The organized fashion industry is growing at a rapid pace due to the growth of various multi-national fashion players in the country and increasing brand consciousness of the consumers. The share of organized market for jewellery and watches is at ~28 percent while that for footwear is more than 26 percent…
The Indian apparel market, pegged at US $ 65 billion, is the second largest retail market after food & grocery in India. It grew at a Compound Annual Growth Rate (CAGR) of 11.5 percent in the period from 2012-17 and is expected to grow at nearly 11 percent CAGR in 2017-21 period to reach a value of US $85 billion by 2021.
The fashion market in India is majorly driven by following key growth drivers:
• Young demographics
• Rising urbanization
• Increasing affluence and a growing middle income segment
• Greater brand awareness
• Better accessibility and availability
• Increased formalization of the sector
Further, talking about the organized share of market in fashion – organized market in apparel & accessories is pegged at around 24 percent currently and is expected to increase to 37 percent by 2021.2 Share of organized market for jewellery and watches is at ~28 percent while that for footwear is more than
26 percent. Organized market is growing at a rapid pace due to the growth of various multi-national fashion players in the country and increasing brand consciousness of the consumers.
Trends in Fashion/Apparel Market in India
Increasing Share of Women Wear:
Share of women wear in Indian apparel market is around 40 percent today, and it is lower than the global average share of 55-60 percent.3 With changing cultural norms, increasing number of working women and greater urbanization, the share of women’s wear is likely to increase and witness faster growth vis-à-vis men’s category.
Faster Growth of Value Fashion and Private Labels:
With increasing disposable incomes, growth of fast fashion and a rising brand and style consciousness, consumers are seen moving towards organized or branded apparel segment and thus buying relatively more branded and premium products. The gradual shift away from unorganized apparel is seen to be resulting in creation of large value fashion market in India and also driving the growth of private labels.
E-Commerce as a New Channel of Distribution:
While the initial focus of e-commerce companies was only to acquire customers by offering discounts, the e-tail model is seen to be a major growth driver as the apparel companies appear to have started viewing e-commerce as a new important channel along with the traditional distribution channels.
Greater Use of Technology:
With the rise of Millennials and emergence of Omnichannel retail, fashion retail brands are seen exploring various strategies to offer seamless experience to their customers. From launching user-friendly web apps to digitizing and enhancing instore experience through innovative use of technologies – brands are seen leaving no stone unturned to gain an edge in a highly competitive consumer market. Brands are leveraging Augmented and Virtual Reality (AR & VR) tools to showcase their new products, leveraging Artificial Intelligence (AI) to understand consumers more and offer custom solutions. AI and big data are also being used to predict trends and forecast delivery timings, demand planning and forecasting, new trends, better fitting/sizes, etc.
Sustainably Sourced Apparel:
Consumer are increasingly seen to be getting conscious regarding the entire value chain of the products they are wearing. As they become more sensitive to environment and social concerns, they are becoming increasingly concerned about whether the products are sourced sustainably, whether these are produced ethically, whether the waste is treated correctly, etc. In order to cater to this, both international and domestic brands are progressively looking for sustainable products to gain business advantage, while also ensuring that they communicate their sustainability measures to the consumers.
Fashion industry is witnessing digitization of in-store retail experience, through means of:
a. Digital marketing displays
b. Augmented Reality (AR) to display outfits and for trials
c. AI-based personalization and curation
d. Increased Omnichannel and e-commerce sales
Other major trends witnessed in the fashion industry include:
Augmented Reality (AR) is amongst the widely used technologies in enhancing the customer experience and engagement levels. A number of global brands have creatively used AR to market their offerings
through virtual product experience. In India, the marketing trends suggest that various clothing brands are likely to adopt AR to create digital stores as the results become more prominent.
Case Example: A renowned Indian clothing brand launched a ready to wear experience store in Bengaluru offering selected clothes and desired sizes inside the fitting rooms through a click on the iPad. According to the initial trends, the company was able to generate more than average footfall and transaction value.4
Virtual Reality (VR) is gaining strong traction in the developing countries and is not only used as a marketing tool, but also a sales enabler. The technology helps in saving time, workforce requirements,
locating products, etc. Since the entire process is dependent on a VR device and appropriate content, both businesses and customers in India are expected to need some time to accept this as a medium to
connect with each other.
Case example: In March 2017, a leading fashion online retailer launched its first offline store equipped with VR gadgets to provide the customers with 360 degree videos of road trips featuring one of its flagship brands. According to the company, the use of VR will be used to draw customer engagement and will not only focus on driving sales.
Artificial Intelligence (AI) is seen transforming various business processes in the form of ease of payments, providing product information, offering personalization and others. While global brands are swiftly innovating, India appears to be in the initial stage of understanding customers through data analytics.
Case example: While majority of retailers and brands are quietly conducting experiments, one of the leading online clothing brands started using AI to analyze data and predict fashion trends. This enabled the designers to incorporate the demand and requirements into their output. As next step, the company intends to use AI in predicting delivery timing.
Omnichannel Fashion Retail: Given the imminence of Omnichannel retail, various consumer brands are exploring multiple retail channel strategies to offer seamless experience to their customers. From launching user-friendly web and application portals to digitizing and enhancing in-store experience through innovative use of technologies – brands are seen leaving no stone unturned to gain edge in a highly
competitive consumer market.
Example: How Omnichannel has modernized the consumers’ apparel retail journey and made it more convenient.
Rise of Personalization, Movement towards Tribetailing: As the preferences of the consumers change with the evolving retail environment, groups of consumers with specific characteristic sets are seen to have emerged. Customised targeting and offering to these groups or “tribes” is seen to be essential to cater to their specific needs. In the current digital era, where there is a plethora of means to purchase a product, tribetailing becomes more challenging than ever. Tailoring products, services, promotions & offers, marketing, loyalty programmes, etc. to the personal needs of a set of consumers requires a detailed study of their consumption patterns and behavioural traits while shopping. Various brands are seen revamping their strategies and processes to reposition themselves as premium and super-premium companies. Companies are providing bespoke solutions and personalized offerings to make their consumers feel privileged.
Case Study:
Ready-to-Wear Offerings by a Major Apparel Brand
A major apparel manufacturer established exclusive stores to offer greater convenience and luxury feel and experience, to its consumers. The stores fuse cutting edge technology with superior hospitality to redefine consumer experience. Similarly, its thoughtfully conceptualized fitting rooms eliminate the need for consumers to carry the clothing. Instead, preferred garments with desired size and colors are made available inside the trial room wardrobe.
Segmental Insights on Fashion Market
Formal Apparel: In terms of formal apparel market, the share of organized apparel has increased from 20 percent in 2012 to 24 percent currently. With increasing brand awareness, push to formal economy and greater presence of multinational apparel brands in the country, the share of organized market in the overall apparel market is expected to increase to 37 percent by 2021 and further to 54 percent
by 2025.
Woolen Wear: India’s winter wear market is valued at ~US $ 2 billion and the country is the world’s seventh largest wool producer with a share of nearly 1.8 percent. The market is expected to grow at a CAGR of 8-9 percent over a 10-year period to reach US $ 5 billion by 2027.8 In terms of employment, the woollen industry employs nearly 1.2 million people in the organized sector with an additional 2 million persons associated with the sheep rearing and farming sector. Further, there are nearly 0.3 million weavers in the carpet sector.
Emergence of technically advanced and light-weight fabrics are seen driving the growth of winter-wear market in India. Change in the climatic conditions has led to winters becoming shorter and warmer in India. Thus, winter wear has shifted from being a functional product to a fashion wear and consumers are buying such products depending on the occasions. Another trend on which various retailers are relying for this winter season includes products with blended fabrics and design variations – variation in proportion, hues, wool thickness, fringe details, etc. are expected to be experimented with by producers. Wool is being promoted as an all-season fabric with new netted designs and light weight apparels. Wool blended fabric is being preferred by consumers during the summer season as well owing to its comfort and style.
Ethnic Wear: Out of the total Indian ethnic wear market of US $10 billion, women’s ethnic wear accounts for roughly 85 percent of the market. This US $8.5 billion women ethnic wear market expected to grow at ~10 percent CAGR till 2022.
Going Forward
The Indian apparel market seems to be poised for rapid growth, relatively faster for women and kids. Similarly, other categories of fashion including footwear, accessories, jewellery, watches, etc are witnessing increased consumption as brand consciousness of the Indian consumer increases. While entry of multinational brands and internet have led to increased access to global brands of fashion, technology such as AI, AR/VR, etc is seen helping the brands to redefine the customer shopping journey and make it more convenient.
Going forward, it is expected that the organized share of fashion brands will increase more rapidly with greater focus on personalization of products. Consumers are expected to communicate their specific
and niche demands, the insights from which could be leveraged by brands to provide bespoke offerings to address the evolving needs of the consumers. Further, with greater focus on tracing of raw materials, sustainable practices are expected to become a norm in the industry. Brands are also leveraging RFID and similar technologies to shorten their lead cycles and rotate their products oftener to attract consumers more frequently. This is likely to help them increase not only the footfalls to their stores but also help in repeat visits and greater sales.
