Ethnicwear Market Understanding india's - Technopak

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Ethnicwear Market Understanding india's - Technopak
Understanding India’s
Ethnicwear Market
Indian ethnicwear market was estimated to be of `82,220 crore in 2014 and is expected to
grow at a CAGR of 9 percent to reach `1,26,210 crore in 2019. The market is dominated
by women’s ethnicwear which contributes 83 percent to the total ethnic market
followed by kids’ ethnicwear and men’s ethnicwear with shares of 9 percent and 8
percent contribution respectively, shares Amit Gugnani, Senior Vice President
- Fashion and Kanti Prakash Brahma, Principal Consultant - Fashion at
Technopak.

  IMAGES Business of Fashion
Ethnicwear Market Understanding india's - Technopak
FASHION BUSINESS
Ethnicwear is one of the most
dynamic fashion categories

                                              Within women’s ethnicwear,
India’s fashion retail market is going        salwar kameez category has
through a dynamic phase marked                high growth potential
by the transition from unbranded to
branded apparel, from physical stores
to omni-channel retailing, from utility       Sarees, salwar kameez and blouse/
based apparel purchase to occasion            petticoat constitute the women’s
specific apparel purchase. Among              ethnicwear market. Saree is the biggest
various fashion categories, ethnicwear        category by size with a share of 50 percent
category has emerged as one of the            in 2014, followed by salwar kameez and
most exciting categories owing to the         blouse/petticoat at shares of 41 percent
revival of demand of ethnicwear across        and 9 percent respectively (Exhibit 2). It is
age groups, especially, among the             expected that the salwar kameez category
youths of both the genders. Though the        will grow at a CAGR of 13 percent over
demand of westernwear categories has          the next 5 years while the corresponding
gained momentum in the recent years,          growth rates for saree will be 5.5 percent
ethnicwear has managed to reposition          and that of blouse/petticoat be 4 percent.
itself as a preferred attire for specific     In addition to the traditional use of salwar
occasions. Combination of a numerous          kameez, increasing acceptance of the
factors like product innovation, innovative   category as a formal attire by working
marketing, amalgamation of ethnicwear         women is expected to contribute to the
with westernwear, relative under-             higher growth of the category. Owing to

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penetration of brands in this category etc.   the higher growth rate of salwar kameez
have contributed to the exciting growth       category, it is expected to become the most
trajectory of ethnicwear.                     dominant women’s ethnicwear category
                                              in 2019.
Ethnicwear market of India is
expected to increase at a CAGR of             Key ethnicwear-specific
9 percent over the next 5 years               consumer trends that are acting
                                              as growth catalysts

Indian ethnicwear market was estimated
to be of `82,220 crore in 2014 and is         Indian fashion consumers have become
expected to grow at a compound annual         more experimentative and image
growth rate of 9 percent to reach `1,26,210   conscious. A strong and growing economy
crore in 2019 (Exhibit 1). The market is      coupled with better job prospects, higher
dominated by women’s ethnicwear which         disposable income and profound impact of
contribute 83 percent to the total apparel    media and technology is revolutionising
market followed by kids’ ethnicwear and       buying behaviour of Indian consumers.
                                                                                              COVER STORY // November ISSUE | 2015

men’s ethnicwear with shares of 9 percent     Consequently, the entire fashion landscape
and 8 percent contribution respectively.      of the country is evolving at a rapid pace.

                                              The Indian fashion market has also
                                              witnessed certain category-specific
                                              consumer trends that have impacted
                                              market dynamics of ethnicwear. The key
                                              consumer trends related to ethnicwear
                                              are: 1. Increasing occasion specificity of
                                              fashion, 2. Growing demand of branded
Ethnicwear Market Understanding india's - Technopak
Exhibit 1: Ethnicwear market in india                                                  Exhibit 2: Category-wise Break-up of Women’s Ethnicwear

                             CAGR 9%
                                        2019 (P)
                                                                                             9%
                                                                                                                                            7%
                  2014
                                                                                                                                                                          43%

                                               12,170
                                                                                                                           50%

                                               10,610
                    7,430

                                                          Total - 1,26,210
 Total - 82,220

                    6,740

                                               1,03,430

                                                                              41%
                    68.050

                                                                                                                                     50%

                                                                                                Saree       Salwar Kameez         Blouse/Petti Coat
                   Womens        Mens   Kids
                                                                                                                                                      Source: Technopak Analysis

Indian consumers no longer stick
to formal or casual attire for family                                        apparel, 3. Increasing value consciousness     fit. Growing disposable income, increasing
functions and marriage ceremonies,                                           and 4. Rising acceptance of alternative        aspiration levels among youths are driving
they rather prefer ethnicwear that                                           retail channels (Exhibit 3).                   factors for branded ethnicwear market
reflects uniqueness of the Indian                                                                                           in India. Consequently, the ethnicwear
cultural ethos.                                                              Trend #1: Growing preference of occasion-      market, in recent years, has witnessed
                                                                             specific clothing is making ethnicwear the     high growth trajectory of existing brands
                                                                             most preferred choice for social functions.    as well as entrance of many new brands.
                                                                                                                            While the Indian brands compete with
                                                                             Indian consumers no longer stick to formal     international brands in westernwear
                                                                             or casual attire for family functions and      categories, they have an edge in
                                                                             marriage ceremonies, they rather prefer        ethnicwear products.
                                                                             ethnicwear that reflects uniqueness of
                                                                             the Indian cultural ethos. This trend          Proliferation of brands is more
                                                                             has extended to national days like the         distinguishable in women’s ethnicwear
                                                                             Independence day, Republic day etc.,           as unlike men, women use ethnicwear as
                                                                             when ethnicwear takes a lead over other        formalwear as well.
                                                                             categories. Innovative marketing and
                                                                             promotion (by brands) that links days          Trend #3: The value conscious consumers
                                                                             of national importance to display of           prefer private labels, wait for discounts
                                                                             patriotism through ethnic attire has           and promotion.
                                                                             contributed to the growing demand of
                                                                             ethnicwear for such occasions. Many            The value conscious consumers seek
                                                                             corporates, both Indian and international,     better deals while opting for ethnicwear
                                                                             have started encouraging ethnic dressing       fashion. They wait for discounts, gift
                                                                             during the occasions of Diwali, Holi etc.      coupons and special offers to purchase
                                                                                                                            their ethnic fashion. High price inflation in
                                                                             Trend #2: The ethnicwear consumers are         recent years has increased the number of
                                                                             seeking association with brands.               value conscious consumers. Private label
                                                                                                                            offerings of retailers have managed to tap
                                                                             The ethnicwear consumers have started          the quality and price requirements of these
                                                                             inclining towards branded apparel owing        consumers. Almost all the key retailers
                                                                             to assurance of better design, quality and     have introduced their private labels that

          IMAGES Business of Fashion
Exhibit 3: Key ethnic specific consumer trends
                                                                                                                                  Source: Technopak Advisors

                                                                                                                                                               FASHION BUSINESS
      Occasion specific clothing       Preference for branded apparel            Value consciousness                 Adoption of alternate channels

      The Indian consumers,                   The ethnicwear                   Consumers have started                   India’s fashion consumers,
       both men and women,                consumers have started                 factoring in ‘value for                 including the ethnicwear
         increasingly prefer                 inclining towards                money’ in their etnicwear                 consumers, no longer limit
        to dress themselves               branded apparel owing                    purchase decision.                  themselves to any particular
    depending on the occasion.             to assurance of better             Consequently, the demand              retail channel. Disruptive growth
       Hence, ethnicwear has               design, quality and fit.          for private label ethnicwear               of alternate retail channels,
        become a preferred                  Growing disposable               has increased substantially                 especially that of e-tailing
         choice for wedding                 income, increasing                    in the recent years.                   has impacted ethnicwear
        ceremonies, festive               aspiration levels among             Brands and retailers have               category as well. Consumers
       celebrations, historic            youths are driving factors           started offering discounts,             are adopting generic fashion
    events (independence day,             for branded ethnicwear                  promotions in more                  e-tailing websites, ethnicwear
     republic day celebrations,                   market.                    innovative ways to lure the             specific e-tailing websites along
                 etc.)                                                        value seeking ethnicwear                 with physical stores for their
                                                                                      consumers.                         ethnicwear requirements

offer optimum combination of quality,
trust and reliability and consumers have          Unlike Westernwear, ethnicwear category is directly linked with regional
started viewing these private labels as           preferences and ethnicity. Thus, the degree of heterogeneity is much higher in
brands.                                           ethnicwear category.

Trend #4: Consumers are increasing

                                                                                                                                                                67
adopting alternate retail channels for
ethnicwear as well                                entrants, the market has its own set of               it difficult to club Indian consumers in
                                                  challenges. Brands and retailers have                 a single group. Unlike Westernwear,
The ethnicwear consumers are no longer            to focus on the key imperatives of the                ethnicwear category is directly linked with
restricting themselves to traditional             ethnicwear market to emerge as long-                  regional preferences and ethnicity. Thus,
retail channels. Indian consumers have            term winners. The imperatives for success             the degree of heterogeneity is much higher
started looking beyond mere products,             in India’s ethnicwear market include:                 in ethnicwear category. In addition to the
they increasingly seek quality shopping           1. Understanding the peculiarities of                 above mentioned factors heterogeneity of
experiences combined with best pricing,           Indian ethnicwear consumers, 2. Creating              choices of a consumer makes the market
wide range of product portfolio, multiple         and sustaining a differentiated market                even more complex. For example, a women
brands under one roof etc. Consequently,          positioning, 3. Introducing innovative                ethnicwear consumer might straddle
ethnicwear retailing has evolved from             designs, styles and fits, 4. Developing               between ethnicwear and westernwear,
traditional family based stores of cities         strategic sourcing capabilities, 5.                   between branded and unbranded
to large format stores, e-tailing, home           Integrating retail channels to provide                products within ethnicwear and between
shopping etc.                                     seamless shopping experience (Exhibit 4).             different brands within branded products.
                                                                                                        Availability of multiple retail channels
Consumers have also started accepting             Imperative #1. Understanding the                      have added additional complexity to the
                                                                                                                                                               COVER STORY // November ISSUE | 2015

ethnicwear-only online retailers. In fact,        peculiarities of Indian ethnicwear                    issue of heterogeneity.
some of these ethnicwear-only retailers           consumers                                             Brands and retailers have to dive deep
cater to the Indian diaspora across Asia,                                                               into the consumer mind set and depend
Europe and the US.                                Indian fashion consumers are                          of granular segmentation of the market to
                                                  heterogeneous by nature, and the                      address the peculiar needs of consumers.
Key imperatives for success in                    ethnicwear consumers are even more                    Ability to customise product offering,
Indian ethnicwear market                          heterogeneous. Regional preferences,                  retail channel-mix and promotion strategy
                                                  multi-ethnicity combined with income                  to address the specific needs of various
                                                  disparity, life-style differences make                micro-segments of ethnicwear market will
While the Indian ethnicwear market                                                                      unleash long-term growth opportunities
promises a plethora of opportunities for                                                                for brands.
existing brands and retailers and new
Exhibit 4: Key Imperatives for Success in Indian Ethnicwear Market
FASHION BUSINESS

                                                                                                          01          Understanding the peculiarities of Indian ethnicwear consumers

                                                                                                          02          Creatingh and sustaining a differentiated market positioning

                                                                                                          03          Introducing innovative designs, styles and fits

                                                                                                          04          Developing strategic sourcing capabilities

                                                                                                          05          Integrating retail channels to provide seamless shopping experience

                                                                                                                                                                        Source: Technopak Analysis

                                             Imperative #2. Creating and sustaining a       Imperative #4. Developing strategic
                                             differentiated market positioning              sourcing capabilities                              the potential to increase fulfilment rates,
                                                                                                                                               reduce inventory cost, enhance customer
                                             In a market characterised by multiple          Ethnicwear sourcing requires a deeper              experience and retain customers. However,
                                             brands (especially in women’s ethnicwear),     understanding of the strengths and                 achieving seamless shopping experience
                                             heterogeneous consumer preferences             capabilities of traditional artisans as well       will require a robust understanding of
                                             and readily brand-switching consumers;         as that of organised manufacturers. As             consumers, retail channels, product
                                             creating a differentiated value proposition    discussed earlier, the consumer class is           and technologies. This is not very easy
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                                             through any one or a combination of            characterised by heterogeneity and thus            to achieve as in India all these factors,
                                             product portfolio, cost leadership, service,   the sourcing volumes are low, sometimes            consumers, channels, products and
                                             customer orientation, retail experience etc.   sourcing gets localised depending on               technologies, are undergoing through a
                                             shall be key to achieve sustainable growth.    peculiar demands of specific markets.              transitory phase marked by rapid evolution
                                             Deployment of advanced consumer                On the high end of the market, the                 from one phase to another.
                                             analytics, right store location selection,     affluent consumers seek uniqueness of
                                             judicious visual merchandising etc. are        the design, a glorified heritage of location       Conclusion
                                             some of the areas that could differentiate     that the product is sourced from etc.
                                             brands and retailers.                          These additional requirements make the
                                                                                            sourcing volumes per style even lower. In          The Indian ethnicwear market is evolving,
                                             Imperative #3. Introducing innovative          an era where the consumers are seeking             business models of brands and retailers
                                             designs, styles and fits                       instant gratification of their fashion needs,      have to evolve accordingly
                                                                                            dealing with multiple artisans, sourcing           It is critical to bear in mind that in a
                                             Both men’s and women’s ethnicwear              partners, working in collaboration with            constantly evolving retail landscape,
                                             markets have witnessed introduction            them to develop products, managing                 the set of associated opportunities and
                                             of innovative products, attractive             inventory in the entire value chain shall          challenges evolve in tandem. The brands
      COVER STORY // November ISSUE | 2015

                                             designs, contemporary styles and fits.         be critical to achieve sustainable profit in       and retailers have to revisit their business
                                             The consumers will continue to seek            ethnicwear market.                                 model, strategic and tactical decisions on
                                             new features in ethnicwear that will                                                              a regular basis to factor in the changed
                                             differentiate her/him from the rest. Hence,    Imperative #5. Integrating retail channels         market dynamics. Understanding the
                                             brands and retailers who could constantly      to provide seamless shopping experience            consumers, keeping a track on technology
                                             introduce differentiated fresh merchandise                                                        innovations and building a customer-
                                             are expected to sustain their market           With increasing acceptance of alternative          centric responsive and scalable business
                                             positioning.                                   retail channels, brands and retailers not          model are three key defining factors that
                                                                                            only have to ensure presence in multiple           will shape the future of ethnicwear brands
                                                                                            retail channels, they also have to integrate       and retailers.
                                                                                            various channels to provide a seamless
                                                                                            shopping experience to the ethnicwear
                                                                                            consumers. Omni-channel retailing has

                                                IMAGES Business of Fashion
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