INDIAN APPAREL INDUSTRY OVERVIEW

Fashion is a serious business, everywhere. Admittedly, India was a latecomer in the scene, but the pace now is scintillating. Indian sub continent is the second largest manufacturer of garments after China. The apparel industry occupies a unique and important place in India. It is one of the earliest industries to come into existence in the country. The apparel industry caters to one of the most basic requirements of people and holds importance; maintaining the prolonged growth for improved quality of life. Over the years, this industry has proved to be a major contributor to the nations' economy.

India’s Apparel Market Size

India’s garment industry is one of the mainstays of the national economy. It is also one of the largest contributing sectors of India’s exports worldwide. Abundant availability of raw materials such as cotton, wool, silk and jute and skilled workforce have made India a sourcing hub. The global technical industry is estimated at US$ 127 billion and its size in India is pegged at US$ 11 billion. The size of Indian textile and apparel market stood at US$ 89 billion in 2011. The garment industry accounts for 14% of industrial production, which is 4% of GDP and employs 45 million people and accounts for nearly 11% share of the country’s total exports basket. It accounts for 27 per cent of foreign exchange inflows. Exports of garment products from India have increased steadily over the last few years, particularly after 2004 when textiles exports quota was discontinued.The most significant change in the Indian textile industry has been the advent of man-made fibers (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. MMF production increased by 9 per cent during April 2014. Cloth production by mill sector and power loom sector increased by 5 per cent and 6 per cent respectively during April 2014. Total cloth production increased by about 2 per cent during the same month.

India’s Apparel Market Growth

The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. The size of Indian textile and apparel market stood at US$ 89 billion in 2011 and is expected to touch US$ 223 billion by 2021. India’s exports of Textiles and Clothing together clubbed as garments is pegged at USD 64.41 billion by the end of March, 2017. India has the potential to increase its textile and apparel share in the world trade from the current level of 4.5 per cent to eight per cent and reach US$ 80 billion by 2020.Textile exports in FY15 are expected to grow by 25 per cent to US$ 50 billion, according to Mr. Santosh Kumar Gangwar, Minister of State with Independent Charge for Textiles, Government of India.Further, the Government of India plans to launch US$ 44.21 million missions for promotion of technical textiles, while the Ministry of Finance has cleared setting up of four new research centers for the industry.

INDIAN CONSUMER BEHAVIORA typical consumer behavior is defined as “The dynamic interaction of affect and cognition, behavior and the environment by which human beings conduct the exchange aspects of lives”. The buying habits of the consumer are greatly affected by their thought process and their feelings experienced. Human beings are greatly influenced in their buying actions by various factors like opinion of others, marketing stimuli like product, advertising, packaging and product appearance. It helps us to answer questions such as:

(i) Why people choose one product or brand over another?(ii) When do people think it is right to buy a certain product?(iii) How they make these choices, and(iv) What affects these choices?

Indian consumers have shifted substantially toward consumerism, particularly over the past decade. The Indian middle class is larger than its counterpart in Western Europe, so it is attractive to multinational corporations. Even apparel brands and retailers agree that there has been a major shift in the way consumers are shopping. They are increasingly showing interest in fashion and more willing to take fashion risks than ever before. Brands like Benetton, Zodiac, Zara, Vero Moda, Calvin Klein, Diesel and Tommy Hilfiger among others are on their toes to match demand. And indeed, these brands have been able to rake in good sales growth in the country.The following section talks about the demographic and psychographic profile of Indian consumers:

Demographic Profile The estimated population of India is 1.2 billion out of which more than 40% of people

belong to the age group of 25-54 years. However, the ratio of males over females is slightly higher i.e. 1.08. Urban population is estimated to be about 31.3% of the total population and is growing at

the rate of 2.47% annually. The life expectancy rate at birth is around 67.8 years. Literacy rate is around 62.8%. The middle class in income terms has an annual income of Rs.200,000 to Rs.1,000,000

($3,280 to $16,390 at current rates). The average family size in India is 4-6 members.

Psychographic ProfileThe Indian consumer has grown from being a price driven buyer to a more discerning consumer who needs to be convinced about the product's quality. Indians are more motivated than ever by personal ambition and a desire for material success, and they put in the hours it takes to achieve those goals. The Indian consumer is no more living in isolation. He has mass presence in social media and is increasingly networked. A recent article in The Economic Times claims that Facebook alone has crossed 65 million users in India. Indians are now better educated and increasingly aware of their environment. They are also well aware of the dangers of environmental degradation. The larger younger Indian population exposed to global media and connected through social networking looks for style. From impulse buying products to the high involvement products like cars and smart phones, the purchases are largely influenced by style.  Indian consumers no longer depend on whatever information the marketers provide them about the product. Today’s consumer explores all possible information sources in order to review, compare and contrast every product alternative available to him before making his purchases. The reduction in family sizes accompanied by increase in family incomes leaves Indian consumers with better incomes at their disposal. The Hindu opined that the new generations of Indian consumers do not mind to borrow from future incomes for holidays. Though Indian consumers have improved incomes at their end, they are short of time now due to increased work hours. The consumers are more conscious about getting value for their time rather than value for their money. Health is now a priority for Indian consumers today.

FACTORS ENCOURAGING GLOBAL APPAREL BRANDS TO ENTER INDIAN MARKET

India is becoming an exciting and dynamic retail destination due to the following:

• A large market size• Low organized retail penetration• Strong GDP growth• Increasing personal incomes• Large number of aspirational consumers (middle-class, young Indians etc.)The steady growth of the Indian economy as a result of foreign direct investment has resulted in increasing disposable income among single- and dual-income households. This trend has driven the growth of India’s middle-class population in the 25- to 35-year-old age group and provided an increased propensity to spend. The resultant increase in consumer spending has stimulated the growth of the Indian retail industry, and for three years in a row India tops the Global Retail Development Index (GRDI) as one of the most attractive nations for international retail investment (A.T. Kearney, 2007).

GLOBAL APPAREL KEY PLAYERS IN INDIA

In today’s scenario, India has become one of the most competitive fashion retail hubs with an avalanche of global brands trying to make their way into the fast growing Indian market. More and more leading international brands are investing time and capital in order to do their business in the Indian way.

Just like any other country, India too demands a different strategy plan for global brands to not only set their businesses but also to successfully run them in this foreign land. Some of the questions that the brands address before setting up a business are:

What should be the location of their retail stores?

What sort of a retail store should they be setting up for their brand?

What kind of a customer service does an Indian consumer require?

What role does product quality play in the Indian market?

How much would an Indian customer like a local appeal to their products?

How the company should mould its culture around that of the Indian market?

What would lure Indian consumers to buy from their stores and how to achieve that?

The following section lists some of the strategies that should be followed by global brands in order to flourish in India:

1. Retail Store Location

The entire business life of a retail operation depends upon the choice of a store location. The brand must learn about the demographics of population, the kind of competition they would

be facing and the traffic patterns of the area under consideration. The location must comfortably be away from aesthetically unappealing regions like the slums. It must be able to accommodate a good approach road with ample space for parking. It’s a good idea to put up a store in malls or hypermarkets in order to attract

large masses of customer. Recent studies show that the cities of Delhi, Mumbai and Bangalore are the ideal locations for setting up a store for an international brand with their modern, well-travelled, high income and well-aware population.

2. Customer Service

Even if a brand is successful in setting up a retail store, it won’t grab the required attention unless it has a great customer service to offer. In today’s world, customers are more value-conscious. The customer expects the brand to avail all goods and services to them once they walk into the store. A good air-conditioned store, neatly arranged goods, several trial rooms and checkout counters, trolleys and baskets for convenient shopping and most importantly, individual attention are some of the key points to lure their customers. Home delivery, option for alterations, refund/exchange policy and timely conveying information for new offers and schemes also helps to keep your customer satisfied.

3. Product Quality

A brand is all about its products and goods. The only reason a customer buys from a global brand is because of their international standards of quality. And that is something a global brand should maintain. Aesthetics in apparel should not sacrifice for durability and performance. Decline in quality, change of shape and color after washing are some of the concerns of a typical customer which the brand should take care of.

4. Product InnovationThe picture below shows how Marks & Spencer has altered its style to longer tops in order to appeal the Indian customer

Indian market is not like usual market global brands cater to. Hence, product innovation becomes a necessity for business. Making their products affordable for Indian pockets has helped a lot of currently leading global brands to assure their presence in India. The international brand must invest a lot of time in understanding the demands of Indian customers. Adopting an India-led merchandising strategy by shifting parts of designing and manufacturing functions to suit the Indian customer is an essential part to bring customers to their doorsteps. An example would to cater to the different and unique colors, sizes, fits, seasons and in fact styles in the Indian micro-markets.

5. Brand loyalty

Brand loyalty refers to a continuous long-term attachment to a brand. It is when customers associate their style with a brand and hence, feel the urge to buy from that brand every time they go shopping. A lot of what a customer buys today depends mainly on its perception towards the brand. Customers feel that their aspirations are better expressed through their favorite brand. It therefore is important for a brand to connect with their customers at an emotional level.

6. Price PointIt is well known that price is a very important criterion in the Indian consumer's mind when it comes to shopping. It denotes the quality, the status or even the worth of consumer for himself/herself or the loved one. Hence, it is extremely important for a global brand to regulate its pricing strategy according to Indian customers.

CHALLENGES FACED BY GLOBAL APPAREL BRANDS IN INDIA

Increasing globalization and international trade has led numerous foreign brands to enter Indian market and clearly, they are a success. But not all global firms have been able to understand the needs of an Indian consumer as well as the market characteristics. Below is a list of few challenges that a global apparel brand face in order to set up its business in India.

1. Economic resistanceHigh rents and restrictive investment policies have been the primary concern of fashion brands in India. Globally the cost of real estate is typically 8-15% of the total cost incurred in running a store. However, in India with the rates being quoted that go as high

Source: livemint.com

as $35-$40 per sq.ft, the percentage of real estate cost turns out be as high as 45%  in some cases.

2. Store LocationFor most top retailers, well-placed malls are most lucrative when it comes to opening stores in India. However, there is a rare opportunity at an affordable level for brands to go into an off-mall location. This hampers the growth of a brand in a region. Given the constraints in metropolitan and tier I cities, international brands increasingly penetrating into tier II and below cities, where rentals are lower than former. However, a penetration in these smaller cities requires an overhaul of the strategy which may elongate the learning curve further.

3. Emotional Appeal and ConnectIt is imperative for international brands to adapt to local demands and sensibilities in order to be liked and accepted in a country like India with a diverse and unique set of cultures and beliefs.

4. CounterfeitingWith increase in brand acceptance and equity, there is a greater incidence of counterfeiting. The rising demand for branded merchandise, combined with the continued price consciousness of Indian consumers, has led to the growth of this parallel channel, which is sold at heavy discount.

MARKETING AND PROMOTION

Source: hindustantimes.com

Globalization and international trade in India is increasing day by day as huge numbers of international brands are entering into the Indian market which is one of the fastest growing and highly competitive markets in the world.

. In today‘s scenario, for any Global brand to succeed in Indian markets, the companies need to shift their focus from forming global strategies for the overall market, to the strategies that adapt to the local market conditions in the India. The Global firms operating in India must try to be as local as they can be, by converting themselves into Global brands i.e. being global at heart. The companies can achieve these objective, either by using local manufacturing, producing Indianised variants of their products to take care of local consumers tastes, to use local celebrities as brand ambassadors, and tackle the issue of price sensitivity of the Indian consumers by launching value for money products which are affordable for the masses and forming long term relationships with intermediaries in the market and instill in them a sense of confidence that they are your brands partners in your journey towards success and they too will benefit if you as a company will succeed and if your brands succeed in Indian market.

Marketing strategies of some global brands –

Forever 21

Celebrated by many style conscious and trend-savvy shoppers, Forever 21 has quickly become the source for the most current fashions at the greatest value. Forever 21 is growing quickly, featuring new and exciting store environments, a constant flow of fun and creative clothing designs and the accessories to make your look come together at the right price. A phenomenon in the fashion world, Forever 21 provides shoppers with an unprecedented selection of today’s fashions, always changing and always in style.

ZARA

To enter the market in India, Inditex (the company behind Zara) used the strategy of pursuing a joint venture with Trent Limited, a Tata Group company, a highly recognized clothing line distributor. Inditex controls 51 per cent of the joint venture, while Trent Limited owns 49 per cent.In order to effectively achieve their goals, Zara pursued a strategy of selling a variety of its local clothing lines and international clothing lines, but maintaining Zara as the primary brand in India. Zara also targeted the larger positions including either the first or second positions in the Indian market of clothing lines. Any of these positions would be sufficient enough for Zara to create an outstanding level with regards to manufacturing, marketing and distribution. These positions can set up a stage from which Zara can sell their clothing lines and other special fashion products.

UPCOMING GLOBAL BRANDS

Many of the international companies entering India in the late 1980s and 1990s chose licensing as their entry route to India to gain quick access to the Indian market at a minimal investment. A few companies such as Levi Strauss set up wholly owned subsidiaries, while others such as adidas and Reebok entered into majority-owned joint ventures. This helped them to gain greater control over their Indian operations, sourcing and supply chains, and brands.

The retail companies are found to be rising in India at a remarkable speed with the years and this have brought a revolutionary change in the shopping attitude of the Indian customers.

H&M

H&M is entering India at a time when other retailers such as Japan’s Uniqlo and American label GAP Inc. are actively pursuing India entries. GAP has been in advanced talks with prospective joint venture partners for its India entry, a market from where the apparel retailer has been sourcing material for its international operations.

GAP

Gap Inc, the largest casual wear retailer in the United States, is readying plans to open stores in India sometime next year, making it one of the highest profile global brands to set up shop in the country after it threw open the single-brand sector to foreign firmsThe company, which owns global brands such as Gap, Old Navy, Banana Republic, Piperlime and Athleta and reported sales of $14.5 billion in 2011, has put in place a team headed by its US veteran Rajiv Malik to give shape to its entry strategy for India. Gap entered China more than two years ago through a fully-owned subsidiary

CLASSIFICATION OF GLOBAL APPAREL BRANDS IN INDIA

Brands

Lifestyle Brands

Formal WearEg: Van Heusen,

Blackberrys

Semi-formal WearEg: Marks & Spencer,

Mango, Zara

Casual WearEg: Forever 21, Vero Moda, Promod, United Colors Of

Benetton

Sports WearEg: Reebok, Puma,

Adidas, Nike

Luxury BrandsEg: Giorgio Armani, Gucci,

Burberry, Emilio Pucci, Louis Vuitton

Examples of Global Apparel Brands In India

Luxury BrandsGiorgio ArmaniGucciDiorBurberryRoberto CavalliBottega VenetaPaul SmithMissoniTom FordVersaceEmilio PucciLouis VuittonCanali

Lifestyle BrandsForever 21 Marks & Spencer GuessTommy Hilfiger Promod United colors of BenettonVero Moda Zara MangoReebok Woodland Van HeusenNike Allen Solly PumaLevis Pepe Jeans French ConnectionArrow Sisley Forever New

PRICING MATRIX

The Price Matrix is a pricing tool that allows you to predetermine the price you would like to charge for a specific service, product or commodity. A price matrix is a useful tool to quickly provide a cost quote for various products when discounts for larger quantities of an item are offered. Price matrices are time saving tools that reduce errors and ensure customers are quoted the same price regardless of which employee provides the quote.

REFERENCES

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www.commodityonline.com

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www.economictimes.com

- Winning in India’s Retail Sector, www.pwc/india

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- Zara Pitch, www.thirdsight.com