1880. Indian Retail & Its Effect on Fashion Trend [Mktg]

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DISSERTATION REPORT

On

INDIAN RETAIL & ITS EFFECT ON FASHION TREND

A REPORT SUBMITTED TO ITS-IM, GREATER NOIDA AS A MANDATORYPART OF PGDM CURRICULUM

SUBMITTED TO SUBMITTED BY

PROF. NISHIKANT BELE MD. MIDHAT AZHAN KHAN

ITS-IM GREATER NOIDA ROLL NO.- 13079PGDM [2011-2013]

I.T.S. - INSTITUTE OF MANAGEMENT


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GREATER NOIDA

STUDENTS DECLARATION

I, Md. Midhat Azhan Khan, student of PGDM, hereby declare that

project titled Indian Retail & Its Effect on Fashion Trend is the

original work done by me and submitted to the AICTE, New Delhi in

partial fulfillment of requirements for the award of PGDM is a record of

original work done by me.

Signature of the Student:

Date:

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ACKNOWLEDGEMENT

I would like to take this opportunity to thank the following people who

have directly or indirectly contributed towards the completion of this

Project work and without their help this in the present form would

have not been possible.

I would like to like to thank my Faculty Guide, Prof. Nishikant Bele, ITS-

IM, Greater Noida for guiding me throughout the project.

I am thankful to my parents without their support my PGDM course

would not have been possible.

MD. MIDHAT AZHAN KHAN

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EXECUTIVE SUMMARY

Retailing is the final step in the distribution of merchandise - the last link in the

Supply Chain - connecting the bulk producers of commodities to the final

consumers. Retailing covers diverse products such as foot apparels, consumer

goods, financial services and leisure. The organized retail sector is expected to grow at

6% by 2010 and touch a retail business of $ 17 billion as against its current growth level

of 3%, which at present is estimated to be $ 6 billion. As India moves towards the

service oriented economy, a rise in this percentage is expected. The number of the retail

outlets is growing at about 8.5% annually in the urban areas and in towns with

population between 1,00,000 to I million; the growth rate is about 4.5%. Organised

retailing is witnessing a wave of players entering the industry. These players areexperimenting with various retail formats. Yet, Indian retailing has still not been able to

come up with many successful formats that can be scaled up and applied across India.

Some of the notable exceptions have been garment retailers like Madura Garments &

Raymonds who was scaled their exclusive showroom format across the country.

This research project was undertaken with a view to analyse the trends in the Indian

Apparel Industry with reference to changing trends in buying behaviour of consumers.

The aim was to understand the effect of increasing income levels of consumers on the

apparel industry.

The research has been structured into five chapters. The first chapter is Introduction in

which the introduction to the area of research presented. The definitions of key terms

have also been covered in this chapter. The second chapter is the research methodology

where in the details of objectives of the study, hypothesis, data collection tools, sampling

techniques, tests used for thesis testing and limitations of the research have been

discussed. The rationale for choosing each research method has been described in this

chapter. The third chapter is Literature Review where in all the relevant literature on

Changing trends in Consumer Buying behavior for apparel have been discussed. The

fourth chapter is Finding & Analysis in which analysis and discussion of literature and

survey findings has been done. The fifth chapter is Conclusion in which concluding

remarks of the research have been presented.

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After the research it can be concluded that the Indian Apparel industry is definitely on

the growth path and with increasing income levels of consumers the trends are changing

across apparel retailing that includes retail formats, merchandise and increased market

share in the organized retail.

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TABLE OF CONTENTS

S.No Chapter Name

Executive Summary

1. Introduction to Retail Apparel Industry

2. Research Design, Objective & Methodology

3. Literature Review

4. Findings And Analysis

5. Conclusion and Recommendations

6.

7.

Questionnaire

References

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CHAPTER 1

INTRODUCTION

The Indian textile and apparel industry is one of the largest in the world with US$ 19.24

billion of exports and US$ 30 billion of domestic textile and apparel sales during 2006-

07. It is one of the largest foreign exchange earners for the country and accounts for

about 35% of the total foreign exchange earned by the country.

Size of the Indian Textile and Apparel Industry

The textile industry is the third largest industry in India next to tourism and Information

Technology. It occupies an important place in the economy of the country because of its

contribution to the industrial output, employment generation and exports. At present, the

industry accounts for about 14% of our total industrial production and contributes nearly

15% of total exports. It contributes about 4% of the countrys GDP. Being the second

largest employer after agriculture, the industry provides direct employment to more than

35 million people in both organized and unorganised sectors including substantial

segments of weaker sections of society. Another 56 million people are engaged in allied

activities. With a very low import-intensity of about 1.5% only, it is the largest net

foreign exchange earner in India, earning almost 35% of total foreign exchange.

Textile exports have registered a growth of 10% to US$ 19.24 billion during 2006-07

from US$ 17.11 billion during 2005-06. The size of the Indian Textile and Apparel

industry is estimated to reach US$ 85 billion comprising US$ 45 billion in domestic

sales and balance in exports by the year 2010.

This is the only industry that is self-sufficient and covers the entire value chain. From

growing its own raw material (cotton, jute, silk and wool) through spinning, weaving,

knitting, dyeing and finishing to providing value added products to consumers such as

apparel and home textiles, the textile industry covers a wide range of economic

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activities. The sector has the capability to produce both basic garments in long runs and

fashion goods in smaller and more flexible runs.

Although the sector is primarily cotton based, it benefits from access to a wide range of

textile fibres for which India is a major world producer such as manmade fibres, jute,

linen and silk. Besides natural fibres such as cotton, jute and silk, synthetic raw material

products such as polyester staple fibre, polyester filament yarn, acrylic fibre and viscose

fibre are also produced in India. However, these manmade fibres account for only 40%

share in the cotton-dominated Indian textile industry.

The sector also benefits from access to a vast pool of workers, both skilled and unskilled,

as well as technicians and managers, at relatively low wage rates; and English is the

language of business. With exports as well as domestic sector growing rapidly, the

Textile and Apparel Industry is expected to provide direct employment to about 40

million people by year 2010.

Source: Ministry of

Textiles

Sector

Units

(In million)

Volume

(In billion sq. mtrs.)

Employment

(In million)

(2004-05) (2005-06) (2004-05) (2005-06)

Organized

Textile Mills

1789 1780 1.5 1.0

Power loom 0.426 0.434 28.3 4.8

Handloom 3.487 3.487 5.7 6.5

Jute - - 1.6 4.4

Handicrafts - - - 6.4

Sericulture - - - 6.0

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The textile industry was de-licensed in 1991 and under the current policy no prior

government approval is necessary to set up textile mills. The per capita cloth availability

in the country has increased from 22.87 square meters in 1991-92 to 36.10 square meters

in 2005-06.

Per Capita Availability of Cloth (In sq. mtrs.)

Year CottonBlended/Mixed

Fabrics

100% Non-

Cotton FabricsTotal

1991-92 13.71 2.90 6.26 22.87

1992-93 15.57 2.57 6.36 24.50

1993-94 15.92 3.58 6.72 26.22

1994-95 15.24 3.27 7.47 25.98

1995-96 16.32 3.48 8.19 27.99

1996-97 16.24 3.98 9.08 29.30

1997-98 15.94 4.57 10.41 30.92

1998-99 13.07 4.13 10.99 28.19

1999-00 14.16 4.48 11.91 30.55

2000-01 14.22 4.50 11.96 30.68

2001-02 14.82 4.69 12.46 31.97

2002-03 14.40 4.38 12.59 31.37

2003-04 13.41 4.51 13.09 31.01

2004-05 14.08 4.11 15.32 33.51

2005-06 16.37 4.32 15.41 36.10

Source: Office of the Textile Commissioner

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Indias position in the World Textile Economy

The Indian textile industry accounts for 12% of the world production of textile fibres and

yarns (including jute). India is the largest producer of jute, second largest producer of

silk and cellulosic fibre/yarn, third largest producer of cotton and fifth largest producer

of synthetic fibres/yarns in the world. All this data clearly indicates the position of India

in the World Textile economy.

It can be very clearly said that India holds a very significant position in the Worlds

Textile economy, especially in the cotton textile sector. India's cotton textile industry has

a high export potential. Cost competitiveness is driving the penetration of Indian basic

yarns and grey fabrics into the international commodity markets. Small and flexible

batches of apparel can be manufactured in India which can provide a larger variety of

casual wear and leisure garments at significantly lower costs.

Structure of the Indian Apparel Industry

The garment industry is made up of a complex chain of actors whose roles often overlap.

In very general terms, the industry includes the following entities:

Apparel manufacturers are primarily engaged in the design, cutting and sewing of

garments from fabric. Some manufacturers are contractors or subcontractors, which

generally manufacture apparel from materials owned by other firms. Larger

manufacturers often contract production to many such contractors or subcontractors

in the U.S. and abroad. Some manufacturers are vertically integrated, producing the

textiles from which they make garments, or even operating retail outlets.

Apparel merchandisers generally design and market clothing, but contract the

actual production to manufacturers.

Buying agents locate, qualify and inspect foreign suppliers/producers of garments,

negotiate with suppliers/producers, and often monitor production for quality control

and compliance with other standards. U.S. companies that do not have a large

presence abroad, or in addition to a U.S. Companys own buying staff may use them.

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Retailers are primarily engaged in the distribution, merchandising, and sale of

garments to consumers. Apparel retailers include department stores, mass

merchandisers, specialty stores, national chains, discount and off-price stores,

outlets, and mail-order companies. A relatively new development is the rise of

electronic forms of retailing such as interactive TV and on-line shopping services.

Some retailers who sell their own private labels go beyond their traditional role as

distributors and become directly involved in the design and sourcing of garments

from manufacturers and contractors.

Stages of Development in Apparel Manufacturing

The figure above shows the different levels of services offered by manufacturers or

vendors. At the first stage, the manufacturer sews the cut garment pieces as a contract

service.

The next level of garment industry development is cutting and sewing. At this stage, the

factory still generally operates as contractor, and does not procure the raw materials

needed to produce the garments. The production patterns are also provided by the

apparel company.

Stage 4Full Package, FOB or LDP

Stage 3Cut, Sew & Source

TRIM

Stage 2Cut & Sew

Stage 1Sew

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At the third stage, manufacturer takes the next step and sources trim, particularly for

basic products for which the trims are standard, such as white buttons for a mens shirt.

At the final stage, a manufacturer becomes a full package supplier. He is responsible for

many aspects of the garment production from purchasing the fabric and trim, pattern-

making to full production and packaging, ready for retail sale. The level of service for

full-package producers can vary. Even though the manufacturer purchases the fabric and

trim, the retailer or Apparel Company often chooses the actual fabric and the mill to

produce the fabric. Sometimes the full-package supplier will select the fabric and fabric

suppliers, or suggest alternative suppliers that are able to meet the fabric specifications

given by the customer. Full-package suppliers must be financially solvent in order to

obtain financing for the purchase of raw materials.

The Supply Chain in Textile and Clothing Sector

The supply chain in textile and clothing sector is illustrated in the diagram below. The

dotted lines represent the flow of information, while the solid lines represent the flow of

goods. The direction of the arrows indicates a demand-pull-driven system. The

information flow starts with the customer and forms the basis of what is being produced

and when. It is also worth noticing that information flows directly from the retailers tothe textile plants in many cases. The textile sector produces both for clothing sector and

for household use. In the former case there is direct communication between retailers

and textile mills when decisions are made on patterns, colors and material. In the second

case, textile mills often deliver household appliances directly to retailers.

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At each link in the production chain to the left of the distribution centre in the diagram,

there are usually several companies. In order to make goods, information and payment

flow smoothly, a number of logistics and business services are needed.

CHAPTER 2

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY:

The report explains the factors that affect the Indian retail apparel market and the

changing trends in the apparel industry with the income levels.

To study the Indian Textile Industry with reference to key success factors.

To analyze the Indian Retail industry with reference to the recent developments.

To study the changing trends in the Apparel Retailing in India

To study the consumer buying behavior for Apparels.

HYPOTHESIS:

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Increasing income levels of consumers have a positive effect on the growth of

apparel industry.

RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. Once can also define

research as a scientific and systematic search for pertinent information on a specific

topic. In fact, research is an art of scientific investigation. The Advanced Learners

Dictionary of Current English lays down the meaning of research as a careful

investigation or inquiry especially through search for new facts in any branch of

knowledge. Redman and Mory define research as a systematized effort to gain new

knowledge. Some people consider research as a movement, a movement from the

known to the unknown. It is actually a voyage of discover. We all possess the vital

instinct of inquisitiveness for, when the unknown confronts us, we wonder and our

inquisitiveness makes us probe and attain full and duller understanding of the unknown.

This inquisitiveness is the mother of all knowledge and the method, which man employs

for obtaining the knowledge of whatever the unknown, can be termed as research.

Research is, thus, an original contribution to the existing stock of knowledge making for

its advancement. It is the pursuit of truth with the help of study, observation,

comparison and experiment. In short, the search for knowledge through objective and

systematic method of finding solution to a problem is research. The systematic approach

concerning generalization and the formulation of a theory is also research. As such the

term research refers to the systematic method consisting of enunciating the problem,

formulating a hypothesis, collecting the facts or data, analysing the facts and reaching

certain conclusions either in the form of solutions towards the concerned problem or in

certain generalizations for some theoretical formulation.

Data Collection Approach:

The data for this research was obtained as a judicious mix of both secondary and primary

data, which were obtained from various sources as mentioned below.

Secondary Research:

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The secondary research was undertaken through collection of above-mentioned

secondary data, which has been presented in the report as the literature review and

discussion in findings. The chapter 3 covers the existing literature on the changing trends

in the Consumer buying behavior for apparels. The information relevant to the topic has

only been included in the report.

Primary Research:

The different options available to the researcher for the purpose of collecting the primary

data were as follows:

Interviews: Interview is a technique used to gain depth information on the subject,

feelings and attitudes of the interviewee.

But the interviews tend to be used on small sample and are generally time consuming.

Secondly at times the interviewer can be preoccupied or need more counter information

may distract interviewers trend of discussion. Thirdly the information gathered from

interviews tends to highly subjective and there can be loss of information during

transcribing. So this method was not chosen for the purpose of the research.

Questionnaires/surveys: There are three types of questions in a questionnaire, which are

open, closed and a combination of both open and closed questions.

Open Questionnaires:

The open-ended questions allow the respondent to answer in his or her own words.

These questions result in more information, as the respondents are not refrained from

giving their views in short. But the large information thus collected is difficult to

analyze. Thus the information collected cannot be easily generalized.

Closed Questionnaire:

These questions limit the options given to the respondent and thus the information

collected becomes easy for tabulation and interpretation and thus resulting in finite

results.

Combined questionnaires:

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Through combined questionnaires, the combination of quantitative and qualitative

responses can be obtained. Quantitative data will complement and support the qualitative

responses, therefore adding validity to the data collected.

Rationale for choosing the research method:

The researcher has selected the combined questionnaire for the purpose of the study. The

questionnaire was designed on the basis of literature review and was presented to

respondents by the researcher at selected Malls and Stores in Delhi. The advantage of

using questionnaires method is that it is an economical method to collect information. It

gives the user an option to vary the selected sample size without much of a problem and

to get more information if it is observed that the collected information was not sufficient

or revealing.

The researcher designed two questionnaires for the purpose of survey, the first

questionnaire was prepared for the Retailers and the second questionnaire was designed

for customers of Delhi city.

Sample Design

The researcher decided to undertake his research at the following Malls in Delhi:

Ansal Plaza, Khelgaon.

MGF Metropolitan, Gurgaon

Sahara Mall, Gurgaon

DT city centre, Gurgaon

The Great India Place, Noida

The Centerstage Mall, Noida

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Sample Element: The basic units, which needed to be examined through the study, were

Customers visiting and the Stores in-charge of the Retail outlets in the selected Malls

and stores.

Population : - The universe of the study comprises all the Store in- charges andCustomers.

Method : - The approach of convenience sampling was used for survey.

Sample Size : - The total number of respondents surveyed was as follows:

Retailers Contacted : 20

Customers Contacted : 75

Sample Extent : - The scope of study was restricted to the geographical areas ofDelhi.

Reliability and Validity

The researcher considered the survey to be reliable because the respondents were Store

Incharge who has been associated with the selected outlets for quite a reasonable length

of time; therefore they had knowledge of Industry. Moreover the researcher has tried to

get the view of Customers contacted at Apparel Stores. They gave sufficient time to the

researcher for filling the questionnaire in the right way. But still there might be some

discrepancies on the part of the researcher, which have been mentioned in the

limitations.

For the purpose of survey, the researcher has tried to get quality data and also tried to

quantify the collected information in terms of values and percentages, as and where

applicable. The researcher has tried to get the most relevant information for the analysis.

LIMITATION OF THE STUDYFor every research there are restrictions and limitations. Without them the world does

not exist. Similarly there are some restrictions in my research work, which could not be

controlled. The following were some limitations, which I faced in the making of this

research.

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The study was restricted to selected Malls and Stores in Delhi.

Time was the biggest constraint. It was difficult and time consuming to get

the questionnaires filled personally from the respondents thus the sample

size was restricted to 20 Retailers and 120 Customers. Nevertheless all

efforts were made to get relevant information for the successful completion

of the research.

There may be some discrepancies in views as some people might give false

information in the Questionnaire, as they might not be interested in filling the form.

The respondents may be biased in their opinions.

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CHAPTER 3

LITERATURE REVIEW

In a research conducted by Business World 2007-2008 the following behavior pattern

related to Apparel buying has been observed.

The New Indian Consumer

When it comes to loyalty, branded garments are a cut above all other sectors. More than

51 per cent of respondents say they are loyal to the apparel bands they own. And even

though consumers can easily switch brands, only 24 per cent consumers say they are

likely to do so. Allen Solly, a premium brand positioned for the yuppie and upcoming

professionals, and marketed by Aditya Birla Nuvo's Madura Garments tops that list with

68 per cent of its customers falling in the 'true loyal' category.

Performance Measures (Apparel)

Apparel

Industry*

Allen

Solly

Provogue Louis

Phillipe

Levis Van

Heusen

Store

Experience

74 81 72 72 69 76

Merchandise 63 71 64 60 67 62

SalesPersonnel 63 69 63 62 55 66

Billing 60 65 64 57 55 59

Packaging 64 65 64 66 58 65

Additional

Services

52 62 51 51 5410 46

Schemes &

Promotions

54 62 56 48 5013

53

Advertising &

Commn.

55 58 5510 55 56 57

Superscript: Percentage of people who were unhappy in these parameters;

* Customers who rated performance as excellent or very good.

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The Rankings

6759 58 56 56 55 55 55 53 51 49

1110987654321

0

10

20

30

40

50

60

7080

Allen

Soll

y

Prov

ogue

Lou

isPh

ilippe

Levi'

s

VanH

euse

n

Golor

plus

J

ohnP

layer

sLe

eAr

row

Wills

Lifes

tleUC

B

CSIScore

Rank

Loyalty Segmentation

1721 20 21

25 25

28

25 22 24

39

24

1015 15

20 18 1715

22 2520

17 18

5 69

5 5 711

6 711

17

7

68

58 56 54 53 5247 47

45 44

37

51

0

10

20

30

40

50

60

70

80

AllenSolly

Provogue

Louis

Philippe

Levi's

Colorplus

VanHeusen

JohnPlaers

Wills

Lifestyle

Arro

Lee

UCB

Industry

Average

High Risk Trapped Accessible True Loyals

LIFESTYLE

As India's retail sector booms, customer expectations are rising much faster than the

pace at which retailers are able to roll out their services. That is the conclusion drawn

from the performance of companies in three segments - lifestyle and fashion stores,

coffee chains and fast food joints. For example, though lifestyle and fashion stores like

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Shoppers' Stop, Pantaloon, Lifestyle, and Globus are offering a shopping experience that

is decidedly better than what was available five years ago, customers are demanding

more.

The segment has managed to muster a loyalty of only 36 per cent. A similar story playsout in the coffee chains category. Thirty-two per cent of customers feel they are trapped.

Now, that's not a comforting thought for a coffee bar. In fast foods, Pizza Hut comes out

far ahead of competitor Domino's because customers think that the Pizza Hut's staff is

more service-oriented.

Performance measures (lifestyle and fashion stores)

Lifestyle

&

Fashion

store

Industry*

Shoppers

Stop

Life

style

Globus Westside Pantaloon

Store experience 70 76 68 68 70 65

Merchandise 62 67 51 56 70 52

Sales personnel 60 62 57 58 66 55

Billing 58 64 51 57 03 47

Packaging 56 58 58 59 56 51

Additional

services

55 54 57 54 62 5013

Schemes &

promotions

52 57 49 54 53 51

Loyalty

programmes

4020 3317 29 3917 4025 6313

Advertising &

Commn.

51 57 52 52 45 4910

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Superscript: Percentage of people who were unhappy in these parameters;

* Customers who rated performance as excellent or very good.

The Rankings

54 53

43 4239

54321

0

10

20

30

40

50

60

Wests ide Shoppers' Stop Lifesty le Pantaloon Globus

CustomerSatisfactionIndex

Rank

Loyalty Segmentation

20 18

3224

3626

2330

3337

38

316

7

3 10

7

6

5144

32 3020

36

Westside Shoppers' Stop Pantaloons Lifestyle Globus Industry Average

Hig h R isk Tr ap ped Accessi bl e Tr ue Lo yal s

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School Goer (Age 12-16)

Close to 50% of their annual spending of Rs. 2,133 (USD 46) on apparel is on Western

wear, with Western casuals occupying a larger share (27.9%) of the pie. High utility and

comfort vis--vis other modes of dressing at this age is a contributor to the higher spends

on this type of apparel. There is a fair proportion spent on fabric as well, at 21.1%. Inner

wear expenditure accounts for more than 15%, marginally higher than that accounted for

by ethnic wear. Share of expenses on Western wear is visibly higher among the boys at

55-9%. But a sizeable 42.4% among the girls is a visible sign of increasing

consciousness of fashion trends and shift towards Western wear. Fabric and ethnic wear

purchase is higher among girls. Share of spends on inner wear is largely similar between

the two genders.

Shares of Wallet apparel types

All Boys Girls

Western Casuals 27.9 30.8 24.8

Western Formals 22.0 25.1 17.6

Fabric 21.1 18.8 24.3

Inner Wear 15.6 15.9 15.2

Ethnic Wear 13.3 9.4 18.7

All figures in Per cent

Outer wear

In the last year, 47% have purchased Western formals and 60% have purchased Western

casuals. Ethnic wear purchases are restricted to 29%. Among those who buy, most (70%

-72%) buy at least once in six months.

Small shops selling local brands are the preferred format for making final purchases for

all apparel types. Branded outlets, both multi and exclusive brand, are also vying for the

attention of this life stage. Only a few (-11%) travel beyond 5 Kms for shopping.

Shopping for apparel is invariably done (in 80%+ cases) at cither local neighborhood

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markets or popular big markets in the city or town, regardless of the kind of apparel

shopped for.

Although bulk of the outlets regularly shopped at are likely to be within a 2 km range

from their residences, l/3rd do not mind travelling upto 5 kms, especially for Westernformals and casuals. Shop loyalty is the highest for Western formals and Western

casuals.

20

51

29

23

49

28

18

52

29

0

10

20

30

40

50

60

AllFiguresin

Percent

Western Formals Western Casuals Ethnic

Outer Wear: Purchase Frequency

Once in 3 Months Once in 6 Months Once in a year

22

47

18

85

25

42

18

11

3

29

42

16

94

0

10

20

30

40

50

AllFiguresinPercent

Western Formals Western Casuals Ethnic

Spends on Outer Wear

Upto Rs. 250 (USD 5.4) Rs 251-500 (USD 5.5-10.8) Rs. 501-750 (USD 10.9-1.63)

Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+)

Inner wear

Most (87%) have bought inner wear in the last one year. Among those who have bought,

86% buy once in six months. Purchases are made to a large extent from smaller shops

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selling local brands (51 % buy mostly at such outlets) rather than management or

employee buy-outs (MBOs or EBOs), which are patronised by 20% and 17%

respectively. The shops bought from are located in the neighbourhood markets in 55% of

the cases and the larger shopping markets in the city in 36% of the cases. Most (70%)

people do not travel more than 2 kms for their inner wear shopping.

A third state loyalty to a particular brand or set or brands while another third express

loyalty to the shop they buy from. The remaining third say they are not particular about

either the brand or shop. Most do not spend more than Rs. 250 (USD 5.3) in a six month

period; 37% spend upto Rs. 100 (USD 2.1) while 45% spend in the range of Rs. 101-250

(USD 2.2 5.4)

Preferred Formats, Location for Purchase

FormatWestern

Formals

Western Casuals Ethnic Wear

Purchased from

Small shops selling local

brands

39 40 42

MBOs 26 25 26

EBOs 25 23 18

Large department stores 10 10 10

Location of the store

Popular, big shopping

market

51 50 43

Local neighborhood/colony

market

34 37 42

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Markets popular for selling

that prod jet

12 9 11

Shopping malls 5 5 4

Distance from home

Upto 1 km 26 27 32

l.l-2kms 28 27 31

2.1-5 kms 35 33 27

More than 5kms 12 13 9

All figures in percent.

Loyalty to Outlets (All figures in percent)

% who say Western

Formals

Western

Casuals

Ethnic

Wear

Fabric

I buy only from one or a few shops that I

like/trust

52 52 51 47

If I dont find a brand at my shop, I buy

some other brand from the same shop

37 34 29 34

Corporate Group (Age 21-25)

The share of expenditure on Western wear exceeds 50% from the annual spending of Rs.

2,727 (USD 59.3). The difference in the allocation of funds to formals and casuals is

stark. The share of spending on inner wear and fabric is nearly the same (~13%).

The workingman buys more formals (~28.5%) with preference for classy, contemporary

brands. However, ethnic wear and fabric ate preferred among women. The wallet share

of inner wear is nearly the same amongst both men and women.

Share of wallet (apparel types)

All Boys Girls

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Western casuals 24.8 26.8 20.5

Fabric 22.9 21.6 257

Ethnic wear 13.3 9.9 20.5

Inner wear 13.2 13.2 13.3

All Figures in per cent

Outer wear

The purchase of Western formals has been by 52%. As for casuals it is 58%, ethnic wear

(~33%) and fabric (64%). Nearly 70% of the people buy Western wear once in six

months, as compared to ethnic wear (62%).

The median spends are in the range of Rs. 251-500 (USD 5.5-10.8) for nearly 43% of the

people for Western casuals and ethnic wear. However, spending goes above this for a

substantial number of them.

The majority of people purchase branded products especially for their Western wear.

The focus for ethnic wear is also shifting towards branded wear. The loyalty towards

brands is quite high. In fact the youth is quite branding conscious.

The purchases are from MBOs as well as EBOs with a good assortment of brand

offerings. Even department stores are preferred by a chosen few with a good number

buying local brands from small shops as well.

The most preferred and frequented locations are, popular shopping markets by more than

50% of the people for Western wear and 48% for ethnic outfits. People do not prefer to

travel much for shopping except for 10% who manage to travel more than 5 kms.

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The decision of the final purchase format is made by more than 90% of the corporate

climbers on their own. Seemingly, shop loyalty is also high with more than 40%

preferring to buy from shops they trust.

23

47

30

19

52

29

17

45

38

14

47

38

0

10

20

30

40

50

60

AllFiguresinPercent

Western Formals Western Casuals Ethnic Wear Fabric

Purchase Frequency of Apparel


14

37

21

16

11

15

43

21

14

7

21

44

1513

7

25

41

16

13

4

0

5

10

15

20

25

30

35

40

45

AllFiguresinPercent


Spends on Apparel


Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+)


Format Western Western Ethnic Fabric

28


29/90

Formals Casuals Wear

Purchased from


brands

37 35 43 47

MBOs 29 31 25 26

EBOs 25 23 19 20

Large department stores 8 7 8 5



market

53 51 58 44

Local

neighborhood/colony

market

34 37 39 46

Markets popular for

selling that product

7 6 9 7

Shopping malls 7 8 4 3

Distance from home

Upto 1 km 29 31 34 39

l.l-2kms 29 28 31 27

2.1-5 kms 28 27 25 24

More than 5kms 14 13 10 10



$ who say Western

Formals

Western

Casuals

Ethnic

Wear

Fabric

I buy only from one or a few shops

that I like/trust

46 48 44 46

If I dont find a brand at my shop, I

buy some other brand from the

same shop

36 33 34 31

Inner wear has been bought by 93% of the people in the last one year whereas 88% buy

at least once during six months. The spending of the majority (-42%) is in the range of

Rs. 101-250 (USD 2.2-5.4).

29


30/90

Around 52% still make their lingerie purchases from small shops selling local brands.

Nevertheless the trend has been changing with the foray of national chains in major

metropolitan cities of the country. Close to l/5th of these consumers buy from outlets

that house multiple brands and are also ready to travel a distance of 2.1-5 Ions. Close to

38% of the employed is brand conscious and hence buy brands of their choice.

Cautious Planner (Age 31-45)

Western formals and fabric account for more than half of their expenditure on apparel.

The higher proportion allotted to fabric is contributed more by the women for whom it

accounts for over a third of their apparel expenditure.

The share of expenditure on Western wear among working women is substantial at 35%,

an evidence of the increasing adoption of Western wear for a variety of occasions.

Outer wear

Fabric purchase has the highest incidence 62%, over a one-year period. Close to half

(47%) bought Western formals. And sizeable segments have purchased Western casuals

(40%) and ethnic wear (37%).

Among the buyers, purchase frequency is at least once in six months for close to 70% in

the case of Western wear. Ethnic wear and fabric is purchased as frequently by 63-64%.

Spends on each of the different types of apparel arc spread over various brands. A larger

proportion spends in the region of Rs. 250-500 (USD 2.2-10.8) for any kind of apparel.

Spends on Western wear tend to be higher.

About 60% buy branded apparel in Western wear, while proportions buying branded

ethnic wear or fabric are lower at 49%. Brand loyalty is a shade higher for Western

casuals with a slightly larger number of people who say they will buy only brands they

like or trust and will seek out their brands at other outlets if it is not available in the

outlets they frequent.

These individuals ate the decision makers on the outlets to purchase from in nearly all

the cases. Purchases ate invariably made at the local neighbourhood market or one of the

larger, popular markets in the city which arc located within a 2 km radius in 60%+ of the

30


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cases, particularly for ethnic wear and fabric purchases. For Western wear purchases,

there is slightly higher inclination to travel beyond 2 kms.

Purchases from small shops selling local brands are most prominent. But purchases from

MBOs and EBOs are also substantial, especially for Western wear.

Loyalty to outlets

About half express loyalty to a particular outlet or set of outlets. And in the event of non

availability of what they are looking for, a third would settle for whatever is available at

that outlet. Shop loyalty factor seems somewhat higher for Western formals and casuals.

Inner wear

Nearly all (91%) have bought inner wear in the last year. It is bought by 85% of them at

least once in six months. Spends are above Rs. 250 (USD 5.4) in less than a fifth of the

cases; 37% have spent upto Rs. 100 (USD 2.1) and 44% have spent Rs. 101-250 (USD

2.2-5-4) in the last six months. Nearly all have bought inner wear using cash.

About half have bought from smaller shops selling local brands but purchases from

MBO and EBOs are significant at 23% and 18% respectively. The purchases from EBOs

are particularly interesting as it is similar for both men and women. These shops are

typically in the neighborhood markets (61% of the times) or in popular, shopping areas

(31%), within a 1 km radius from their residence in nearly half the cases. Travel exceeds

2 km for a significant one-fourth. Loyalty to shops and brands is largely similar to that of

apparel, with proportions being spread over those loyal to outlet, those loyal to brand

and those who are neither.

Share of wallet (apparel types) (All figures in percent)

All Men Women

Western Formals 27.7 28.9 19.2

Fabric 25.7 24.5 34.4

Western Casuals 19.3 19.8 15.9

Inner Wear 14.7 14.5 15.7

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Ethnic Wear 12.6 12.3 14.9

17

53

30

18

51

31

17

47

36

16

47

37

0

10

20

30

40

50

60

AllFiguresinPercent




15

43

19

15

6

22

36

23

13

7

26

39

16

13

4

25

39

19

12

4

0

5

10

15

20

25

30

35

40

45

AllFiguresinPercent


Spends on Apparel


Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+) 3-D Column 6


Format Western

Formals

Western

Casuals

Ethnic

Wear

Fabric

32


33/90

Purchased from


brands

38 35 41 45

MBOs 39 30 28 27

EBOs 24 23 21 20




market

45 44 48 38

Local

neighborhood/colony

market

41 42 40 51

Markets popular forselling that prod jet

8 7 6 7

Shopping malls 7 7 6 4

Distance from home

Upto 1 km 33 36 36 39

l.l-2kms 28 28 33 30

2.1-5 kms 30 25 21 22




$ who say Western

Formals

Western

Casuals

Ethnic

Wear

Fabric


that I like/trust

49 52 46 45


buy some other brand from the same

shop

37 32 30 33

33


34/90

The Home Makers (Age 26-60)

Fabric and ethnic wear purchases account for a larger share of the wallet among these

women. Western wear also has a considerable share in their spending. Share of inner

wear is largely similar to that seen in other life stages.

Outer wear

Purchase incidence of fabric is highest in this group, with 58% of the women having

bought some fabric in the last year. Close to half have bought ethnic wear, while a

substantial 35% and 33% have bought Western formals and Western casuals. Among

buyers o all these categories, frequency of purchase is at least once in six months in

almost 70% of the cases.

Fabric and ethnic wear purchases are in the lower ranges, to some extent. For instance

almost a third has spent only up to Rs. 25 1 (USD 5.4) on fabric, while these proportion

are much lower for Western wear. The value of spends is higher for Western casuals in

particular.

Brands are more popular in purchase o Western casuals (-61%) and formals (-57%!

However, close to 48% of the housewives buy branded clothes for their ethnic wear as

well fabric purchase.

The housewife is the decision maker in 86% of the cases. Among the remaining

women, the husband plays some role in outlet choice. On fabric purchase however, the

housewives are the unilateral decision makers.

Popular large shopping areas and the local neighborhood markets are patronized for

apparel purchase. Smaller shops selling local brands are frequented in more than 40% of

the cases. But purchases from MBOs and EBOs are also significant, especially for

Western wear.

As seen in the other life stages, distance of these shops is within a 2 km radius from their

homes in a larger number of cases.

Brand and shop loyalty is lower for fabric purchase. Brand loyalty is higher for Western

casuals.

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35/90

Share of wallet (apparel types) (All figures in percent)

All Housewives

with no children

Housewife with

dependent

children

Housewife

with

Independent

Children

Fabric 25 22 26 27

Ethnic Wear 24 26 23 22

Western

Formals

17 18 17 15

WesternCasuals

17 17 17 17

Inner Wear 17 17 17 19

17

51

29

19

54

27

16

51

33

20

48

31

0

10

20

30

40

50

60

AllFiguresinPercent




35


36/90

19

44

19

13

4

21

34

24

14

7

24

41

18

12

4

31

35

18

12

3

0

5

10

15

20

25

30

35

40

45

AllFiguresinPercent


Spends on Apparel


Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+)


Format Western

Formals

Western

Casuals

Ethnic

Wear

Fabric

Purchased from


brands

44 41 43 49

MBOs 24 28 30 27

EBOs 23 21 17 15


Location of the storePopular, big shopping

market

45 44 45 41

Local

neighborhood/colony

market

41 41 44 49

36


37/90

Markets popular for

selling that prod jet

9 8 6 7

Malls/Shopping Complex 5 7 6 4

Distance from homeUpto 1 km 31 31 35 38

l.l-2kms 30 33 34 31

2.1-5 kms 28 24 21 22



Inner wear

Four out of five housewives have bought inner wear in last year, with 82% having

bought at least twice a year. A substantial 44% have spent in the range of Rs.101-250

within a six month period. More than half buy at the smaller shops selling local brands

but purchase from branded outlets are also substantial (MBOs-23%, EBOs-14%); which

is clear evidence of branding' beginning to play a more important role in the inner wear

category.

Loyalty to Outlets (All figures in percent)$ who say Western

Formals

Western

Casuals

Ethnic

Wear

Fabric


that I like/trust

48 51 45 43


buy some other brand from the same

shop

42 42 31 34

37


38/90

CHAPTER 4

FINDINGS & ANALYSIS

Retailing

Retailing is the most important part of the entire logistics chain in a business especially

in consumer related products. Without proper retailing the companies can't do their

business. Retailing is the process of selling goods in small quantities to the public and is

not meant for resale. Retail is derived from the French word retaillier, meaning to cut a

piece off or to break bulk.

There are various ways of making goods available to consumers like:

Company to distributor to wholesaler to retailer to consumer

Company to salesperson to consumer

Company to consumers (online/ phone/ catalog ordering)

These three are among the most common ways of making the goods available to

consumers. But in India the three layered system of distributor, wholesaler and retailer,

forms the backbone of the front-end logistics of most of the consumer-good companies.

In this system the company operating on all India basis appoints hundreds of distributorsacross the country that supplies to various retailers and wholesalers. Wholesalers in turn

can either directly sell in the market or can supply to retailers. The current retailing

system prevalent across the country is highly fragmented and unorganized. Anyone with

some money and some real estate can open a small shop and become a retailer catering

to the locality in which he opens the shop.

There are a number of reasons behind this fragmented retail market. Some of the major

reasons being:

Poverty and lower literacy levels.

Low per capita income.

Savings focused and less indulgence mindset.

Poor infrastructure facilities like roads etc.

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Restrictions on intra-state good movement.

High taxes.

No exposure to media.

High import duties on imported goods.

FDI in retailing is not allowed.

Retailing is not considered as a business or industry by the government.

Hitherto none of the business schools in India were offering specialized courses

on retailing.

Expensive supply chain.

Besides these there are other reasons too, which led to stifling of growth of organizedsegment of retailing sector and which instead led to highly fragmented market.

Today in India we have more than 12mn retail outlets and most of then are family run

and locally owned. There are very few nationally present retail stores. In India the

process of buying and selling at these unorganized retail outlets, is highly characterized

by bargaining and negotiations. But slowly with increasing influence of media and

urbanization the market is shifting towards organized segment. Seeing the huge market

size of retail business in the country and the current level of organized segment, many

players have jumped into the fray and many are waiting for the right opportunity to enter

it.

Classification of Retailing

Retailing is not bound or restricted by product categories, any consumer products

manufactured by a company and available in the market can be retailed ranging from

food to books to toys etc.

Entire retailing market in India can be divided into traditional retail stores and modernretail stores. While traditional retail stores form the unorganized segment of the market,

modern stores are a part of organized sector.

Organized retail market can be further categorized in then following different ways:

On the basis the area covered by various stores.

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On the basis of the products retailed by various stores.

On the basis of the ownership arrangement and product categories.

On the basis of readiness for riding the expected retail boom.

Categorization on the basis of area covered by various stores:

Based on the area covered by the store we can categorize retail stores into 5 types,

namely:

Neighborhood stores

High street stores

Small department stores

Specialty stores

Shopping malls, etc.

Neighborhood stores have an area in the range of 100-500 sqft and are most common of

all; these are present every where in every locality. These shops keep items pertaining to

daily use ranging from food and grocery to stationery etc.

High street stores have an area ranging between 300-1000 sqft. These stores are

generally specialty stores keeping only particular product category.

Small departmental stores have area in the range of 500-2000 sqft and these stores

generally keep grocery and other daily use items.Specialty stores have an area in the range of 5000-50000 sqft and these keep items

pertaining to only one particular product category.

Shopping malls come at the top of this retail pyramid and it keeps products ranging all

the product categories.

Categorization on the basis of products retailed by stores:

On the basis of product retailed, we can categorize stores into various types. In fact, the

categorization can be as vast as the number of product categories but taking into account

the importance of the product category we can divide these retail stores into following

types:

Food retailing stores.

Apparel retailing stores.

Pharmaceutical retailing stores.

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Books, music and life-style / entertainment retailing stores.

Fuel retailing stores.

Electronic goods retail stores.

House furnishing retail stores.

Food retailing stores can be further subdivided into fast food retailing stores, other fresh

foods stores and groceries stores and apparel stores can be sub-categorized into women

apparel, men apparel and children wear stores. Similarly we can do sub-categorization in

accordance with product categories and target segment.

Categorization on the basis of ownership arrangement and product categories:

On the basis of ownership arrangement and product category, categorization of retail

outlets can be done in following manner:

Departmental stores

Super Market

Consumer Durable stores

Franchisee Stores

Departmental stores are retail outlets that offer a number of products and a number of

brands under one roof. The entire store is divided into a number of departments with

each department offering one category of products. These stores offer everything exceptgrocery products.

Super markets offer products related to grocery and other food categories.

Consumer durable stores can be sub categorized into two, one electronic goods stores,

and book & music Stores.

Franchisee stores can be categorized into following types:

Apparel stores

Foot wear stores

Gifts and cards Stores

Watches Stores

Jewelry stores

Categorization on the basis of readiness for riding the retail boom:

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The organized sector of retailing can also be categorized into three types on the basis of

their readiness for off take to participate in the boom.

Ready to Go: Those retail categories, which have all inputs in place and all

development for the sector to take off has taken place.

Shape and Adapt: Those retail categories, which require development in logistics, cold

storage facilities and some development in sourcing arrangement.

Wait and Watch: These are the retail categories, which are waiting for the regulatory

permission to take off.

Ready To Go Shape and Adapt Wait and Watch

Men's apparel Women's apparel Liquor Stores

Dry Grocery Fresh Grocery Fuel retail storesElectronics/Consumer

Durables

Fast Food Pharmacy Stores

Life Style Products

Source: Excerpts from CII- McKinsey report on retailing sector

Some of the main factors essential for running a successful organized retail stores

are:

Location of the store.

Sourcing the right merchandise. Developing a promotional plan.

Area for moving around and browsing in the store.

Ambience of the store (designing, building, and fixturing the stores).

Type of staff and its training.

Varieties and choices available to the consumer.

Leveraging and gaining economic synergies across the locations (operational

economies of scale).

Factors that would lead to growth in retailing sector are:

Increasing growth in disposable income.

Increasing demand of products by consumers.

Changing life styles.

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Better product and shopping options available with consumers.

Relaxation of a number of regulations by government.

Rethinking on existing Real estate laws (like governmental plans for ULCA).

Restructuring in Tax regime (like uniform sales tax for all states).

Increased investment and focus on infrastructure by government.

Present Situation

Indian retailing industry is largely in hands of unorganized sector. There are around

12mn retail outlets across the country, which makes India number one in retail outlet

density. There is one outlet serving every 200 consumers. With increasing urbanization

and government following the policy of liberalization the industry is waiting in wings to

fly and grow at stupendous rates. It is in this anticipation a number of studies andsurveys have been done.

All these surveys might be differing in statistics but all have one thing in common: the

expected boom in the sector. The studies are based on a number of apparent changes

that have taken place in the society over past few years with onset of liberalization era in

the country.

Some of these factors are:

Economic reforms ushered in by the central government.

Lower import duties & increase in imported goods.

Increase in exposure to media.

Higher amount of ad-spending by companies.

Increase in disposable income.

Change in spending and indulgence tendencies.

Changing profile of families, shift towards nuclear families.

Changing profile of women.

Higher level of education among women.

More number of working women.

Changing life styles.

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All this led to beginning of a gradual shift in the control on the market from retailers'

hands to customer hands. In India presently the retailing market is dictated by retailers

and now with a number of new players coming in, the shift has started taking place

slowly to consumer dictated market.

The organized sector started with first few players setting up stores targeted at upper

income bracket of people but slowly the focus was shifted to middle and upper middle

class people. Today we have most of these retail stores targeted at middle class and

above.

RETAIL INDUSTRY IN INDIA

Till the early nineties, the organized retail industry had not evolved. There was no

consumer culture, there were limited brands and people bought what was available.

There were no shopping areas. The retail industry lacked trained manpower. It was

difficult to compete with the unorganized sector because they operated with minimal

labor costs and overheads. Tax laws and government restrictions added the problem.

Liberalization has changed all this. Today customer is with more spending power, is

better educated, and more importantly, exposed to brands and products through

television and foreign trips . The Indian consumer now has the desire to acquire.

Personal consumption is on the rise. Customer segments, already diverse, have been sub-

divided with joint families giving way to nuclear families, and the increasing number of

working couples. These changes along with increased availability of retail space and

qualified manpower have had a positive impact. New players are now entering the

market. Instead of retail evolution, there is a retail revolution in India.

The emerging purchasing power of the urban educated middle class and the growingwork culture of the working women has changed the buying habits of families, who are

experiencing a growth in income and dearth of time. Rising incomes have led to

increasing convenience and service. Consumers have started caring about where they

would like to shop, be it multi brand outlet, exclusive stores or malls with development

around them but are also more demanding. They want superior quality at an affordable

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price and they want it instantly. Thus, we see that there is a strong trend in favor of one-

stop shops like malls and supermarkets.

The economy of India is the fourth largest in the world as measured by purchasing

power parity (PPP), with a gross domestic product (GDP) of US $3.611 trillion. When

measured in USD exchange-rate terms, it is the twelfth largest in the world, with a GDP

of US $719.8 billion (2005). India is the second fastest growing major economy in the

world, with a GDP growth rate of 8.9% 2 at the end of the first quarter of 20062007.

However, India's huge population results in a per capita income of $3,300 at PPP and

$714 at nominal.3

The economy is diverse and encompasses agriculture, handicrafts, textile,

manufacturing, and a multitude of services. Although two-thirds of the Indian workforce

still earns their livelihood directly or indirectly through agriculture, services are a

growing sector and are playing an increasingly important role of India's economy. The

advent of the digital age, and the large number of young and educated populace fluent in

English, is gradually transforming India as an important 'back office' destination for

global companies for the outsourcing of their customer services and technical support.

India is a major exporter of highly-skilled workers in software and financial services,

and software engineering.

India has gradually opened up its markets through economic reforms by reducing

government controls on foreign trade and investment. The privatization of publicly

owned industries and the opening up of certain sectors to private and foreign interests

has proceeded slowly amid political debate. Over the past few years the Indian economy

has undergone drastic changes- changes that have had the market flooded with

multinationals and a variety of products. There has been a sudden upsurge in the Indian

industry and exponential growth in specific industries. Todays companies work in a war

zone of rapidly changing competitors, technological advances, new laws, managed trade

policies and diminishing customer loyalty. Earlier the companies could succeed by

producing their products and supporting them with hard selling and heavy advertising.

But

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Todays customer faces a plentitude of products in every category.

Customers exhibit varying and diverse requirement for product and service

combinations and prices. They have high and rising expectations of quality and

service.

Recent Trends in Apparel Industry

The domestic clothing, textiles and fashion accessories market is estimated to be at Rs.

80,000 crore and about 13.6% of this market is believed to be organised. Apparel retail

is the largest segment of this sector and accounts For almost 39% of the organised retail

sector. The men's apparel market in India, valued at Rs. 32,640 crore for the year 2004,

has grown nearly 12 per cent over the previous year in value terms. The women's wear

market is estimated to have grown at about 13.4% in the year 2004 over the previous

year in value terms. The textile manufacturers were among the first to get into branded

menswear in the Indian market. This sector is perhaps the most developed in terms of

supply chain sophistication in the branded clothing market. Let us start by understanding

the composition of the apparel sector. The apparel sector can be broadly classified into

Men's apparel, Women's apparel and Children's wear. Each of them can be further

classified into Formal, Casual, Indian wear, Inner wear, Sports wear and Accessories, as

is illustrated in Figure given below:

46

Apparel

Menswear Women wear Children'swear

Formal Casuall Indian Sportswear Accessories Innerwear

ShirtsTrousersBlazers/jacketsSuits

TShirtsShirtsJeansCasualTrousers

KurtaPyjama

DhotiKurta

Sherwani

TrackSuits

ShortsT Shirts

BeltsTiesSocks

VestsBriefs


47/90

The same classification can be reworked for women's wear and children's wear. Thus we

can see that this sector has many classifications and sub-classifications adding to the

complexity and the competitiveness of this sector. Apparel Retail in India is

characterised by the existence of a large number of regional, national and international

brands. Another important characteristic is that retail occurs through multiple formats,

for example an Arrow shirt would be retailed through stores like Shopper's Stop,

Pantaloon, etc. and also through the company's own retail outlets.

In menswear, the key players are Arvind Brands, Madura Garments, Raymond's/Park

Avenue. It is estimated that by the end of 2009, the domestic: market for textiles and

clothing should touch or exceed Rs. 110,000 crore. At that size, it would be in the top 15

markets in the world even when we consider the substantially lower retail price points in

India. The key brands in menswear are indicated in Table given below.

Formal wear Casual wear Denims Sportswear

Arrow Allen Solly Levi's Reebok

Louis Phillippe Color Plus Lee Nike

Van Heusen Dockers Wrangler Adidas

Park Avenue Benetton Pepe -

Wills sport Ruf n Tuf -

Table: Key Menswear Brands

In India, a national brand in Womenswear is virtually non-existent. Most branding that is

visible in women's wear is only in the western casual clothing segment. However, this is

a growing segment where sizeable opportunities exist in the women's ethnic wear,

lingerie and maternity clothing. Allen Solly, a leading brand in menswear, has entered

the women's western wear market.

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Local manufacturers again rule a large section of the children's clothing market though a

few national brands like Gini & Jony and Ruff Kids have emerged in the market.

Invariably, these brands started by retailing within larger department stores before

setting up their own and franchised retail outlets. Apparel retail occurs through a

company's own outlets or through the multi brand outlets. Over the past few years, this

sector has seen the development of private labels by many department stores. In fact,

Westside focuses strongly on private labels only.

Opportunities, Challenges

The biggest fillip to the industry would be provided by the growth of organized retailing.

As more shopping malls open, adding thereby a few lakh square feet of retail space,

garment manufacturers will have many more options to peddle their merchandise. Thisphenomenon cannot, however, be looked at in isolation and needs to be examined in the

perspective of retail outlets also promoting their in-store brands (see related story for

more details).

Retailers' Challenge

THE big opportunity that has presented itself before manufacturers of readymade

garments today is the growth of organised retailing.

As players such as Shoppers Stop, Lifestyle and Globus embark on ambitious plans to

ramp up the square footage of organised retail space, branded readymades will have

more shelf space to display their merchandise.

INDUSTRY SNAPSHOT

Branded readymade apparel market for men estimated at about Rs.5,000 crore,

expected to grow at 15 per cent

Industry characterised by a high degree of fragmentation

Leading players include Madura Garments (about Rs.350 crore}, Arvind (about

Rs.275 crore) and Raymond (about Rs.350 crore, after acquisition of Color Plus)

Other major players include Zodiac, Wills Lifestyle, Provogue, Indus League,

Bombay Dyeing and Levi's

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Distribution through a combination of exclusive brand stores and multi-brand

outlets

Branded garments retail either through an exclusive brand outlet (EBO), where only the

merchandise of a particular company is showcased, or through a multi-brand outlet(MBO) which stock multiple brands under one roof.

Location in upmarket areas that has sizeable catchment, and an ambience that spells

class and sophistication, large retail stores are but a logical destination for branded

apparel makers.

The retail equation has to be seen in the context of the emergence of in-store brands such

as Stop, of Shoppers Stop, and Oak Valley, of Globus.

As in-store brands gain greater prominence, it is only natural that the retailing outfits

would seek to promote them by allocating a greater floor area for display.

After all, a retail outfit would stand to make higher margins on its own brands compared

to the others that it stocks. Top-end brands are a big draw among customers visiting a

large retail store, as they facilitate comparison-shopping and shoppers are not tied down

to choosing just one brand, which is what happens in the case of an EBO.

This places the retail outlets in a quandary. They would not be willing to let go of the

footfalls that the various brands that they stock generate and, at the same time, would

want to boost revenues from their in-store brand, which is a more lucrative proposition.

The onus would then fall on the retailers to arrive at a balance between these conflicting

issues to ensure that their interests, as also that of the other brands they stock, are best

served.

Finally, the rules for success when it comes to a going-to-market strategy are not cast in

stone. It does pay for a company to be format-agnostic, and ensure that its brands areavailable at all points where a prospective customer is likely to visit.

As more consumers realize the convenience of readymade garments, it will only serve to

hasten the transition from tailored clothing. Unlike in the West, where tailoring is a more

expensive alternative to readymade clothing and makes a fashion statement, it is more

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preferred in India, especially for those who look at it as a lower priced option vis--vis

branded ready-to-wear.

The price differential between tailored clothing and ready-mades is partly because of the

excise duty on the latter. The industry would, naturally, like to see a reduction from thecurrent level, as it would make ready-mades more affordable.

Another challenge confronting Indian garment manufacturers is the need to devise

strategies once the quota on garment exports is abolished in 2005. With garments

accounting for nearly 50 per cent of overall textile exports, the threat from lower-cost

producing nations is real.

To counter the potential loss of revenue, Indian garment exporters are gearing up to

launch ready-mades in the domestic market. Conversely, there is also the likelihood of a

wide variety of fabric coming into the country, providing the exporters opportunity to be

creative with their design.

Women's western wear is another segment that is likely to see action. With increasing

urbanization, the demand for such clothing is likely to rise significantly. It would also

pose a challenge to retailers in terms of how they re-jig their stores to appeal to the more

demanding fairer sex.

Both opportunities as well as challenges abound for players in the readymade garments

business. Substantial investments made in brand building and in establishing customer

niches will ensure that they further build on the gains they have made.

At the same time, brand strategists will have their plate full when it comes to entering

territories such as women's or kids wear, or taking advantage of emerging retail

opportunities. Capitalizing on these opportunities will ensure that the garments industry

is clothed in success.

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Survey Analysis

(From Customers)

OTHER INFORMATION:

Age:

Less Than 20 Yrs 21-35 Yrs 36-55 Yrs 56 Yrs & above

18 23 17 17

Less Than

20 Yrs

24%

21-35 Yrs

30%

36-55 Yrs

23%

56 Yrs &

above

23%

Interpretation: In the survey respondents were chosen from all age groups so as to get a

view on the purchase behaviour for apparel all segments. The respondents were chosen

randomly. Both male and respondents were contacted for the survey.

Marital status:

Single Married

21 54

Single

28%

Married

72%

Interpretation: In the survey 72% respondents were married. 28% respondents were

single and most of them were students.

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Educational Information: (tick one)

SSC/HSC Graduate Post-graduate

Self 18 36 11Spouse 18 21 15

18 18

36

21

1115

0

5

10

15

20

25

30

35

40

SSC/HSC Graduate Post-graduate

Self Spouse

Interpretation: In the survey respondents were from different educational background.

This would help in gauging the buying behaviour of different segments.

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Occupation:

Occupation No. of Respondents

Businessman 16

Executive 13Government Service 6

Academics 2

House-Wife 11

Self-employed 9

Student 18

Self-employed

16%

Student

0% Businessman

27%

Executive

23%

House-Wife

19%

Academics

4% Government

Service

11%

Interpretation: The survey was conducted using convenience and respondents with

different occupational background were selected. The buying behaviour for apparel is

different for students who need trendy/casual clothes while people in service need

formal clothes.

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Monthly Household Income:

< Rs.10000 Rs. 10000-

Rs.15000

Rs. 15000-

Rs.20000

> Rs. 20000

6 31 19 19

Rs. 15000-

Rs.2000025%

> Rs. 20000

25%

< Rs.10000

8%

Rs. 10000-

Rs.15000

42%

Interpretation: Buying behaviour is dpenedent on the househuls income of individuals.

The surveyor has analysed the buying behviour of individuals based on their buying

power i.e. househols income.

Accommodation

My own house Company provided Rented Accommodation

24 8 43

My own

house

32%

Company

provided

11%

Rented

Accommoda

tion

57%

Interpretation: 57% respondents were living in rented accommodation, 11% were

living in company provided accommodations while 32% respondents were living in their

own house.

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1. Which of the following fashion brands are you aware of?

Brands No. of Respondents

Allen Solly 75

Dockers 23

Parx 45

Blackberrys 21

Proline 11

Zodiac 54

Provogue 67

Park Avenue 45

Louis Philippe 58

Van Heusen 61

Peter England 75

Excalibur 75Arrow 56

75

2321

45

21

11

54

67

45

5861

75 75

56

0

10

20

30

40

50

60

70

80

Allen Sol ly

Dockers

Color Plus

Parx

Blackberrys

Proline

Zodiac

Provogue

Park Avenue

Louis Philippe

Van Heusen

Peter Eng land

Excalibur

Arrow

Interpretation: Most of the respondents were aware of Allen Solly, Peter England,

Excalibur, Provogue and Louis Philippe. While very few respondents were aware of the

Proline and Blackberry. Only few respondents were aware of Dockers as these brands

mostly cater to the higher income group..

2. Which of the following brands of Denim are you aware of?

Denim Brands No. of Respondents

Lee 34

Dockers 23

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Levis Strauss 45

Wrangler 69

Numero Uno 34

Pepe 34

Monte Carlo 36Lee Cooper 45

34

23

45

69

34 34 36

45

0

10

20

30

40

50

60

70

Lee

Dockers

Levis Strauss

Wrangler

Numero Uno

Pepe

Monte Carlo Lites

Lee Cooper

Interpretation: Most of the respondents were aware of Wrangler. Other brands were

also known to almost 50% of the respondents. Denim brands were popular in both male

and female segment.

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3. How often do you purchase your readymade garments?

Frequently Occasionally

56 19

Frequently

75%

Occasionally

25%

Interpretation: 75% respondents purchased readymade garments frequently i.e. on

regular intervals. While 25% respondents purchased the readymade garments

occasionally.

4. How often do you purchase clothes?

Once a week Once in a months Once in 3 months Once in 6 months

9 45 17 4

Once a

week

12%

Once in amonths

60%

Once in 3

months

23%

Once in 6

months

5%

Interpretation: 60% respondents purchase clothes once in a month, while 23%

respondents purchase clothes once in 3 months. While 12% respondents purchased

clothes once a week and 5% purchased clothes once in 6 months.

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5. Factors you consider while purchasing a readymade garments.

Factors No. of Respondents

Cloth type 56

Color 75

Brand 49

Fashion/Trend 34

Price 75

Availability 39

56

75

49

34

75

39

0

10

20

30

40

50

60

70

80

Cloth type

Color

Brand

Fashion/Trend

Price

Availability

Interpretation: The most important factor affecting the purchase of the readymade

garments as depicted above is price and color of the garment. The next important factor

is cloth type followed by brand. Availability and Fashion trend are the important but do

not affect the purchase decision to that extent.

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6. Listed below are statements about shopping behavior for clothes and clothing

fashions. Please check one box for each statement to indicate the extent to which

you agree or disagree with each statement.

Agree Neither

Agree Nor

Disagree

Disagree

A. I buy clothes I like, regardless of current fashion. 54 21

B. I buy new fashion looks only when they are well

accepted.

11 45 19

C. I am not as concerned about fashion as I am about

modest prices and wear ability.

45 16 14

D. I prefer to buy well-known designer labels rather

than take a chance on something new.

7 67 1

E. I am confident that I have good taste in clothing. 34 41

0

10

20

30

40

50

60

70

Agree Neither Agree Nor

Disagree

Disagree

A

B

CD

E

Interpretation: After the survey it can be concluded that people buy clothes regardless

of the current fashion. Also it is clear that people do not wait new fashion to be accepted

but here can say that the concept of individualism is applicable to purchase of readymade

garments. People are concerned about the price and wear ability. Designer Labels do not

affect the purchase behavior for most individuals and they are popular amongst the

Higher Income Groups.

7. Who influences you to purchase the brand?

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Family Friends Advertisement Self

37 11 8 19

Family

49%

Friends

15%

Advertisement

11%

Self

25%

Interpretation: The most important influencer in purchase of a particular brand are the

family members, followed by individuals themselves. Advertisements and friends affect

the buying behavior of the younger generations.

8. Where do you shop regularly?

Super Market Local Market Store

26 49

Local

Market

Store

65%

Super

Market

35%

Interpretation: 65% respondents prefer to buy readymade garments from stores in local

markets while 35% respondents prefer to buy them from super markets.

9. How many times in a month do you visit the market?

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1-3 times 3-7 times 7-10 times

Super Market 19 5 2

Local Market 27 13 9

19

27

5

13

2

9

0

5

10

15

20

25

30

1-3 times 3-7 times 7-10 times

Super Market

Local Market

Interpretation: As evident from the above bar graph most of the people mostly visit

the market 1-3 times in a month. While very few people visit market more than 3 times

in a month. Usually people visit markets on weekends for organized purchases while for

non-organized that includes day to day purchases are done on regular basis.

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10. Where do feel you get a better bargain?

Super Market Local Market

18 57

Local MarketStore

76%

Super Market

24%

Interpretation: 57% Respondents feel that they get better bargain in local markets

while 24% respondents feel that they get better bargain in super markets. Respondents

prefer multi brand outlets for purchase of readymade garments.

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11. Which of the following factors influence your decision to shop at a

supermarket and not at the Local market or vice versa?

Factor Supermarket Local Market

Store

Range of products 43 32

Accessibility 18 57

Ease of purchase 39 36

Store timings 49 26

Behavior of sales

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1880. Indian Retail & Its Effect on Fashion Trend [Mktg]

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