The Indian retail market size stands at about USD 585 billion and is expected to grow at CAGR of 13 percent to reach USD 1080 billion by 2020. This growth is largely attributed to the coming of age of the Indian retail sector, which has gone through major transformation over the last decade with a noticeable shift towards organised retailing.
Speaking specifically on the Indian fashion accessories segment, the market was worth around US$ 3 billion in 2013 and is expected to grow at a CAGR of 12 percent touching US$ 6 billion by 2019. This growth in the fashion accessories market can be contributed to various factors like:
- FDI policy for single and multi-brand retailing.
- Increasing fashion awareness and aspirations among consumers.
- Easy access to information facilitated by technology.
- Growth and acceptance of e-commerce in fashion sector.
- Less risk in design creativity- This allows designers to experiment with the product design with lesser risk as compared to creativity in gold jewellery.
However, this market is still largely dominated by unorganised players, wherein it is estimated that organised retail contributes only 16 percent to the bags, belts and wallets markets of the accessories segment. This organised retail has been an influx of some of the world’s biggest fashion retailers with far more conducive FDI norms than in the past. Fashion retailers like Zara, H&M, Charles and Keith, Accessoriez, Forever 21 have set a stronghold in the country and have found a devout following among the fashion conscious, tech savvy millennials. Homegrown brands are now competing with these fashion behemoths, not only in terms of product design, but in price and marketing aspect as well.
E-commerce has also changed the face of Indian retail sector in the past few years. As the acceptance towards technology increases, more and more consumers are willing to explore web based shopping alternatives. This has lead to an overcrowding of platforms as customers are flooded with options. In such a scenario, E-tailers are turning to innovative ways of interacting with their consumers, seamlessly blending off-line and online channels, all the while trying to stay connected with their target consumers via various touch points – social media being the most crucial of them. These brands look to offer the consumers an experience, which extends beyond the product and creates a long term relation with them.
The advent of Demonetisation, while beneficial to the nation’s long term growth, will take its toll on the Fashion Retail Industry, especially the Luxury market.The post-demonetisation surge in gold prices in the country has discouraged the consumer from investing into gold. If these speculations in gold prices continue, it could prove beneficial to an already growing fashion jewellery market as consumers look for a cheaper substitute. The real estate market will also face a slowdown, leading to fall in property rates. This could prove beneficial to retailers who are looking towards expansion and online retailers who want to foray into brick and mortar, but were up till now skeptical.
The article has been authored by Sohel J Lalvani, co-founder, Toniq Retail Brands