Sportswear Market in India 2011 - Market Size and Growth, Drivers and Challenges

Sportswear Market – India (Part I)

April 2011

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2SPORTSWEAR MARKET IN INDIA 2011.PPT

Executive Summary

Market

�Sportswear is considered as a niche segment of the retail industry

�The Indian sportswear market is estimated to be around INR 50 bn and is expected to grow at a

CAGR of 9% and reach INR 120 bn in the next 10 years

�Branded sportswear market is dominated by international brands like Reebok, Adidas, Puma, etc

Drivers &

Challenges

Drivers:

� Increased spending power

� Increase in number of Sports events

� Growing health & fitness awareness

� Unsaturated market

� Increasing organized retail space

Challenges:

�Low sports participation rate

�Competition from unorganized

players

�Poor sports infrastructure

� Imposition of excise duty

Trends

�Players sponsoring major sports teams and events

�Tie-ups with renowned Indian designers

�Players roping in celebrities for brand endorsements

Competition

� Indian sportswear market has most of the major international brands like Reebok, Adidas, Nike,

Puma, Fila, etc

� Indian players include Woodland, Liberty Shoes, Bata and Planet Sports




•Market Overview

•Drivers & Challenges

•Trends

•Competition

•Key Developments




Sportswear Industry is a growing segment dominated by

major international players

• Sportswear is one of the niche sections of the retail

industry and is witnessing steady growth

• In India, sports is mostly treated as a recreational

activity

• Organized sportswear industry is dominated by

major international players like Reebok, Adidas, Nike

and Puma

� These players have outsourced a considerable part of their

production to Indian manufacturers

• Sportswear includes sports apparel, footwear and

accessories

� Sports shoes account for ~60% of the total sports products

market

• The Union Budget 2011 has made it mandatory for

branded apparels to collect 10% excise duty, a move

which will make all branded apparel including

sportswear dearer

Market Overview Market Size and Growth

Source: The Clothing Manufacturers Association of India “Dress up sportingly”, Feb 2011; Italian Trade Commission Report: “Market Research Report: Sports in India”;

indiaretailing.com

120

50

0

50

100

150

INR bn

+9%

2020e2010e

Apparel Market Segmentation

15%

53%

5%

27%

Formal

Casuals

Ethnic

Sports




Imports & exports in the sportswear industry

Imports - Value

Exports - Value

Source: Dept. of Commerce, Export Import Data Bank Note: All figures for respective financial year ending 31st March

148.4

570.3

1,600.1

445.0206.2

953.5772.5

555.5

0

500

1,000

1,500

2,000

INR mn

2011*201020092008

260.9

443.2

319.6376.9

3.713.215.37.30

100

200

300

400

500

INR mn

2011*201020092008

Gloves, mittens & mitts

Footwear

*Figures for Apr-Jun 2010

Note: HS Codes for Footwear -640219, 64031910 & 640411; Gloves, Mittens & Mitts-420321

4,595.45,499.2

7,034.78,179.0

6.545.349.421.50

2,000

4,000

6,000

8,000

10,000

‘000

2011*201020092008

527.0

1,997.9

4,255.2

1,615.5

126.4620.6514.7412.5

0

1,000

2,000

3,000

4,000

5,000

‘000

2011*201020092008

Gloves, Mittens & mitts

Footwear

Imports - Volume

Exports - Volume




•Market Overview

•Drivers & Challenges

•Trends

•Competition

•Key Developments




Drivers & Challenges

Increasing organized retail space

Unsaturated market

Increase in number of Sports events

Increased spending power

Growing health & fitness awareness

Drivers

Imposition of excise duty

Poor sports infrastructure

Competition from unorganized players

Low sports participation rate

Challenges




Fitness and health-conscious consumers provide a huge

opportunity for players to grow

• There has been a paradigm shift regarding consumer attitude towards health and fitness. Rapid

urbanization and changing lifestyle is making Indians health and fitness conscious

� 1.5% of the urban population regularly do workout

• Young Indians, who are usually the target group for most sportswear brands are likely to push

up the demand for sportswear and fitness-related sports merchandise

Growing health & fitness awareness

Source: Italian Trade Commission Report: “Market Research Report: Sports in India”; Financial Chronicle “Fitness industry hopes to double size”, Mar 2009

0

50

100

150

200

250

300

1985

54%

46%

276

119

505654

INR bn

2025e

84%

16%

2015e

26%

74%

2005

36%

64%

1995

38%

63%

Rural

Urban

Annual Spending on Recreational Items Fitness Equipment Market Size & Growth

63.3

42.2

28.118.8

12.55.6 8.3

0

50

100

INR bn

+50%

2012201120102009200820072006

Impact




Growing disposable income coupled with lifestyle changes is

driving the demand for sportswear

• The increase in disposable income allows consumers to seek quality products which do not fall

under the category of necessities and are gradually becoming extremely affordable

• Major sportswear brands have positioned their brands as sports-cum-lifestyle or luxury

products

� Although, lately they are leaning towards affordability to tap the massive middle class market

• With more income in hand, many people are indulging in sports as a leisurely activity which

leads to higher spending on sportswear

Increased spending power Impact

Deprived

Aspirers

Seekers

Strivers

Globals

2025e

90

3%15%

34%

23%

24%

2015e

44

9%

33%

34%

9%15%

2005

24

23%49%

13%7% 9%

Aggregate Annual Disposable

Income (INR tn)

Core target

consumer

groups>1000

500-1000

200-500

90-200

<90

2025e

281

18%

33%

34%

12%3%

2015e

244

30%

43%

23%

2% 1%

2005

207

49%

44%

5% 1%

1%

Total No. of Household (mn)

Source: McKinsey Global Institute “Rise of India’s consumer market”; Nielson Upper Middle and Rich (UMAR) Survey 2009; Businessworld Marketing “Whitebook: 2010-11”

Per household annual

income (INR ‘000)

Expenditure pattern is shifting from necessities to lifestyle goods and apparels that includes sportswearExpenditure pattern is shifting from necessities to lifestyle goods and apparels that includes sportswear




India hosting major international & national sports events

and unsaturated market provide scope for expansion

• India playing host to a number of international sports events has helped in considerably

increasing the level of sports awareness

• The recently concluded Commonwealth Games 2010 was a great way to increase popularity of

sports other than cricket. India played host to the Hockey World Cup 2010 as well

• India is co-hosting the Cricket World Cup 2011. The Indian Premier League (IPL) for cricket has

further commercialized the sport, with various franchisees having their own branded

merchandise

• The sport awareness generated as a result of heightened sport activity is likely to translate into

sales for all major sportswear players

Increase in number of sports events Impact

Source: ibnlive.in “Major sporting events to look out for in 2010”, Jan 2010; Italian Trade Commission Report: “Market Research Report: Sports in India”

Unsaturated market Impact

• Most major sportswear brands have significant presence only in the metros

• Apart from that, a lot of sportswear players that do not have a retail presence in India have

sourced their manufacturing to Indian manufactures

• Thus, the relatively unsaturated state of the Indian market provides a huge opportunity for the

players to expand and capitalize on the tier II and tier III cities




Increasing supply of quality retail space has helped in the

expansion of sportswear outlets

• India is witnessing exceptional growth in organized retail with rising number of shopping malls and departmental stores

• Increased supply of organized retail mall space has benefited the retail market considerably by providing greater visibility

• Numerous sportswear outlets are being opened in malls and also expanding their base to other cities

Increasing organized retail space Impact

Source: Malls in India 2009, IMAGES F&R research study

Region-wise Mall Space Mall Projections Across India

21

56

16

79

72

87

37

150

0 50 100 150

North

East

West

South

2009

2011e

7

16

4

25

18

22

6

49

0 5 10 15 20 25 30 35 40 45 50

North

East

West

South

2009

Q12011e

mn sq. ft.ISIEmergingMarketsPDF in-iimahdvishwa from 203.200.225.151 on 2011-08-14 05:57:24 EDT. DownloadPDF.



Lack of sports culture and competition from unorganized players

is a major concern

• There is a marked lack of sports culture in India, as the Indian society tends to be more education-

oriented treating sports as a source of distraction or recreational activity

• Only 1% of the population indulges in sporting activities

• In the absence of proper ‘sports culture’, the overall awareness regarding sports is also very low in

India

� For example, very few people are aware of the difference between running shoes and football shoes

Low sports participation rate

• Players face major competition from unorganized players that make up ~70% of the sportswear

market

• Unorganized players have significant advantage over their organized counterparts towards

price-conscious consumer as they save on advertising, taxation, etc

• With increasing brand-consciousness and quality-preference among consumers, the threat from

unorganized players may not be so important in the future

Competition from unorganized players

Source: Italian Trade Commission Report: “Market Research Report: Sports in India”

Impact

Impact

30%

70%Unorganized

Organized

Market Segmentation




Poor state of sports infrastructure is taking a toll on the

overall sports industry

• The condition of sports infrastructure in India leaves a lot to be desired. The government budget

outlay for sports was only ~1% of the total national budget

• Only half of the primary schools in the country have any playing fields

• Very few cities have access to proper stadiums and playing courts

• Sports persons do not have a smooth sail as there is dearth of good coaching facilities as well as

overall awareness about the right kind of food and nutrition is very low

• However with recent sports achievements and events , government is taking more initiative to

uplift the dismal sports scenario in the country

Poor sports infrastructure

Source: The Views Paper “State of Sports Infrastructure in India”, Aug 2009; Economic Times “Union Budget 2011: Branded garments, textiles to cost upto 15% more on

excise duty”, Feb 2011; fashionunited.in “Excise duty on branded apparels, major concern for industry”, Mar 2011

Impact

• In the Union Budget 2011, the government revised the optional excise duty regime for ready-

made garments & made-up textiles and levied 10% mandatory excise duty on all branded

apparel manufacturers

• As a result, all branded apparel which include sportswear apparel is likely to witness increase in

prices by 5-10%

Imposition of excise duty ImpactISIEmergingMarketsPDF in-iimahdvishwa from 203.200.225.151 on 2011-08-14 05:57:24 EDT. DownloadPDF.



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Sportswear Market in India 2011 - Market Size and Growth, Drivers and Challenges

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