Sectoral Analysis

Indian Apparel Industry

Vishal KhatokarSCMHRD, Punevishal_khatokar@yahoo.co.in

Introduction India is the world's 2nd largest producer of textiles and garments.

Currently, Indian textiles and apparel industry is estimated to be

worth $99 billion and is expected to touch $223 billion by 2021.

Indian textile industry accounts for about 24% of the world’s

spindle capacity.

Abundant availability of raw materials such as cotton, wool, silk

and jute and skilled workforce have made India a sourcing hub.

Contributes 5.2% to the (GDP), the share of apparels is 40%

Textile accounts for 27% of foreign exchange inflows & 14% to

industrial production and provides employment to over 45 million

people.

Market Size & Segmentation

69%

31%

Shares in India’s textile and apparel sector in 2012

Apparel Textile

40%

35%

25%

% Share in Total Apparel Market in 2012

Men Women Kids

Source: Technopak, Aranca Research

Share of Apparels in Retail

Source: http://www.citiindia.com

Share of Apparels in Online Retail

Source: http://www.citiindia.com

Brand presence & Sales projections

18%

82%

2011International Brand

25%

75%

2016

Domestic Brand

Presence of International Brands in Modern Retail

2011 2016 2021145 235

386273

435

664Export Domestic

Apparel Sales & Projection

Market Share: Men’s Wear

Source: Technopak Analysis

Market Share: Women’s Wear

Source: Technopak Analysis

TOP Apparel Brands

Louis Philippe, the premium menswear brand from Aditya Birla Group has not only managed to top the charts in these department chains, but with sales of over 1,100 crore during the year ended March 2013, it is also the largest apparel brand in India.

Italian fashion group Benetton's annual retail sales topped Rs 1050 Crore in India, becoming the first international fashion brand to cross that mark locally. With this, India has also emerged as the largest market for Benetton outside Europe.

Source: Economic Times

Pricing strategy

The price of a product relates to its perceived value. Lower priced

items will expect a higher volume of sales, whilst fewer sales of

luxury products may achieve the same revenue through higher

pricing.

Market skimming- new product has premium pricing to give high

revenues whilst the product is unique in the market

Premium pricing- there is a uniqueness and exclusiveness about

the product so that it can command a high price

Economy pricing- tends to be for no-frills, basic products, here the

cost of manufacture and marketing are kept minimum.

Promotional strategyDirect mail - e.g. catalogues, newsletters received by post or email.

Exhibitions or events – participating high profile at fashion events

Sales promotions - such as discounts, money-off coupons

Public relations - through press or by participating in charitable events

Sponsorship – sponsoring Events & Shows

Product placement - endorsement for the product,

Branding – hiring Brand Ambassadors, layout and decoration of its stores, its links to music, its advertising campaigns, packaging and point-of-sales displays

Supply Chain Model

Source: http://www.industryweek.com

Challenges faced

Online Retails eating market share of traditional Stores

Unreliable Sales forecasting

Seasonality driven sales

Increased Volatility

Lack of transparent Supply Chains

Competition from other Brands

Emphasis of giant retails on Private Labels

Rising production costs and flat prices

Factors driving Growth

A Fast growing Young population with high exposure to

international brands & Significant prosperity to spend

Consumers age group of 15-34 years, represents around 35% of

the total Indian population

300 Million youth would enter work force by 2025

Massive retail space creation through Malls, Hyper markets &

Super markets

Boom In luxury retail segment

Rising purchasing power of middle class consumer

India Apparel Market in 2020…..USD 120 billion plus

In Top 5 markets in the world (7% market share)

Women’s wear (42%) would deservingly be bigger than men’s

wear (39%)

Branded market (43bn) will be bigger than total market today

(40bn)

All major global brands will report India as a major contributor to

sales

Will have few many billion dollar brands and retailers

Few fashion houses will have more than 20 brands’ portfolio

Couple of retailers will have 5,000 plus stores

An online retailer would have crossed billion plus mark

Thank You