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.
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.
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.
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.
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.
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.