In 1997, Peter England had coined the term ‘Honest Shirt’, denoting a fairly-priced, good quality branded shirt. Over time the title seems to have lost its sheen, however. Today, big brands in India are mostly focussing on the upper end, largely ceding the lower end, also referred to as the ‘popular shirt market’, to the regional and unbranded players. The value/economy segment has a whopping 60 percent market share, and hence, a sparse presence of large corporates in this space is both striking and intriguing!
Some two decades ago, Peter England had brought a major disruption in the Indian apparel market by launching its ‘Honest Shirt’ range, with branded quality and very affordable pricing being its USP. Peter England, an iconic British menswear brand brought to India by Aditya Birla Group-owned Madura Fashion and Lifestyle, became an instant success. Reportedly, the brand sold four lakh shirts in its debut year. Soon enough, the newly-constituted ‘popular shirt’ segment was abuzz with several more home-grown and foreign brands, vying for the opportunity. However, owing to the ever-developing market scenario, some of the big-bang entrants eventually faded away, while brands like Excalibur, Ruggers, Turtle and even Peter England have climbed up the value chain to become slightly more premium and aspirational. Currently, there are only a few players present in the segment, which is now massively dominated by regional brands and unorganized players.
Conspicuously, the colossal value-to-economy segment representing about three-fifths of the overall market is failing to capture big brands and corporates’ interest. Although there are also some tapping the lower end of the mid-price segment, the majority seems to be gung-ho on the upper end of the market only.
India’s Branded Shirt Market
The branded apparel market in India actually started pacing up with the turn of the new millennium. Brands were few and far between and limited to the affluent few up till the late ’90s and the clothes were mostly tailor-made, including men’s shirts and trousers. However, the present scenario is exactly the opposite – almost everyone wears readymade attires.
“Shirt is currently the most branded category as menswear is one of the most standardized product segments. Also, the shirt was a much easier segment to start off with because Indians generally have more fat around their belly and hip areas
and standardization of trousers was always an issue,” elucidates Baqar Naqvi, Business Director, Wazir Advisors. Roughly 60 percent of the country’s entire shirt market, he apprised, is of value-to-economy (includes unbranded market also), 20 percent is mid- market and rest 20 is a premium-to-luxury segment. Apparently, the mid-market is getting squeezed from both ends (value and premium). Premium brands are heavily discounting during EOSS, which now has become an almost 8-month season, while many private labels are upping their game and moving into the mid- price range.
“In yesteryears, both branded and unbranded shirts were simple looking and similar in terms of design and style. Price and quality of course varied. The market has evolved a lot over time largely due to the UK and European influences, and style options are aplenty today. The increased variety is driving the demand and growth of the market, especially the upmarket,” elaborates Anil Talreja, Partner, Deloitte Haskins & Sells LLP. Men nowadays, he further adds, don’t mind spending beyond their purchasing capacity for the latest fashion shirt. This is happening in the women segment also, with their growing working populace and the younger lot preferring western wear over traditional dresses. This all has created a lot of market disruption. Indian consumers are difficult and emotional and are loyal to products and brands they really like. Cutting into the ‘inner circle’ of consumer preference can get exponential popularity and success, however.
According to Zoheib Jilani, Head of Private Labels, Voonik, “Shirts has been a growing segment for years and has found its place in both the branded and the unbranded segment. Given the nature of the product, it is pretty much a staple fashion for all user segments across ages, geography and markets. However, the fashion in recent years has moved more towards ‘fast fashion’, and shirt category is a part of that phenomenon as well.” Fashion e-tailer Voonik has launched its own private clothing label Brenco, with shirts as one of the offerings.
‘Indian men are very particular about their shirt selection. They typically have several regular ofǟ ce shirts and a few special shirts for special business and social occasions. However, they neither want to spend a lot on everyday shirts nor lower their expectation in terms of fabric and make quality. And here the popular shirt comes into the picture’.
Major Drivers of the Popular Shirt Segment
The genesis of the ‘popular’ or ‘affordable’ or ‘fairly-priced’ branded shirt market can be largely attributed to the large section of the Indian consumers (the middle-class) who long for branded wear that doesn’t come with a hefty price tag. Sensing the vast market gap and the huge opportunity within, many brands and unbranded players have forayed into the segment over the years.
The concept of affordability, Prashant Bhatia, Managing Partner at Cambridge Clothing Co LLP, observes, has evolved over the last 15-20 years. “The market has witnessed both highs and lows in terms of demand. Till a few years back, the customer was willing and able to upgrade to the next level of pricing. Then came the slowdown and we continue to see new lows every year. We see tremendous potential in the affordable segment going forward as a lot of customers have been downgrading because of the present set of economic conditions.” In this segment, a quality branded shirt may cost anywhere between ₹ 650-750. And if a brand/company is able to back this price with a modern retail environment, there is a lot of business to be done, he believes. Mumbai- based Cambridge is a notable player in the popular shirt segment.
Indian consumer culture and perception is the biggest driver of affordable branded shirt phenomenon. Indians have always been enamoured by foreign brands and products and the shirt is not an exception. However, price, too, is a critical factor for them. According to Anil Talreja of Deloitte, some of the brands that were launched to give not only a ‘brand’ also came down to the price point that met with the local consumer expectations. The strategy paid off and these brands were lapped up by the middle-class. “However, today, we have several good foreign brands but with pricing that is rather high for an average consumer, and therefore, there is not much hype around them. In the case of domestic brands also, barring a few valued brands there are also various brands that straddle across the mid-range but somehow fail to meet the perception. Brand value is important for market success and so is the price point,” he accentuates.
“Shirt is a staple garment for a man irrespective of the occasion. Indian men are very particular about their shirt selection. They typically have several regular office shirts and a few special shirts for special business and social occasions. However, they neither want to spend a lot on everyday shirts nor lower their expectation in terms of fabric and make quality. And here the popular shirt comes into the picture,” explains Sandeep Khapra, Design Head – Menswear, Max Fashion. He also informs that at Max they mostly stock men’s shirt, also for boys but not much for women. Pricing is tricky for kids shirts because manufacturing cost is almost the same as men’s but the willingness of the customer to pay is less. Nevertheless, these shirts, which mostly also form the part of the core range for the brand, are identified as Never-Out- of-Stock-Option. Notably, value fashion brand Max Fashion is a part of Dubai-based Landmark Group.
Sparse Presence of Big Corporates Today
Today, the popular shirt market in India is deprived of many big brands/corporates and even more so at the national level. Commenting on the same, Priyavrata Mafatlal, CEO of Mafatal Industries, states, “At present, the popular or affordable shirt market is highly segregated, and this makes market penetration tough. This is the key reason for a national level shirt brand not to be able to cover every nook and corner of the country. Traditionally, the market works with distributors, dealers and retailers, which eats into the margins, increasing the MRPs of the products. Of course, a lot of local brands have benefitted from this phenomenon. They have a huge advantage in terms of market reach and margins. Also, style and fit wise a local player has more knowledge and can offer the right product which their market demands. The same may not be possible in case of a national brand, though.”
Textile major Mafatlal Industries Limited has forayed into the apparel business with its two brands. The flagship men’s wear brand ‘Trendz by Mafatlal’ portfolio includes formal shirts, trousers and jeans, while ‘1905 by Mafatlal’ is a casual men’s wear brand of t-shirts and shirts. Both brands are positioned in the mid-segment, offering value for money (VFM) product.
The advent of e-commerce has also fuelled the expansion of the popular shirt category, supplementing the offline market, the Mafatlal Chief notes. “We have more than 100 Mafatlal Family Stores across India with their own loyal customer base. Besides that, we have a 30,000 square feet fulfilment centre based out of Indore which caters to all our online business and has a network of distributors who also sell our products in their regions,” he shares. In his words, today’s customer is rather smart and is looking for value. We see this as a big opportunity to tap the growth with both our VFM brands.
Notably, Trendz by Mafatlal offers high-quality formal shirts in polyester cotton and 100 percent cotton segments. 1905 by Mafatlal also offers polyester cotton and 100 percent cotton casual shirts. The company offers garment washes and finishes in this segment also.
Clearly, a value brand thrives on volumes than on value and it would have to sell to a larger market to become profitable, as unit margins are not very high. Anil Talreja [Deloitte] explicates, “To conceive a very attractive price point, the brand needs to control the cost and/or reduce its profit margin. Sales price is a factor of demand and supply and cannot be played with. The biggest cost components in apparel trade today are real estate (for a store) and distribution costs. It can be quite challenging for an apparel company to set up its distribution channel(s) from scratch in a brownfield-like situation that entails heavy expenditure and still be able to contain its costs. It will rather leverage the existing channels. Ease of distribution matters.” He goes on to say that the brand’s wider success depends on a combination of factors like trendy products, acceptable price points, strong distribution network, and the capability to penetrate deeply into the market. For a value/economy brand, multi-brand stores, value retailers, e-commerce and traditional stores are comparatively more viable sales channels than opening exclusive outlets.
A good product, ample marketing and wide distribution to reach a larger number of consumers are the perquisites to become a big brand, Baqar Naqvi [Wazir Advisors] underscores. “Typically, value and mid-market brands don’t have that kind of margins or the money. They can spend on either one or two of these things: a good product, large distribution and generous marketing budget. Therefore, value brands with quality products generally have localised presence, till through word of mouth they become well recognized and hence grow into new markets, which is a long process. Customers will walk away after one or two purchases if the product is compromised to increase market presence.” However, he also points out that large fashion retailers like FBB, Pantaloons, Amazon, Flipkart, etc., are able to cater to the value/economy segment through in- house private labels because they own the entire value chain themselves. They do not have to dole out margins to intermediaries and are hence able to offer better value.
‘Shirts has been a growing segment for years and has found its place in both the branded and the unbranded segment. Given the nature of the product, it is pretty much a staple fashion for all user segments across ages, geography and markets’. However, the fashion in recent years has moved more towards ‘fast fashion’, and shirt category is a part of that phenomenon as well’
For most consumers, factors like fit, comfort, durability, etc., are equally important than aesthetics alone. “To be able to deliver this all, the brand or manufacturer has to invest time, effort and obviously money. Although the cost of quality cannot be ignored, it can be optimized. Our private label Brenco aims to lower the cost of quality without lowering the benchmark and produce good quality products that cater to a wider customer base,” maintains Voonik’s Zoheib Jilani. Currently, the brand mainly offers basics workwear shirts. Most of the collections are in solid colours, some in prints and yarn dyed checks, mostly pure cotton and some polyester cotton blends. For cost optimization without quality compromise, the brand strives to ensure limited variation in the same base fabrics used. This helps in the standardization of tests both in terms of fabric and end product behaviour. It ensures that the fits are tested, and patterns approved with wearer trials done before moving to production.
However, Max Fashion’s Sandeep Khapra rues that the initial USP of being relatively low cost has turned counter-productive in the long run for the popular shirt category. Mass availability and lack of differentiation make it ‘not special’. Brands, therefore, need to keep refreshing their offerings, he suggests. Customers understand that there is a certain cost incurred to make a product and profit are important for a business to sustain and grow. However, they are unwilling to pay the premiums for the other operational overheads. At Max, our operation and profit margins are minimal and that is how we are able to offer such attractive prices.
Domination of Regional Brands
Many of the bigger players have not been able to sustain in the popular shirt segment for multiple factors as Cambridge’s Prashant Bhatia summarizes, “Low sales and mounting operating costs is the foremost reason. The distribution partners nowadays demand a lot more margins to meet market credit terms. With the EOSS culture now permanently etched not much is left for a brand after discounting. Moreover, since higher price points leave a lot of room for covering all costs, discounts and the frills needed to please the distribution partners, most of the national brands have moved up over the years. This is where regional players and the unbranded ones fill in.” However, he also highlights that because of the slowdown and the downgrading phenomenon of the customer, the large players, too, are appreciating the need for price markdown. This will be a very tough war in the long run and the only ones to survive will be the ones with deep pockets.
Notably, Cambridge’s nationwide retail footprint includes roughly 90 EBOs and over 200 MBOs. The brand has a dominant presence in its home market of Maharashtra, with a growing presence in other states like Kerala, Karnataka, West Bengal, Jharkhand, Bihar, Tamil Nadu and Gujarat. The brand has not actively started selling online yet. The brand focusses on cotton blended fabrics, with a good fused collar and a shirt that is sewed with 15-16 stitches per inch. “This we back with a brand promise of 58 years. Hence, our prices may seem slightly higher than regional and/or unbranded players. However, when we charge a customer that `50 extra we give him something extra that is not available at that price with anyone else. For example, we had launched an Oxford Shirt with a modern twist about three years ago. Its styling was similar to a premium international brand – in fact, we took it a level up and charged the customer `699/- only. Even today, we continue to sell large numbers in that style,” avers the Cambridge Chief.
Interestingly, at some point, a regional brand may decide to go national. Nationwide brand building costs are huge and pan India distribution can be challenging even for large corporates/brands. Due to ‘network effect’, a regional or small brand can have greater visibility and deep penetration in concentrated geography despite limited marketing. However, Baqar Naqvi at Wazir Advisors questions the very premise of the brands going national. “Earlier, the market was so small that even the largest player had to cover the whole country to achieve a 200-500 crore brand. But today, a regional brand can achieve such revenues with a presence in a couple of states because the market has grown so much. Hence, a regional brand can have national aspirations though it’s not at all essential from the scale perspective. There is enough market/opportunity in each geography that they can tap,” he argues.
Further, Naqvi also discusses the typical problems of the apparel segment that hinder regional brands’ national aspirations saying, “Just like food, consumer fashion tastes are quite localised across India. The consumer buys a premium brand for its image, but the market becomes more and more heterogeneous towards the value end.” According to him, a regional apparel brand with focussed merchandise, styling and colour palette for a particular regional market may not appeal to the customers in another region. Moreover, the seasonality factor also makes North and South India two distinct markets.
We don’t north Indian brands with a significant presence down South or vice-versa. A national player has to cater to multiple regions and may need to customise its offerings and have a multi-level merchandising. Not many brands are able to appreciate the diversities and integrate them into their manufacturing, merchandising, marketing and sales strategy for different regions. This becomes a critical challenge for a small brand to scale up.
Deloitte’s Anil Talreja also agrees that the path to achieving the national brand status is riddled with hurdles in a market like India, more so for the low and mid-market brands. “Our country is massive in terms of its size, topography,
population. To replicate the fame and success of some of the popular brands, retailing in metros and a few big cities is not enough; the brand will have to cover the entire country. But there also a downside to the nationwide fame and increasing demand thereof. The strategy can backfire if consumers don’t get the product. Before advertising, the brand must create the necessary distribution infrastructure to ensure a regular supply, which may not be an easy feat. Wider distribution and greater volumes increase pressure on production also,” he cautions.
Surviving ‘n’ Thriving in a Competitive Milieu
Product differentiation is the only way to withstand and grow in a highly competitive affordable shirt market. “With unorganised manufacturing getting more organised, the production costs have risen due to increased taxation and over-head costs. However, good colour, good fit and a unique textile design don’t add much to the manufacturing cost. We price our products in a way that the customer need not wait for the sale. In fact, we have a higher share of sales from fresh merchandise even during sale period,” says Sandeep Khapra of Max Fashion.
“The pursuit of our label is to minimize the cost by process control and optimizing supply chain management to deliver the promised quality at the most honest price. The market is quite stable and vast and therefore the competition is good for both, the consumer and the retailer. The consumer now has more options to choose from and the retailer also has access to gauge different markets based on what the competition is doing without actually diving deep in it. Eventually, it becomes a factor of optimizing the opportunity,” suggests Voonik’s Zoheib Jilani.
At present, the popular or affordable shirt market is highly segregated, and this makes market penetration tough. This is the key reason for a national level shirt brand not to be able to cover every nook and corner of the country.
According to Prashant Bhatia [Cambridge], `499-599 pricing was regarded as affordable maybe 10-12 years ago in the mass or mid- market segment. Today that looks like 650-750, and that too largely depends on the product offering. The popular shirt brands must focus to differentiate themselves from the rivals in their segment. Not to say, the competition has heated up significantly, with premium brands are slashing prices and/or introducing another label to leverage the affordable segment. “And this does affect us because a premium brand available at a lower price point will catch the customer’s eye first. Online discounting has actually taken away a lot of customers from brick and mortar brands like us for the same reason. Customers don’t realise or even care that the product is of previous seasons. They only seem to care about the brand and the price. The unbranded players are seeing more heat because they have to compete with not only with us, but the online discounting has further reduced their numbers,” he points out.
Priyavrata Mafatlal at Mafatal Industries believes that today’s customer is much more evolved and is willing to pay a higher price for brands, quality, fit and finish. About the company’s growth plans, he shares, “Our textile products have been a hallmark of quality and affordability since 1905, garnering the trust of the Indian and international markets. We have adopted a fair price policy for our menswear brands, and we aim to provide good quality and great value to our patrons. We have a strong physical presence and we are tying up with large format retail stores for further offline expansion. Additionally, we are now also focussing on the online channel and actively working with Flipkart, Amazon and other leading e-commerce players.”
