Not Just A Child’s Play!
A look at the growing childrenswear market in India
In a country like India, which boasts a large population of young kids, children enjoy a special place. For the apparel market, the childrenswear segment is a booming, growing market, with a lot of challenges and rewards.
Samir Alam reports.
Kids have it good today. It wasn’t very long ago that kids would be expected to make do with slightly ill-fitting large clothes, simply because “they would grow into them” or “make do with hand-medowns” from elder siblings. Earlier, kids’ clothing wasn’t accounted for in a family budget, and was low on the list of shopping priorities. Today, however, the trend has radically transformed, with parents and children being equally demanding when it comes to variety, style, and branded clothing. This demand for childrenswear is now driving the overall apparel trade in India to new heights and is estimated to constitute a nearly 20 per cent share in the total apparel market. CHILDRENSWEAR: AN OVERVIEW The childrenswear market has been one of the key indicators of the Indian consumer society. As a product segment which has evolved relatively recently, it demonstrates the enthusiasm and engagement of the Indian consumer market. With ever increasing disposable incomes, greater marketing and branding initiatives, and a younger tech-savvy population, the demand for retail apparel has never been higher. With an expected Compounded Annual Growth Rate (CAGR) of 9.7 per cent, the Indian apparel market is expected to reach USD 115 billion by 2026 from USD 46 billion in 2017.
With greater globalised influences, Indian consumers are also attracted to all that such a diverse market has to offer, with the childrenswear segment now coming into vogue. According to Technopak, the childrenswear segment has already grown from USD 8.3 billion in 2013 to USD 13.6 billion in 2017, with projections to reach USD 22.4 billion in five years. During the same period, the menswear segment is only expected to grow at a CAGR of 7.5 per cent, while women’s wear to grow at 7.6 per cent. With a CAGR of nearly 10.5 per cent, childrenswear is one of the fastest growing segments in Indian apparel. HEY BOY, HEY GIRL Within this segment, there is a clear divide between between male and female clothing. The boys’ market is slightly weighted higher due to reflective population demographics and comprises about 52 per cent of the total childrenswear market. The market has also experienced greater product differentiation with a variety of styles and goods, such as t-shirts, shirts, denim, ethnic wear etc, being more favoured among consumers, making up nearly 80 per cent of the product categories. Another major contributor to this growth trend is the increasing influence of global media, which has inculcated a demand for emerging styles within this apparel segment. With such consistent rise, the market for boys’ clothing is estimated to be just over USD 4.3 billion and expected to reach USD 9.3 billion with a CAGR of 8.1 per cent by 2027.
The market for girls’ clothing has also experienced similar growth with USD 4 billion in share and a CAGR of 8 per cent, reaching USD 8.7 billion by 2027. This segment has continued
to demonstrate growth in product variety and style, and has diversified at a greater rate than the boys’ market. This segment not only consists of ethnic wear, dresses, and denims, uniforms, but has also begun to include unisex items such as t-shirts, shirts, and bottom wear. Despite this broadening, the core majority is still held by ethnic wear and uniforms, which make up nearly 53 per cent of total products. The core reason for this being that despite shifting cultural trends, majority of the Indian population is located in rural areas and still conforms to dress codes consistent with the culture.
As the influence and reach of urbanization and modernity increase, we can expect to see more Tier II and Tier III cities and towns embracing global trends. With a projected growth rate of 13 per cent CAGR for Tier II and 12.3 per cent CAGR for Tier III cities, there is bound to be more heterogeneity in product and gender based apparel items in the coming years, as girls get more access to boys’ clothing segments. However, the core cultural trends are unlikely to shift, and as a result ethnic wear and dresses shall continue to remain the major product segments in childrenswear going forward. GROWING PAINS As the nation continues to move forward on a path to globalised commerce, we can expect to see an even great presence of international and domestic brands in the childrenswear market. Globalised companies are now better positioned to transfer best practices from one market to another in order to win over customers. With increasing media exposure, welcoming fashion trends, rising disposable income among the working class, easier access to e-commerce channels and rise of localised premium brands, Indian consumers have more options and means to fulfil their desires in even erstwhile niche segments like childrenswear.
In this context, retailers have also discovered an efficient and easier means to reach consumers - social media and e-commerce channels. The opening up of digital sales channels has allowed a variety of niche product segments to find new consumers. Companies such as Firstcry and Hopscotch had exclusively targeted childrenswear segments on the internet and can offer a large variety of products at affordable rates. Additionally, their digital platform allows them to reach across disparate regions and service customers from all backgrounds. Another major part of this trend has also been the ability of such companies to target their products towards younger consumers via digital channels.
As domestic and international lifestyle brands follow suit, we are discovering that kids have great influence in buying decisions within the household. As companies become more aware of the consuming power wielded by kids, they are acting in a manner so as to win them over. Numerous private labels, brands, and designers are now working to earn the attention of the childrenswear market and break into this burgeoning segment. We are already seeing competition between these players to offer stylish yet affordable options so that parents find it easier to give into their children’s demands. Such factors are, therefore, contributing to the rise in market share of private brands which is expected to rise from 4.5 per cent in 2016 to nearly 10 per cent by 2020. SMALL CONSUMERS, BIG GROWTH This push from businesses is also accompanied by the changing mindset of the paying consumers - the parents. While the products might be for children, the consumer is still the paying adult, who has changed radically in the last 20 years. These younger parents are organized in different family setups such as dual income households, where both parents work. As a result of this new system, both parents are capable of directing their disposable income towards their children. At the same time, these parents are more tech-savvy than earlier generations and impacted by the digital age. As a result, they are more sensitive to notions of style, fashion, and brand value when shopping for clothes for their children.
None of these changes are surprising when we consider the current and evolving demographics of the Indian population. According to a study by Deloitte, India has the largest number of working young people, especially in the 25-35 year old demographic, ie the millennial generation. This segment of people makes up nearly 35 per cent of the national population, and is poised to drive consumption in the Indian economy. Along with this, India also has the world’s largest population of youth under the age of 14 years. With nearly 335 million children in the under-14 segment, and a bustling millennial population empowered by employment, wages, and credit, there is little doubt that the childrenswear segment will continue to grow well into the next decade.