Gear­ing up for Change

Mr Sharad Venkta, MD & CEO, Toonz Re­tail, ex­plores the grow­ing op­por­tu­ni­ties and chal­lenges pre­sented by the wave of changes sweep­ing the In­dian fash­ion re­tail in­dus­try.

Apparel - - CONTENTS OCTOBER 2018 -

A look at the op­por­tu­ni­ties and ob­sta­cles in the chang­ing In­dian fash­ion re­tail sec­tor

In re­cent times, the In­dian fash­ion re­tail mar­ket has shown promis­ing growth year on year. The over­all In­dian re­tail in­dus­try has been grow­ing at a CAGR of 10 per cent, of which ap­parel is the sec­ond largest con­trib­u­tor. And it is ex­pected that the in­dus­try will reach US$1,576 bil­lion in terms of value by 2026. The In­dian fash­ion re­tail in­dus­try to­day is no more restricted to just ap­parel; it also in­cludes fash­ion ac­ces­sories, and this has also been a ma­jor con­trib­u­tor to the growth of the fash­ion in­dus­try. The re­tail sec­tor of In­dia has emerged as the most dy­namic and fast-paced sec­tor in re­cent times. Ev­ery year, more and more play­ers are get­ting added to this sec­tor, thus in­creas­ing its over­all size. Due to the ex­pand­ing re­tail mar­ket, grow­ing econ­omy, pop­u­la­tion mov­ing to­wards ur­ban­i­sa­tion, and grow­ing mid­dle class, In­dia has re­placed China and has be­come the most promis­ing econ­omy in to­day’s sce­nario.

Over the years, the in­dus­try has evolved and has also wit­nessed some ma­jor changes over­all. One of the great­est changes that we have wit­nessed is the re­cep­tiv­ity of the con­sumers to­wards cor­po­ra­tised re­tail. And this has proven to be a boon to the over­all ecosys­tem of the re­tail mar­ket. The cus­tomers have started spend­ing a greater amount be­cause of the im­prove­ment in the qual­ity of the prod­ucts and the ser­vice of­fered by the re­tail­ers.

The fash­ion trend has evolved, as the af­flu­ent class is all set to keep up with the chang­ing trends and oth­ers are try­ing their best to match that level. There has been a sud­den propen­sity of In­di­ans to­wards fast fash­ion and brands are seen sell­ing prod­ucts through­out the year. It is very well known that sell­ing the prod­uct off­line is not the only way of sell­ing the prod­uct in the mar­ket. Brands are try­ing their best to reach their cus­tomers, which sees growth in al­ter­na­tive re­tail chan­nels. How­ever, the changes in the in­dus­try also come with many chal­lenges that it needs to over­come in or­der to be suc­cess­ful on a long-term ba­sis. Ad­dress­ing those hur­dles can help fash­ion brands un­der­stand the cus­tomer’s needs fur­ther and shape their strate­gies ac­cord­ingly. Some of the ma­jor changes as well as op­por­tu­ni­ties and chal­lenges that the In­dian fash­ion in­dus­try is cur­rently fac­ing are as fol­lows:

GROW­ING IN­DIAN ECON­OMY

In In­dia, although the menswear sec­tor of the fash­ion mar­ket is still high as com­pared to that of wom­enswear, we can see that the gap is re­duc­ing with each pass­ing year. Also, last year, the kidswear seg­ment ac­counted for around 20 per cent of the mar­ket; it is ex­pected that by the year 2022, the share will reach 25 per cent.

VALUE FOR MONEY

The In­dian fash­ion con­sumers have be­come aware of their needs and know where to spend and how much to spend, as a re­sult of which they know the value of the money spent by them. They have also started us­ing prod­ucts that are avail­able at a lower price. Pri­vate con­sump­tion still re­mains a very im­por­tant fac­tor. Be­sides ap­parel, In­dian con­sumers are also in­dulging in the ac­ces­sories seg­ment, but at the same time, they want to make sure that they get what the brand has promised them. With the grow­ing in­fla­tion rate, con­sumers have be­come more con­scious about the money spent by them and the brands they are buy­ing. The con­sumer to­day fo­cuses on two words, ‘value’ and ‘af­ford­abil­ity’. On the other hand, the need to look good and stay up­dated with the cur­rent trends al­lows the con­sumer to spend even more, which spells good news for brands.

CHANGE IN FASH­ION

Till a few years ago, In­di­ans used to shophop only on spe­cial oc­ca­sions like wed­dings or fes­ti­vals. Over time, we have wit­nessed that the cur­rent gen­er­a­tion is be­com­ing a very im­por­tantnt part of the chang­ing fash­ion scene. As the as­pi­ra­tions pi­ra­tions of the con­sumers are chang­ing, they are gear­ing up to fol­low the global fash­ion trends at the same time. With the ad­vent of a num­ber of in­ter­na­tional brands in In­dia,a, the cus­tomers to­day have started to re­think nk be­fore buy­ing an out­fit. And in or­der too make sure that they do not lose their cus­tomers, mers, do­mes­tic brands have also started to com­pete against the in­ter­na­tional brands nds by adapt­ing their busi­ness model.

IN­CREASE IN DE­MAND

Across the coun­try, the de­mand varies. s. The ur­ban mar­ket of the coun­try is still known to be the largest con­sumer and is known to con­trib­ute max­i­mum to the In­dian fash­ion re­tail mar­ket. Lately, it has been seen that a num­ber of in­ter­na­tional brands have started en­ter­ing the Tier I and Tier II mar­kets as well, as a re­sult of which do­mes­tic brands are also try­ing to make a mark in the re­gion.

THE CON­SUMER TO­DAY DAY FO­CUSES ON TWO WORDS, ‘VALUE’ AND D ‘AF­FORD­ABIL­ITY’.

CON­SUMER BUY­ING BE­HAV­IOUR

This is a very im­por­tant fac­tor as the con­sumers have started tak­ing the onus of their pur­chase. The In­dian fash­ion re­tail in­dus­try is un­der­go­ing an evo­lu­tion, and so is the In­dian con­sumer. Con­sumers are slowly adapt­ing to the global fash­ion state­ments. Fac­tors such as the in­crease in their dis­pos­able in­come, ex­po­sure to the West and grow­ing con­fi­dence has played a very im­por­tant role in the growth of the In­dian in­dus­try.

EVO­LU­TION OF DIG­I­TAL TECH­NOL­OGY

Tech­nol­ogy has be­come an in­evitable part of our life. Both in­ter­net ac­cess and pen­e­tra­tion have in­creased over the years. As in­ter­net ac­cess be­comes more and more af­ford­able, changes are seen in the buy­ing pat­tern of the con­sumers. It is be­cause of the ac­cess to var­i­ous de­vices and the avail­abil­ity of the in­ter­net on the phone that the con­sumers are able to choose from the va­ri­ety of op­tions avail­able in the mar­ket. They are also able to com­pare the prod­ucts that they buy from one brand with that of an­other brand. In­dian lan­guage users are also grow­ing at a fast pace. By the year 2021, we can ex­pect that the num­ber of Hindi in­ter­net users will sur­pass the num­ber of English in­ter­net users.

CUS­TOMER RE­LA­TION­SHIP MAN­AGE­MENT

Cus­tomer Re­la­tion­ship Man­age­ment (CRM) does not only in­volve knowl­edge of IT. A brand is ex­pected to dig deep in or­der to un­der­stand the needs and pref­er­ences of the cus­tomers. In the case of sell­ing the prod­uct to the cus­tomer di­rectly, it re­quires a fo­cused ap­proach on the cus­tomer’s needs. A brand can­not af­ford to miss out on any seg­ment when it comes to de­liv­er­ing the prod­uct to the cus­tomer.

CUSTOMISATION

If a brand wants to be­come suc­cess­ful, it should be able to at­tract cus­tomers from all age groups. Customisation has gained a lot of pop­u­lar­ity these days and brands are try­ing to en­ter the niche seg­ment where they can of­fer cus­tomers prod­ucts as per their wish.

MAR­KET DI­VER­SITY

In­dia be­ing a di­verse na­tion, with mil­lions of cus­tomers hav­ing var­ied choices and unique pref­er­ences, it be­comes dif­fi­cult to tap the en­tire mar­ket. Hence, the cus­tomers’ needs get ne­glected. To en­sure that does not hap­pen, as a re­tailer, it is im­por­tant that one takes care of their con­sumers’ re­quire­ments and de­liv­ers ac­cord­ingly.

IN THE CASE OF SELL­ING THE PROD­UCT TO THE CUS­TOMER DI­RECTLY, IT RE­QUIRES A FO­CUSED AP­PROACH ON THE CUS­TOMER’S NEEDS.

REAL ES­TATE COST

The ris­ing real es­tate cost has be­come an­other ma­jor con­cern for re­tail­ers in In­dia. As a re­sult, it be­comes re­ally dif­fi­cult for them to find the right place and hence the right cus­tomer in cities.

IN­FRA­STRUC­TURE COST

The in­fra­struc­ture gets hit be­cause of the bad con­di­tion of roads and high­ways, due to which it af­fects the cost of in­ven­tory and sup­ply chain as well. To en­able the do­mes­tic brands to re­alise their full po­ten­tial, the Gov­ern­ment has to in­vest highly in the in­fra­struc­ture, which in­cludes proper con­nec­tiv­ity, good roads and a proper trans­porta­tion sys­tem.

RAPID EVO­LU­TION

As the needs of the cus­tomers are evolv­ing at a rapid pace, it be­comes dif­fi­cult for brands to un­der­stand those needs in such a short span of time. The whole process of de­liv­er­ing the prod­uct in­volves mak­ing changes in a num­ber of ar­eas like the struc­ture of the or­gan­i­sa­tion, the re­tail for­mat and the prod­uct port­fo­lio. As the fash­ion re­tail mar­ket in In­dia has not reached its ma­tu­rity stage, the brands can­not stop learn­ing and re­learn­ing. At the same time, it is not enough; brands have to learn from the insights gained and the same must also be trans­lated into ac­tion after proper re­search.

To sum up, in the chang­ing face of the In­dian fash­ion re­tail in­dus­try, a tar­geted ap­proach to cus­tomer sat­is­fac­tion as well as an over­haul of the re­tail in­fra­struc­ture and sys­tem is key to sur­vival for fash­ion brands in the coun­try.

AS THE NEEDS OF THE CUS­TOMERS ARE EVOLV­ING AT A RAPID PACE, IT BE­COMES DIF­FI­CULT FOR BRANDS TO UN­DER­STAND THOSE NEEDS IN SUCH A SHORT SPAN OF TIME.

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