quality than about the style of their clothing. Also, when it comes to women s garments, today it is easy to buy highly fashionable items at reasonable prices. Thus, women are an extremely important target audience for apparel marketers. Although historically the womenswear market in India has been largely unorganised, in the past few years, it has undergone tremendous changes. This market has not only seen volume expansion, but also recorded exponential growth in new product segments. This is attributed to the push it got from the industry as well as the phenomenal pull it garnered from consumers. Some of the key growth drivers are discussed in the following section. KEY GROWTH DRIVERS Increase in number of working women Gradual increase in the number of women joining the workforce has fuelled growth of the womenswear market. Consequently, there is an increase in disposable income of individual women, as well as that of the family as a whole, leading to an increase in discretionary spending. An estimated 40 million plus women in the age group of 20 to 25 20 15 10 5 0 MENSWEAR MARKET SIZE (USD Bn) CAGR 9% 2012 2017 (P) Category growth in womenswear (US$ mn) 2007 2012 CAGR Ethnicwear 7477 11310 8% Innerwear 880 1835 14% Winterwear 383 553 7% Sleepwear 270 431 9% Tops/Shirts/T-shirts 212 373 11% Others 156 261 9% Trousers/Skirts 105 186 11% Denims 58 147 17% 40 years will be joining the workforce in urban India by 2020. The rise in women entering the workforce has also led to an increase in demand for occasion-based dressing. The requirement of western formalwear has grown dramatically. Further, with women becoming financially independent, there has been a constant need of apparel for various outdoor occasions, like parties, social gatherings, eating out, et cetera. Thus, the wallet share of apparel has increased significantly. Serie$ IMAGES Business of Fashion August 2013 59
cover story Presence of international lifestyle brands in India A NOTEWORTHY PORTION OF THE INCREASED DEMAND FOR CONTEMPORARY WOMENSWEAR IS DRIVEN BY YOUTH RESIDING OUTSIDE THE TOP 20 INDIAN CITIES. Year Brands 1990-2000 Pepe Jeans London, Benetton, Lacoste, PUMA, Lee, Levi s 2000-2005 Mango, Marks & Spencer, Promod, Guess, Tommy Hilfiger, Gant, Gas 2006-2010 s.oliver, Forever New, Cherokee, Ed Hardy, Paul Smith, Vero Moda, Zara, Alcott Post 2010 Source: Technopak Analysis Quiksilver, Diesel, Paul & Shark, 7 For All Mankind, Elle, Forever 21 Changing family dynamics and lifestyles With the prevalence of nuclear families and the resultant change in family dynamics, women today tend to experiment more with their clothing choices. Of late, they have been exploring segments other than ethnicwear. The average household size decreased to about 5.0 in fiscal 2010 from 5.36 in 2001. Thus, the emergence of nuclear families, the spurt in urbanisation, and higher spending power have together led to an evolved consumer lifestyle. There is an increase in the frequency of socialising, via various activities and events. More than ever before, there is now a demand for multifunctional clothing, such as smart casuals, activewear, et cetera, which enable straddling various occasions. Growing international exposure With more and more international brands making their way into the Indian market, especially in the masstige segment, the concept of fast fashion has become widely accepted. Such fast fashion makes apparel available at affordable prices, mostly for young women. Fuelling the demand for these apparel are fashion magazines, media publications, and celebrity influence, which help kindle the desire for new must-haves each season. There is also the trend of women engaging mostly with fast fashion, thus making them the most important consumers. Further, since international travel has become cheaper and more approachable, more families go holidaying abroad thus getting better exposure to western fashion trends and brands, and ultimately aspire to own such items. This trend is further fuelling demand for branded apparel in the Indian market. Rising aspirations outside of the metros In the past few years, there has been a dramatic shift in the geographical distribution of consumer spending power. A greater number of middle class families have emerged from beyond larger cities. With awareness brought about through the media revolution, the consumption basket of such families has continuously evolved from need-based to aspiration-based clothing even in smaller cities. Various women-centric brands have set up stores in tier-i cities, and even outside them, to attract this aspirational consumer. Thus, a noteworthy portion of the increased demand for contemporary womenswear is driven by youth residing outside the top 20 Indian cities. Even here, women take the e-commerce route to fulfill their fashion requirements in the absence of brick-and-mortar stores. Thus, growing awareness and aspirations for fashion and international trends, driven by an increase in the number of women in the organised workforce, has caused radical changes in the dressing style of women in India. New categories, apart from ethnicwear, have not just emerged, but have recorded optimistic growth. Such product segments include westernwear (lifestyle), contemporary ethnicwear, intimatewear, sleepwear, denims, winterwear, and fashion accessories such as jewellery, footwear, and handbags. 60 August 2013 IMAGES Business of Fashion
Westernwear (lifestyle) Women s westernwear, the demand for which is only soaring with each passing day, is anticipated to be continually sought after with a further increase in the population of women within India s workforce, and of those yearning to mimic the fashions of such women. Increasing consumerism and the inclination towards fast fashion, especially within the womenswear segment, is an indication of changing market dynamics. Within the westernwear segment, T-shirts, tops, and shirts have grown at a promising rate of 11 per cent from `1,100 crore (US$ 210 million) in 2007 to `1,940 crore (US$ 370 million) in 2012. The penetration of brands offering women s westernwear into tier-i and -II cities has also fuelled the growth of these categories. Awareness regarding global fashion trends and casualisation is largely influencing the acceptability of these categories even outside of urban India. Leveraging the potential presented by this segment, a significant number of international brands have forayed into India since 2006, and are now in expansion mode. Although there has been a rise in disposable incomes and, consequently, discretionary spending, the Indian woman consumer increasingly seeks and evaluates value along such enhanced parameters as fashion quotient, product depth, fit, convenience of purchase, et cetera. Thus, there is an opportunity even for value and masstige brands. Contemporary ethnicwear Currently with a 75 per cent contribution, the salwar-kameez category will continue to drive the growth of the ethnicwear segment with a CAGR of 10.5 per cent over the next decade. This segment is currently dominated by the unorganised sector (making up around 85 per cent), which offers varied products across the entire price spectrum. The organised sector has also been registering optimistic growth, primarily due to its mid-fashion, contemporary product offerings. Consumers are increasingly seeking convenience, comfort, and style from the contemporary ethnicwear segment; this trend seems to be propelling the growth of modern formats and, thereby, that of the organised sector. Brands have identified with this transition and are offering products positioned across such occasions as casual, formal, weddings, semi-casual, et cetera. With shifts in usage and fashion trends, ethnicwear is being accepted by the younger generation as everyday apparel. Brands are targeting this populace with affordable price points, and a promise of IN WESTERNWEAR, T-SHIRTS, TOPS, AND SHIRTS HAVE GROWN AT A RATE OF 11 PER CENT FROM `1,100 CRORE (US$ 210 MILLION) IN 2007 TO `1,940 CRORE (US$ 370 MILLION) IN 2012. RTS MARKET (USD Bn) CAGR 8.3% 4.34 2.92 2012 2017 RTW MARKET (USD Bn) CAGR 13.5% 3.67 1.94 2012 2017 IMAGES Business of Fashion August 2013 61
cover story THE MARKET FOR WOMEN S INNERWEAR, PEGGED AT `9,540 CRORE (US$ 1,835 MILLION), HAS GROWN AT 14 PER CENT. comfortable and contemporary fashion. While unorganised formats and traditional markets are preferred for readyto-stitch fabrics, consumers are increasingly showing inclination towards national brands, large format stores and other popular formats for ready-to-wear ethnicwear primarily due to relevant product offerings and deeper penetration. Large format players have tapped into the needgap in ethnicwear by offering their own private labels, which straddle the mass as well as popular price segments. The contemporary ethnicwear segment broadly combines traditional kurtis with leggings, denims, et cetera. Traditional kurtis are also evolving. They are no longer fabrics of just cotton or other wovens, or in traditional silhouettes; they are instead available in western cuts, in knitted fabrics, and in shorter lengths. As a matter of fact, elements from typical traditional ethnicwear are now incorporated in westernwear as well. Paisley prints, batik, block, and prints are now being used in designing shirts, dresses, and other western garments. Ethnicwear as a category offers a unique blend of comfort and fashion to the consumer, thus making it a preferred apparel type for most occasions. Ethnicwear is perceived as value apparel, as it involves low maintenance and provides a blend of conformity, comfort, and style. Even though tier-i cities tend to see the traditional use of the sari dominating the market, ethnicwear is increasingly becoming the category of choice. Currently, there is limited brand focus on RTS offerings within the organised sector. In the larger cities, RTS fabrics are preferred primarily for special occasions as they offer the option of customising the embellishments and styling offering uniqueness. Intimatewear A largely unexplored segment, mostly dominated by the unorganised players and subject to limited availability, innerwear has nevertheless shown promising growth, transitioning from a utility product to an aspirational category. The market for women s innerwear, pegged at `9,540 crore (US$ 1,835 million), has grown at 14 per cent. Increased awareness of better fits, quality, colours, styling, and accessorising, coupled with the growing share of westernwear (which demands specialised lingerie), has led to the market s burgeoning. Trends and brand consciousness, with the presence of a number of international brands, have led to openness in purchasing fashionable and luxury innerwear and intimate apparel. Thus, in the past few years there has been a substantial Serie$ 4000 3500 3000 2500 2000 1500 1000 500 0 WOMEN S INNERWEAR MARKET: INDIA (USD Mn) 2007 2012 20127 (P) upswing in the premium and super premium market with brands expanding their portfolio. With the increasing demand from metros, mini metros, and beyond, intimatewear has also witnessed value growth. Uptil the previous decade, lingerie was looked upon as an essential commodity with no retail focus. Although MBOs selling only innerwear are still considered to be the most important retail format for the category, women are now comfortable about walking into EBOs for purchasing innerwear. Within EBOs, there is greater focus on assisting customers in selecting the right styles and sizes through trained staff. Organised EBOs and departmental stores cater primarily to urban consumers in major cities while in smaller cities neighbourhood stores are preferred for buying innerwear. Online retail is also gaining momentum, with premium brands leading the way. Sleepwear Sleepwear is available through a variety of unorganised Indian brands, which are the mainstay for this category. Therefore, the branded product market is also dominated by 62 August 2013 IMAGES Business of Fashion
cover story Denims The Indian denim market, in terms of volume, has an estimated 250 to 300 million pairs of jeans, and is projected to grow to 550 to 600 million pairs in the next five years. The current market is skewed towards the men s segment, which makes up 80 per cent of the total. However, the women s segment is expected to grow more rapidly, and is likely to account for 25 per cent of the total market by 2015. Also, only 40 per cent of the total denim market is organised. 350 300 250 WOMENS DENIM MARKET : INDIA (USD Mn) 200 150 100 SLEEPWEAR CONSTITUTES A FAIRLY SIGNIFICANT PART OF ALL LINGERIE OUTLETS, WITH LOWER PRODUCT WIDTH AND DEPTH COMPARED TO INTIMATEWEAR. local brands. The retail front-end has evolved along the same lines as the intimatewear category, with a limited variety now available through branded EBOs and departmental stores in the metros and mini metros. Departmental stores enjoy a good standing with customers; however, it is the local unorganised stores that are most preferred by consumers. Foreign brands have not yet established a sizeable presence through a wide product range. Sleepwear constitutes a fairly significant part of all lingerie outlets, with lower product width and depth compared to intimatewear. Sleepwear comprises chemises, pajama sets, short and long robes, tube dresses, nightgowns, and nightshirts. Consumers of this category are not very brand-driven but instead focus on design, style, and comfort. 50 0 2007 2012 2017 (P) At present, the larger cities together account for ~57 per cent of the market. The growth of denim apparel is dependent on deeper penetration into the smaller cities, in tandem with the rise in acceptance of denim within India. The existing denim players tend to leverage the aspirations of consumers from tier-ii and -III Indian cities. Women in smaller cities usually combine denims with short kurtis or tunics. It is not just the youth but also mid-aged women who are experimenting with denims across fits. For women, denim appears to be a high association category, with comfort being the most common association. Other key associations are major denim brands, trendy and flattering fits, and style. Denims span multiple occasions for women, although primarily as non-formal wear. The consumer s fit does not change from occasion to occasion, even though the choice of style differs. Stylised denims with better fits are worn for parties, functions, and formal occasions with a preference for darker colours in the 64 August 2013 IMAGES Business of Fashion
cover story evenings. Thus, brands also focus more on such product attributes as fit, styling, detailing, and wash, resulting in a growth in value as well as volume. At 40 per cent of the branded market, there is a developing trend towards high product differentiation in terms of fits and washes. The exit barriers tend to be moderate as key players have front-end investments through retail formats such as EBOs and MBOs. Manufacturing is largely outsourced with specialised players, as denimwear forms the core business for key players in these categories. Winterwear Historically, the men s winterwear segment has been the highest contributor in terms of value, but in the past few years women s winterwear has also been on the growth trajectory. Women s winterwear is presently worth `2,878 crore (US$ 548.9 million). Like all other segments, the product attributes and styling within this category are influenced by global trends. New product segments like knee-length woollen tunics, felt coats, and woollen fashion accessories like scarves, gloves, and leggings have made their presence felt, especially in the urban regions of North India. By value, the winter season is becoming as profitable as the summer. Winterwear is generally more expensive than any summer product assortment. Also fuelling value is the festivals season, which begins in October. During these festivals, women tend to shop more, both for gifting and for their personal use. Earlier, just a few brands offered winterwear. Now, however, most lifestyle brands as well as ethnic brands offer a wide range of products for women during the winters. Though the segment has a positive future, there are various threats faced by fashion retailers. High manufacturing costs, high skill set requirements, and long lead times associated with women s winterwear showcase the increasing need for merchandise planning and forecasting. To differentiate themselves from growing competition, brands and manufacturers need to focus on their product, pricing, and positioning strategy. 800 700 600 500 400 300 200 100 0 WOMEN S WINTER WEAR MARKET : INDIA (USD Mn) 2007 2012 2017 (P) Fashion accessories The accessories market in India is still in the nascent stage. The category covers all products that help complete the must-have look for the fashion conscious, such as fashion jewellery, handbags, footwear, scarves, and personal accessories. Fashion jewellery: Traditionally, Indian women are known for their undying love for jewellery and, thus, have an inclination towards precious and semiprecious jewellery. However, this trend is changing, with fashion jewellery emerging as a close substitute in the past few years and percolating quickly among Indian women, whose mindset is changing towards considering accessories as an integral part of their wardrobe. Indian women are also becoming more fashion conscious, and like to experiment and wear accessories to enhance their personality. Today, fashion jewellery has found acceptance with a large segment of consumers, who believe they are a good substitute to real jewellery, across segments. It is thus being worn more often, as it is less studded than precious or semi-precious jewellery and also fits in well with all kinds of wear. Women, across all age groups, prefer western accessories over Indian ones. The preference for Indian accessories is largely occasion-driven. However, the awareness of brands and organised formats is low. There are limited brands present in the space, with most of them having low recall. The market has great potential and is growing at a fast pace, providing tremendous opportunities for new brands to enter. 66 August 2013 IMAGES Business of Fashion
cover story WOMEN S S FOOTWEAR (USD Mn) 4000 3500 3000 2500 2000 1500 1000 500 0 2011 2016 (P) Footwear: There has been a significant increase in the frequency of footwear shopping in India. Women tend to purchase a new pair of footwear every second month, while men buy a new pair every three months. Women shoppers procure new shoes and accessories whenever they update their wardrobe with new apparel. With the entry of international brands, women now have growing aspirations. The influence of media and technology also increases awareness and hence fashion consciousness. They like to be the centre of attraction at occasions and gatherings. They seek variety in styles and designs, and look for quality products. Comfort is the most important attribute when evaluating alternatives, followed by price, aesthetics or looks, and durability of footwear. Brand preference is found to be more prevalent among men than among women. The total retail footwear market is worth `26,400 crore (US$ 5.0 billion, 2011) and is expected to grow at ~13 per cent in the next five years. In the women s footwear category, casual footwear is the largest segment and is mostly sold through traditional retail channels. More brands are foraying into the women s footwear market, which will help increase the share of organised retail. The share of women s footwear is expected to increase by 10 per cent by 2016. The lower priced segments (those under `1,500) make up 77 per cent of the market by value and 90 per cent by volume. This segment is dominated by traditional retail, and faces competition from entry-level products of select women s footwear brands. Handbags: A majority of the market constitutes unbranded or unorganised market, including local or regional brands. The premium and super premium categories form ~ 20 per cent of the total market. However, going forward, the growth rate in the branded segment or organised setup is anticipated to be much higher (~25 per cent) than the overall market. The major drivers fuelling this growth include the increasing number of working women, their rising income, higher fashion consciousness and aspiration levels, and a growing influx of foreign brands. The handbags category is one of the most popular among women, even if most of the shopping is impulsive. The target woman consumer for leather bags falls in the age group of 25 and above, and is primarily the working class woman. Women below the age of 25 are mostly college students, and tend to purchase less expensive and casual handbags. Although casual bags contribute the most to the overall handbags market, there are only a limited number of handbags only brands in organised Indian retail. Most brands offer handbags as an additional category alongside footwear, apparel, and other accessories. There are a few established leather bags brands in India, and their retail presence is primarily concentrated in the metros and mini metros. Many players prefer the EBO route and are present in malls and high streets while casual bags brands are widespread across organised as well as unorganised formats. Beyond product segments, retailing formats have also been evolving rapidly in the past decade. Traditionally, with limited product offerings, unorganised formats were the primary retail channels. The apparel market is one of the key 68 August 2013 IMAGES Business of Fashion
segments with significant presence in organised retail in India with a ~20 per cent share. It is also poised to contribute almost 25 per cent of the total fashion market in the next five years. This is largely due to the increased number of domestic and international players foraying into the market through a variety of medium like EBOs, discount stores, departmental stores, hypermarkets, and e-tailing. There has been a sharp uptick in the number of mid-sized domestic and international companies entering the Indian market. Further, it has been observed in the past few years that, having successfully built their brands within the domestic territory, Indian lifestyle and apparel brands are venturing into international markets in order to enhance brand salience. With rising real estate rentals and challenges of expanding both in metros and beyond tier -I and -II cities, retailers have been largely experimenting with relatively new model of e-tailing, which holds great promise as a retailing format. With a phenomenal growth in the number of laptops and smartphones, and easy accessibility to the Internet, India is poised for a digital revolution. There has been a rapid acceleration in consumer acceptance across multiple new product categories. It is expected that, for the most part, urban, relatively young, middle income and above consumers will shop for over 25 per cent of all merchandise online, by 2015. Time paucity is fuelling the growth of e-tailing in the metros and mini metros, whereas growing aspirations and the absence of physical stores is propelling growth in tier -I and -II cities. The platform offers higher margins for retailers due to lower inventory or space costs and, at the same time, ensures greater discounts and a higher variety IT IS EXPECTED THAT, FOR THE MOST PART, URBAN, RELATIVELY YOUNG, MIDDLE INCOME AND ABOVE CONSUMERS WILL SHOP FOR OVER 25 PER CENT OF ALL MERCHANDISE ONLINE, BY 2015. among offerings to a much larger target audience. Realising the potential of this format and the opportunities therein, many lifestyle apparel and accessories players have been venturing into this space. Overall, the womenswear market in India has been charting an optimistic growth trail. With an increase in the number of working women, their rising aspirations, and the emergence of new consumption hubs as well as new retail formats, womenswear is all set to offer lucrative opportunities for both domestic and international players. Retailers will have to continuously evolve and have a differentiation strategy, either through product, value, convenience, presence, marketing, or retail format, in order to be successful in this highly competitive market. Due to surging demand and changing consumption patterns, it is imperative for domestic players to reexamine their product turnaround time. To have a point of differentiation, it is important to have the right merchandise at the right time, at the right price, and at the right place. This is only possible by means of an effective sourcing strategy and an anticipative supply chain. Thus, supply chain systems need to be altered or reconfigured to reflect changing desires and requirements of today s Indian women. Maintaining appropriate levels of inventory and choosing the right suppliers while working on shortest lead times at the right price, along with offering a fashion-forward product range will help brands and retailers achieve success. Overall, retailers and brands need to focus on all levels of operations to gain a competitive edge. IMAGES Business of Fashion August 2013 69