Consumer Discretionary

Indian Apparel Retail Poised For Ascendancy Amidst Economic Revival

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<p><span data-preserver-spaces="true">If reports by experts are anything to go by, then the Indian apparel retail market is expected to reach US $89 billion by the end of 2022 and a whopping US $108 billion by 2026.&nbsp;</span></p><p><span data-preserver-spaces="true">And if India can attain the projected US $89 billion by this year, it will help our country to become the 3rd largest apparel retail market globally, just behind US and China. That would be a remarkable feat for our country globally and a massive boost to our country&rsquo;s economy.</span></p><h2><span style="font-size: 14pt;" data-preserver-spaces="true">Current Scenario of the Indian Apparel Retail Market&nbsp;</span></h2><p><span data-preserver-spaces="true">Over the past few years, Indian apparel retail has emerged as one of the fastest growing markets in the world. The menacing wrath of the pandemic did impact the industry in 2020, but despite all the pandemic-induced constraints, the apparel industry seems to be returning with a vengeance, at least, that&rsquo;s what the numbers state.</span></p><p><span data-preserver-spaces="true">Apparel showed a double-digit growth post-pandemic from late 2021, with a consistent fall in Omicron cases in India. And the main reason seen for this double-digit growth is that customers started to venture out from their homes and started doing vengeance shopping as they had been sitting inside their homes for the last couple of years due to the pandemic.&nbsp;</span></p><p><span data-preserver-spaces="true">However, it is noteworthy to ascertain and analyze the factors that have been instrumental in the growth of the Indian apparel retail market and how the scenario will be in 2022 and beyond.</span></p><h2><span style="font-size: 14pt;" data-preserver-spaces="true">Driving Force Behind the Growth&nbsp;</span></h2><p><span data-preserver-spaces="true">Yes, Indian fashion retail is poised for ascendancy. The revival started sometime in late 2021, when people bought everything they couldn&rsquo;t in 2020 and early 2021, especially apparel and fashion accessories.</span></p><p><span data-preserver-spaces="true">With the vaccination drive picking up a significant pace throughout the year and schools and offices opening in many parts of the country, a rise in consumer confidence and exuberance was seen. This confidence and enthusiasm drove people to the apparel/footwear stores in the city and buy the items of their choice.</span></p><p><span data-preserver-spaces="true">Notably, the revenge buying one witnessed in the US, and Europe was evident in India. There was no longer any salary constraint, and it was just a matter of re-living the good old pre-pandemic days and buying apparel to their liking &ndash; even if it meant stocking up on dresses. Many of them were seen filling their shelves with their favorite dresses.</span></p><p><span data-preserver-spaces="true">One of the most notable developments over the last 15 months has been the successful acquisition of many small brands/retailers by big retail giants. It happened across the globe, and it happened in India.</span></p><p><span data-preserver-spaces="true">One such recent development was in March 2022, when India&rsquo;s retail giant Reliance Retail Ventures (RRV) bought a majority stake in Clovia, a popular lingerie brand, for US $125 million or Rs 950 Crores (owned by Purple Panda Fashions).&nbsp;</span></p><p><span data-preserver-spaces="true">And it&rsquo;s not the only one!&nbsp;</span></p><p><span data-preserver-spaces="true">RRV had earlier announced an investment in a 30-year-old designer brand, Abraham &amp; Thakore (A&amp;T), for a majority stake.&nbsp;</span></p><p><span data-preserver-spaces="true">Earlier this year, we saw Aditya Birla Fashion and Retail (ABFRL), too, bought a 51 percent stake in the House of Masaba Lifestyle for around Rs 90 Crores to enhance its portfolio of fashion labels, this is in addition to its investments in Sabyasachi and Tarun Tahiliani. RRV and ABFRL have today left a mark on the global front too.</span></p><p><span data-preserver-spaces="true">Bengaluru-based Mensa Brands has been successfully acquiring direct-to-consumer brands and helping them scale within the home market and overseas. More on this, Ananth Narayanan, Founder of Mensa Brands, says, &ldquo;In all our categories (apparel, beauty, and home), we are not trying to build a brand for India, but a brand for the globe. Thirty percent of our revenue already comes from overseas markets.&rdquo;</span></p><p><span data-preserver-spaces="true">Recently, retail corporatization has gained importance in the fashion products segment, bolstering the retail ecosystem in India. Notably, 2022 will see the penetration of retail corporatization into tier-2 and tier-2 cities with the adoption of retail technology &ndash; addressing fashion demands there, driven by increased media reach and growing aspirations amongst the youth.</span></p><p><span data-preserver-spaces="true">The apparel retail growth has also been attributed to efforts initiated by many to innovate and embrace new business strategies. It was not just about enhancing the product development process, tracking and studying consumer and shopping behavior, or revamping the supply chain, but also about adopting new technologies.</span></p><p><span data-preserver-spaces="true">Every retailer had a clear-cut plan to progress with purposeful agility &ndash; eventually translating the efforts into good numbers. Also, with parties, marriages, and events back into action, the market for partywear or bridalwear too has opened.&nbsp;</span></p><p><span data-preserver-spaces="true">The good part is the resurgence of brick-and-mortar stores. The stores have started displaying &ndash; yet again &ndash; the best of not only partywear but also formal and casual wear. All products are back in action.</span></p><h2><span style="font-size: 14pt;" data-preserver-spaces="true">The Resurgence of Brick-and-Mortar Stores&nbsp;</span></h2><p><span data-preserver-spaces="true">Despite the fast-growing popularity of fashion and e-commerce over the last decade &ndash; especially in the previous 24 months &ndash; the fact remains that there is no more immersive brand experience than shopping at a physical store. It&rsquo;s been a new era of in-store convenience, especially with a surge in services like same-day order fulfillment, curbside pickup, and self-checkout.</span></p><p><span data-preserver-spaces="true">Also, one must recognize that most shoppers still want to see, touch, feel and experience the products they buy, especially in apparel, footwear, and fashion items.</span></p><h2><span style="font-size: 14pt;" data-preserver-spaces="true">Indian E-commerce Continues to Grow&nbsp;</span></h2><p><span data-preserver-spaces="true">Indian e-commerce has completely transformed how business is done in India, especially in the last decade. And in the last 24 months, it&rsquo;s been exemplary. As per India Brand Equity Foundation (IBEF), India&rsquo;s e-commerce is expected to reach US$ 99 billion by 2024, with fashion/apparel likely to be the key growth drivers.</span></p><p><span data-preserver-spaces="true">In fact, according to a Technopak report, by 2025, close to 20 percent of all apparel sold in India will be sold online; this will be a US$ 16 billion market.&nbsp;</span></p><p><span data-preserver-spaces="true">That says it all!</span></p><p>&nbsp;</p><p><span style="font-size: 10pt;"><em>This article was contributed by our expert&nbsp;</em><a class="editor-rtfLink" href="https://www.linkedin.com/in/gunjan-verma-9a237913/" target="_blank" rel="noopener"><em>Gunjan Verma</em></a><em>&nbsp;</em></span></p><p><span data-preserver-spaces="true">&nbsp;</span></p><h3><span style="font-size: 18pt;" data-preserver-spaces="true">Frequently Asked Questions Answered by Gunjan Verma&nbsp;</span></h3><h2><span style="font-size: 12pt;" data-preserver-spaces="true">1. How big is the Indian retail market?</span></h2><p>The Indian retail market is growing and is estimated to be US$ 600 billion. It is one of the top five retail markets in the world by economic value.</p><h2><span style="font-size: 12pt;" data-preserver-spaces="true">2. What percentage of e-commerce is fashion?</span></h2><p><span data-preserver-spaces="true">The apparel and accessory industries in the US accounted for 29.5% of all e-commerce sales in 2021. Whereas, in India, apparel e-commerce is about 25%.</span></p><h2><span style="font-size: 12pt;" data-preserver-spaces="true">3. Why are brands going DTC?</span></h2><p><span data-preserver-spaces="true">Direct-to-Consumer retail helps brands to control directly. And businesses do not have to rely on retailers to maintain that customer relationship; the brands can also take control of that.</span></p><p>&nbsp;</p>
KR Expert - Gunjan Verma