Consumer Discretionary

Indian Apparel Retail Poised For Ascendancy Amidst Economic Revival

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<p style="text-align: justify;">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 the whopping US $ 108 billion by 2026.&nbsp;</p><p style="text-align: justify;">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.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Current Scenario of India Apparel Retail Market &nbsp;</span></h2><p style="text-align: justify;">Over the past few years, organized 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 &nbsp;industry seems to be coming back with a vengeance &ndash; at least, that&rsquo;s what the numbers state.</p><p style="text-align: justify;">Apparels 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 had been that the 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;</p><p style="text-align: justify;">What&rsquo;s, however, noteworthy is 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.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Driving Force Behind the Indian Apparel Retail Sector&rsquo;s Growth&nbsp;</span></h2><p style="text-align: justify;">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 &ndash; especially apparel and fashion accessories.</p><p style="text-align: justify;">With the vaccination drive picking up a significant pace throughout the year and schools and offices opening in many parts of the country, one saw a rise in consumer confidence and exuberance. It was this confidence and enthusiasm that drove people to the apparel/footwear store in the city and buy the item of their choice.</p><p style="text-align: justify;">Notably, the revenge buying one witnessed in the US, and Europe was very much 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 dresses. Many of them were seen filling their shelves with their favorite dresses.</p><p style="text-align: justify;">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.</p><p style="text-align: justify;">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;</p><p style="text-align: justify;">And it&rsquo;s not the only one! RRV had earlier announced an investment in 30-year-old designer brand Abraham &amp; Thakore (A&amp;T) for a majority stake.&nbsp;</p><p style="text-align: justify;">Earlier this year, we saw Aditya Birla Fashion and Retail (ABFRL), too, bought 51 percent stake in 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.</p><p style="text-align: justify;">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 (apparels, 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;</p><p style="text-align: justify;">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, which is driven by an increase in media reach and growing aspirations amongst the youth.</p><p style="text-align: justify;">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.</p><p style="text-align: justify;">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;</p><p style="text-align: justify;">The stores have started displaying &ndash; yet again &ndash; the best of not only partywear but also formal wear and casual wear. All products are back in action. The good part is the resurgence of bricks-and-mortar stores.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">The Resurgence of Bricks-and-Mortar Stores&nbsp;</span></h2><p style="text-align: justify;">Despite the fast-growing popularity of fashion e-commerce over the last decade &ndash; especially in the last 24 months &ndash; the fact remains that there&rsquo;s no 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.</p><p style="text-align: justify;">Also, one cannot overlook that most shoppers still want to see, touch, feel and experience the products they buy, especially in apparel, footwear, and fashion items.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Indian E-commerce Continues to Grow</span>&nbsp;</h2><p style="text-align: justify;">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 key growth drivers.</p><p style="text-align: justify;">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;</p><p style="text-align: justify;">That says it all!</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="https://www.linkedin.com/in/gunjan-verma-9a237913/">Gunjan Verma</a> &nbsp;</em></span></p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Gunjan Verma&nbsp;</span></h3><h2><span style="font-size: 12pt;">1. How big is the Indian retail market?</span></h2><p style="text-align: justify;">The Indian retail market is growing and has been estimated to be US$ 600 billion. It is one of the top five retail markets in the world by economic value.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. What percentage of ecommerce is fashion?</span></h2><p style="text-align: justify;">In the US, the apparel and accessory industries account for 29.5% of all ecommerce sales in 2021. Whereas, in India the apparel ecommerce is about 25%.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. Why are brands going DTC?</span></h2><p style="text-align: justify;">Direct-to-consumer retail helps brands to control directly. And the businesses do not have to rely on retailers to maintain that customer relationship; the brands can take control of that, as well.</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Gunjan Verma