Not A Kid’s Play

Poised to be­come USD 102 bil­lion busi­ness by 2023, the kids wear re­tail is pro­jected to con­sti­tute al­most 22% of the to­tal ap­parel busi­ness. The growth of kids wear re­tail has a rather metaphor­i­cal sig­nif­i­cance for In­dia, which has the youngest pop­u­la­tion

VMRD - - Retail Kids Wear - Satarupa Chakraborty

Amongst all global economies, In­dia has the youngest pop­u­la­tion with an av­er­age age un­der 30. Bring­ing the age scale even down, the 0-14 years age group amounts to be around 29% of the to­tal pop­u­la­tion. The In­dian kids wear mar­ket in 2017 was es­ti­mated at Rs 66,904 crore, ac­count­ing for 20% of the to­tal ap­parel mar­ket of the coun­try. Kids wear is ex­pected to grow at CAGR of 8.1% to reach Rs 145,445 crore by 2027, whereas menswear and women’s wear are ex­pected to grow at rel­a­tively lesser CAGR of 7.5% and 7.6% re­spec­tively (Source: Technopak Re­port).

Growth Of In­ter­na­tional Brands

Like any other ap­parel cat­e­gory in In­dia, or­gan­ised brands com­prise only a minis­cule of the over­all kids wear mar­ket. The kids wear mar­ket in In­dia is mostly dom­i­nated by pri­vate la­bels – big re­tail­ers, in­ter­na­tional brands and just a hand­ful of home-grown mono­brands. How­ever, there has been an in­ter­est­ing shift with the pri­vate la­bels mov­ing to the level of mono­brands, while most of the pop­u­lar homegrown kids wear brands are mov­ing to­wards EBO ex­pan­sion af­ter oper­at­ing ex­clu­sively through SIS. Thanks to the GST boost, which is mak­ing the shift from unor­gan­ised and or­gan­ised re­tail smoother. The mar­ket share of pri­vate la­bel prod­ucts in In­dia is ex­pected to in­crease from 4.5% in 2016 to around 10% in 2020.

It would be in­ter­est­ing to take the ex­am­ple of the so­cial me­dia-led Mini-Me trend to ex­plain the growth of pri­vate la­bels. Al­most all lead­ing In­dian re­tail­ers and the in­ter­na­tional brands have kids wear pri­vate la­bels to­day and some of the in­ter­na­tional brands like US Polo, Gap, Benet­ton, Adi­das, Pepe Jeans have started their spe­cial kids wear store for­mat. Take the ex­am­ple of Pepe Jeans, which has a strong port­fo­lio in In­dia with 238 re­tail touch­points, and the brand started their own kids wear store for­mat for the first time in In­dia amongst many other global mar­kets. To­day, Pepe Jeans has 8 exclusive kids stores in strate­gic lo­ca­tions and the net­work is grow­ing.

Gap is an­other in­ter­na­tional brand which has given enough im­por­tance to its kids and baby ap­parel cat­e­gories. Gap cur­rently has 15 stand­alone stores mostly in met­ros and 21 shop-in-shop stores across Tier II and Tier III cities. Out of these, 13 are fam­ily for­mat stores that of­fer adult, babyGap and GapKids prod­ucts, while 2 are adults only stores. With con­sis­tent fo­cus on the kids wear cat­e­gory, Gap is build­ing a strong GapKids/babyGap shop-in-shops in cities like Kolkata, Chandigarh, Ahmedabad and more.

Parag Dani, CEO, Pre­mium and Bridge-toLux­ury divi­sion, Arvind Life­style Brands Ltd,

said, “Gap is fo­cused on strate­gic ex­pan­sion. We’re look­ing to fur­ther ex­pand into fam­ily for­mats, adult only for­mats and exclusive GapKids/babyGap for­mats too in the months to come based on the de­mand for each seg­ment in iden­ti­fied mar­kets.”

Homegrown Mono­brands: Hand­ful But Here To Stay

While the most suc­cess­ful In­dian kids wear brand Gini & Jony seemed to have seen tad de-growth over past few years, its close suc­ces­sors like Cat­moss and Liliput have seen some un­pre­dictable fall. At the same time, brands like Ki­dol­ogy, which is work­ing on the bridge-to-lux­ury seg­ment in this cat­e­gory and has a much higher ticket value, hit the rev­enue scale of USD 1 mil­lion. Sur­pris­ingly, un­like other ap­parel cat­e­gories, kids wear re­tail seems to have wit­nessed rise of just about a hand­ful of or­gan­ised exclusive kids wear homegrown brands.

While ques­tioned on the de-growth of the 35 years old homegrown kids wear brand, Sailesh Lakhani, Vice Pres­i­dent, Gini & Jony, said, “Well, shut­ting down stores doesn’t es­sen­tially mean plum­met­ing busi­ness. It was rather a strate­gic turn in our busi­ness plan to shut down stores that failed to ac­count prof­itabil­ity. At the same time, we grew our store net­work ef­fec­tively and now, with a new look and feel of the stores.”

Although the branded kids wear seg­ment has recorded higher growth in re­cent years, it still re­mains a largely un­branded mar­ket, with prod­ucts sold mostly through unor­gan­ised re­tail chan­nels. Some In­dian man­u­fac­tur­ers who had pre­vi­ously been fo­cus­ing solely on the ex­port mar­ket have started re­ori­ent­ing them­selves to meet the grow­ing de­mand within the coun­try. Con­se­quently, they have come up with their own brands and in­de­pen­dent re­tail op­er­a­tions.

Seg­men­tal De­vel­op­ment

Manu In­drayan, Co-founder & CEO of the sec­ond largest In­dian kids wear brand, 612 League, ex­plained, “The seg­ments in terms of age group are pretty cru­cial, and so are your re­tail strate­gies. As a mid-price seg­ment brand, we were very sure of the

cat­e­gories that we op­er­ate in. We started with kids wear and later diver­si­fied into pre­teen.

The In­dian kids wear mar­ket is slightly skewed to­wards boys wear ow­ing to 53% boy’s pop­u­la­tion for age group 0 to 14. In 2017, the boys wear seg­ment held al­most 52% of the to­tal cat­e­gory and is ex­pected to grow at a CAGR of 8.1% to reach INR 75,325 crore in 2027. How­ever, as of to­day, the girls wear mar­ket at a CAGR of 8% is ex­pected to reach to INR 70,120 crore in 2027.

Fo­cus­ing on the girls wear seg­ment, an­other kids wear brand Pep­per­mint, which has re­cently started their EBO op­er­a­tion, will soon make de­but in footwear and ac­ces­sories seg­ments. San­tosh Katariya, Man­ag­ing Di­rec­tor, Pep­per­mint, said, “I think that most of the in­ter­na­tional brands, which are pretty dom­i­nant in kids wear mar­ket, are still deal­ing with boys wear seg­ment. Also, most of the brands are re­tail­ing ca­sual wear. There­fore, we fo­cused on girls wear and oc­ca­sion wear. In fact, we took even a fur­ther step to launch re­gion­cen­tric de­sign.”

On sim­i­lar lines, 9 years old brand Nau­tiNati, has re­cently started Nau­ti­lene, which is a fash­ion-for­ward line for girls up to 8 years.

Re­tail Chan­nels & For­mats

Although open­ing stand­alone stores is be­com­ing per­ti­nent for most of the brands, homegrown and in­ter­na­tional brands put to­gether, the dom­i­nant re­tail­ing chan­nel re­mains shop-in-shop. Brands and re­tailer, pre­vi­ously cater­ing only to adults, have ex­tended their prod­uct lines to in­clude chil­dren and are at­tempt­ing to trans­form them­selves as a com­plete fam­ily shop­ping des­ti­na­tion. In this re­spect, even in­ter­na­tional brands have be­gun of­fer­ing chil­dren’s ap­parel.

How­ever, In­drayan of 612 League thinks a lit­tle dif­fer­ently, “In In­dia, re­tail frag­men­ta­tion is so huge that the re­tail

man­age­ment be­comes chal­leng­ing for a brand that goes be­yond INR 400-500 crore of rev­enue. How­ever, thank­fully, In­dian re­tail­ers are ac­ing the na­tional roll­out and op­er­a­tion games.”

Although brands are strength­en­ing their SIS pres­ence more ag­gres­sively, exclusive brand out­lets are of­ten smoothen­ing brand build­ing ex­er­cises and em­pow­er­ing them with much more dis­play ca­pac­ity. Nau­tiNati’s Di­rec­tor Shan­tanu Du­gar dis­closed fur­ther EBO ex­pan­sion plan of the com­pany which is grow­ing at a year-on-year growth of 50%, “In next 2.5 years, we tar­get 50 EBOs. 60% of our next 20 stores will be com­pany owned and then there will be a 50:50 ra­tio be­tween CoCo and Fran­chisee roll­out.”

E-com­merce is also prov­ing to be a grow­ing and trusted chan­nel, espe­cially in kids wear cat­e­gory. Ama­zon, the leader of e-com­merce with about 300 kids wear brands and 900 sell­ers, re­ported 80% sales growth in 2017 com­pared to 2016. Kids’ eth­nic wear is one of the most searched sub cat­e­gory, which grew at 80% year-onyear in fi­nan­cial year 2018, as re­ported by Ama­zon.

Re­tail De­sign Trends

While most of the mono­brands are present in SIS for­mat, brands are in­no­vat­ing on their store for­mats, de­sign and vis­ual mer­chan­dis­ing. Some of the brands are even diver­si­fy­ing in dif­fer­ent for­mats. Ex­plain­ing on the re­tail for­mats, Sharad Venkta, Man­ag­ing Di­rec­tor & CEO, Toonz Re­tail, said, “We have three types of store for­mats and co­he­sive de­sign for our brand. For tier-II and tier-III cities, we keep our store de­sign re­ally sim­ple, fix­tures mod­u­lar and store com­mu­ni­ca­tion more pic­to­rial than text-heavy. Our fash­ion sec­tion of the store has more am­bi­ent and as­pi­ra­tional light­ing whereas the strollers/walk­ers and smaller mer­chan­dise dis­play area is util­i­tar­ian. We in­vest more in mall and met­ros stores to­wards wall fin­ishes, floor­ing, light­ing, fix­tures and store com­mu­ni­ca­tions.”

Gini & Jony has also re­cently re-imag­ined their store de­sign and VM with Pune-based agency Stu­dio Mars. Nau­tiNati, on the other hand, though fast ex­pand­ing in the EBO route, has a fru­gal capex ap­proach. While the brand changes its de­sign sen­si­bil­i­ties with every new store, the capex cost doesn’t go above INR 1500-2000 per sq ft. The store de­sign sen­si­bil­i­ties of these brands don’t nec­es­sar­ily have a myr­iad colour pal­ette, as may be ex­pected in a kids’ store. In fact, they more or less be­lieve in us­ing colour pop while keep­ing the de­sign pal­ette pre­mium and muted so that the colour­ful mer­chan­dises get a bet­ter off­set.

In this new-age de­sign world, 612 League de­serves a spe­cial men­tion for their 612 Won­der Store, which is ba­si­cally a vir­tual

try-on to en­gage di­rectly with the young cus­tomers. In­drayan said, “We wanted to strike a di­rect di­a­logue with the kids. The Won­der Store con­cept, which has been rolled out in 6 of our stores so far, en­ables the kids to vir­tu­ally try our mer­chan­dises with hand ges­tures. We plan to take it to all our stores soon.”

Kids Wear Re­tail – Grow­ing Up Fast

If we look at the broader pic­ture, the INR 50,000 crore (ap­prox.) also holds 30-35% of school uni­form cat­e­gory. Among rest of it, only 12-15% con­sti­tutes pri­vate la­bels and or­gan­ised brands. While fash­ion-fo­cused re­tail­ers are ded­i­cat­ing sub­stan­tial share of their busi­nesses to kids wear seg­ment, unor­gan­ised brands are now find­ing their way to come un­der cor­po­ra­tised league. How­ever, some of the kids wear brands have strug­gled in terms of planning store ex­pan­sions with ad­e­quate pru­dence and anal­y­sis and thus have been forced into rolling back plans or have got en­tan­gled in high debt traps and un­war­ranted busi­ness lit­i­ga­tions. With a pro­jec­tion of con­sti­tut­ing 22% of In­dia’s over­all ap­parel mar­ket by 2023, the trick seems to lie in the seg­ment map­ping (age-group and mer­chan­dise type wise), right mar­ket iden­ti­fi­ca­tion and strate­gic re­tail ex­pan­sion.

Gap Store

Gini & Jony

Parag Dani, CEO, Pre­mium & Bridge-to-Lux­ury divi­sion Arvind Life­style Brands Ltd

Sailesh Lakhani Vice Pres­i­dent, Gini & Jony

Manu In­drayan, Co-founder & CEO 612 League

Pep­per­mint

612 Won­der Store

San­tosh Katariya Man­ag­ing Di­rec­tor Pep­per­mint

Toonz

Shan­tanu Du­gar Di­rec­tor Nau­tiNati’s

Sharad Venkta Man­ag­ing Di­rec­tor & CEO Toonz Re­tail

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