How has the Indian apparel industry changed over the past decade?
To fully understand the Indian apparel industry, it is necessary to revisit the history of fashion manufacturing and retail. India is undergoing a "compressed evolution" of this history. Fashion began as a bespoke tailored and low-volume industry supplied by the textile manufacturers; then, power shifted to the manufacturers, who would make products, place them on display or promote them, and customers would then be attracted to purchase the more standard product.
However, with the progress from the industrial revolution and the advent of mass scale production, the retail industry changed dramatically. Manufacturers were no longer focused on making really small volumes of product for the window, but 10 or more for the shelf. Standardisation drove economies of scale; however the retail of these products remained fragmented.
Within India you have pronounced diversity and regional differences. The huge variation in climate across the country and the federation of regional states, deep regional pride and poor infrastructure have led to a business climate that favours smaller, independent retailers and manufacturers that focus on and address local needs. Instead of a rapid evolution to an organised, consolidated retail sector, India has remained a two-tier market.
Which are the new trends in this market?
India's retailing industry remains dominated by owner-manned small shops. Indian retail is in fact two separate industries — the "organised" retail of large chains, international brands and foreign investment and a more domestic "unorganised" or "shadow" retail that exerts huge economic and political influence. The tension between these two spheres is one of the most pressing issues facing international retailers, fashion manufacturers and textile-based businesses looking to capitalise on the Indian market.
Though not exclusive to India, this large "shadow" retail industry of smaller, independent retailers has such a strong identity of its own that it is hard to find similar examples elsewhere in the world. India is keen to open itself up as a market, as both producer and consumer. This has led to retail becoming a real battleground as big, foreign retail giants look to enter the market but find themselves in the midst of a system that is based around a far more fragmented retail ecosystem than they are accustomed to.
Furthermore, Fashion companies confront two perennial hazards—stock outs and markdowns. You can’t sell what you don’t have, but you also can’t sell what customers don’t want. To complicate matters, it’s a dynamic environment—different collections start and finish daily or weekly. Whether your sales model is B2B or B2C, this new business challenge leaves you no choice but to adapt to a changing environment across many channels.
As the retail environment evolves from a focus on brick-and-mortar stores to a mixed model that includes online selling and mobile retail, channel proliferation compounds the challenge of selling in many directions at once. It’s not uncommon to see a single product getting marked down in an online channel, while going out of stock in the brick-and-mortar channel, or vice versa. The term “multichannel” no longer adequately describes the complexity of this challenge—fashion is now an “omnichannel” phenomenon in which market forces and customer desires in many different channels collide, leaving a vastly more complex competitive landscape than the industry has ever seen before.
Enterprises have now realised the need for specialised software solutions that can help them bridge these gaps.
How can technology help retailers and manufacturers?
Technology, consumers and retail all have changed over the years. Achieving top-line growth requires rethinking the way business is done. No longer can performance be improved by just opening new stores. The growth game is about wallet share. To grow, retailers need to build relationships with customers by offering superior and even innovative service, differentiated assortments, and engaging shopping experiences.
What is the expected growth of the Indian textile and apparel industry year-on-year?
The Indian textile and apparel industry is expected to reach a market size of US$220 billion by 2020 with an annual growth rate of 11 per cent. India’s current textile and apparel market size is US$90 billion. Garment exports are rowing at around 16 per cent year-on-year and export of other textile products increasing by 11-13 per cent and entire textile exports expected to grow by 18 per cent year-on-year. Apparel exports increased 15.5 per cent year-on-year to $8.26 billion.
ven as the textiles ministry has set an ambitious target of $50 billion for textile exports in this fiscal as against $34 billion in 2012-13, India can achieve faster exports growth as China was increasingly becoming expensive and Bangladesh facing a host of problems, especially in complying with benchmarks set by buyers. India’s apparel exports are rising, primarily because the country is eating into the shares of neighbouring China and Bangladesh. Exports from India are being driven by demand from major textile importing regions such as the US and Euro zone.
Indian retail is a huge potential opportunity for fashion brands and there undoubtedly will be huge change over the coming months and years as the new, more investment-friendly regime takes effect. But those international brands will enter a market that is not only unique, but fraught with regional differences, unique product requirements and customer expectations. It will not just be a case of caveat emptor (let the buyer beware) but also, manufacturers and retailers beware.