Five Consumption Trends Shaping The Indian Apparel Industry
Indian apparel which was deeply rooted in immensity and richness of Indian culture is now aligning itself to more refined and globally on-trend fashion. Contemporary Indian apparel has more variations and segments today than ever before. It is classified as formal, semi-formal, casual, active, sports, ethnic, seasonal, leisure, party wears and more. This is due to the changing demographic and psychographic profile of the Indian consumers and supported by the apparel market which is increasingly shifting away from tailor-made to readymade clothing and growing in size catalyzed by the entry of global retailers and brands.
The Indian consumer which comprises of the largest Gen Y population of the world with a median age of 27 years is also evolving in its shopping habits and buying behavior. The new Indian consumer prefers branded apparel over unbranded due to his/her inclination towards better lifestyle and willingness to try out new on-trend fashion.
With India’s economy expected to grow at 7 – 9 % CAGR, over the next decade, the per capita income will also increase. Increasing wallet sizes will result in consumers with more money to spend and greater enthusiasm for fashion. The per capita expenditure on apparel is expected to reach INR 8,000 by 2025, rising from INR 3,100 in 2015. Therefore, the total Indian apparel consumption expenditure is expected to grow to INR 11.7 Lakh Crores (USD 180 Billion) by 2025.
These changes in Indian economy are explicit and so is the impact of these changes on the apparel industry. For new as well as existing Textile and Apparel business establishments, this means a great deal. The aforementioned macroeconomic changes will drive apparel consumption trends, giving rise to significant business opportunities.
Wazir has identified five key consumption trends in India that are shaping the apparel industry and present significant opportunities for new as well as existing businesses.
Trend 1: New Middle Class and Its Soaring Aspirations
Source – Wazir Analysis Based On Published Data
In India, people are shifting from rural to urban areas in search of jobs and better education at a continually increasing rate. In 2015, 33% of India’s population was living in urban areas, rising from 31% in 2010. By 2025, 37.5% of India’s population is expected to be living in urban areas. Along with urbanization, cities are also expanding by immersing the villages near them, as 32% of urban population growth between 2001 and 2011 was because of re-classification of towns and expansion of urban areas. Due to urbanization, the size of working population is increasing and the type of occupations they indulge in is changing. The working population has increased income with an attitudinal change to look better.
Furthermore, urban lifestyles and services are also spilling over to rural areas. A decade ago, the agriculture contributed to about half of rural GDP, but it is now only about one-fourth and decreasing further each year. The rural economy, which was dominated by agriculture has already diversified to manufacturing and service-based jobs over the last decade.
Together Urbanisation and Rurbanisation are adding new consumers to the middle class whose soaring aspirations are changing the dynamics of the apparel market. By 2025, the middle-class consumers which will form 48.5% of the total targetable customer base will contribute about 55-60% share of total apparel market size. The top tier cities will continue to remain dominant locations in terms of apparel market because of the presence of both the middle-class and affluent consumers. However, two third of this middle class will dwell in the middle tiers and smaller cities as well as large district towns which are and will continue emerging as increasingly attractive apparel markets.
The middle-class consumers spend relatively higher amounts than aspirers on discretionary apparel consumption. However, there are only very few apparel retailers and brands in India who have rightly understood the middle-class consumers. The Indian middle-class consumers are value conscious and at the same time want fashionable clothes too. They seek quality and design at the best price. Therefore, the Indian middle-class consumers are creating an opportunity which needs to be captured in “value fashion”.
Trend 2: Smart Women Smart Kids
The role of women in Indian families is changing and with women contributing more to household income, their influence on family decision making is also increasing. Even women who do not work are also stepping beyond their homes like working women and taking up male roles and responsibilities, as family work gets redefined, driven by pressures of urban living. While this may be more visible in metros and larger towns, the change is also happening across smaller towns and rural areas, where the girl child is slowly being encouraged to do more and achieve higher. This whole transition in the lives of the new age women has increased their awareness about themselves and how they look, which in turn is driving growth in the women’s apparel market.
On the semi-urban and small-town side, this means more spend on apparel, increasing adoption of ready to wear rather than home stitched apparel and increasing acceptance of western casuals (denim, T-Shirts/ Tops etc.).
On the urban side, with the rapid expansion of professional sectors in India where working conditions are more women-friendly and hiring policy is inclined towards greater gender diversity, the number of women entering in the workforce is constantly increasing. At the same time, the dropout ratio of women professional is decreasing and average tenure is increasing. Hence, the need for dressing smart and willingness to look better is driving urban women to increasingly accept western wear, leading to women western wear market showing more traction and wider acceptance in urban areas.
Recognising this changing scenario in urban areas, the women western wear is also evolving beyond denim and western casuals with innovative fabrics and stylised silhouettes. In an attempt to capture the growing transition towards western wear, increasing number of retailers and brands are introducing fashionably smart clothes for women, including office wear and party wear. Even the Indian ethnic wear is getting a twist with silhouettes becoming more westernized and moving towards “contemporary clothing.” This growth of domestic brands like “W” and international brands like Zara are witness to this trend.
Furthermore, the way urban women perceive inner wear has also transformed. They no longer shop innerwear as a need-based product or functional purchase. For urban women, contemporary inner wear is more associated with their aspirations and desires rather than functionality or need. Therefore, women western wear and innerwear market are big opportunities for growth and investment.
The transition in the lives of urban women has in turn positively affected the kids wear market in urban India. With the change in wardrobe preferences of the women, there is a subsequent change in the wardrobe preferences for their kids also.
In the past, urban consumers never considered “brand name” as a substantial parameter for buying kids apparel and were highly price sensitive. This has however changed and urban consumer’s willingness to pay for kids’ apparel has increased with their higher purchasing power. Urban women are more status conscious and carefully contemplate on what their kids should be wearing.
Also, smarter mothers are grooming smarter kids who have a lot of say in the purchase decisions. Kids are more aware of brands as they are exposed to media and surroundings more than ever. As a result, though quality remains paramount and price sensitivity high, the acceptability of brands for kids wear is increasing among urban consumers.
The absence of a large number of established brands in kids wear market in comparison to men’s wear and women’s wear market is a big opportunity. The kids wear market in urban India is expected to reach INR 1,57,000 Crores by 2025. However, this opportunity created by the urban consumers only demands to be catered with the sustained combination of good quality, latest fashion, and affordability.
Trend 3: Functionality and Fashion Expanding Wardrobes
The urban consumer’s way of living has dramatically changed. With this, the occasions and reasons prompting apparel consumption have also increased. Today, urban consumers are buying apparel which serves a specific occasion/ usage e.g. they prefer plain shirts for meetings, checked or striped shirts for casual interactions, and shirts with funky patterns for night parties.
Similarly, specific reasons can also trigger apparel consumption. There exist urban consumers who buy apparel because of functional/performance benefits and hence brands introduced clothing lines on the concept of shape retention, anti-stain, anti-odor, anti-perspiration, quick dry etc.
All the aforementioned developments are driving apparel retailers and brands to look beyond the predictable functional needs of urban consumers. For driving the sales growth, brands and retailers are on one side, creating and serving the new occasions in the lives of consumers and on the other are innovating performance features that will prompt apparel consumption. Some examples of traditional apparel advancing to the next level are as follows:
- Biker Denims – Denims that offer excellent full-length abrasion resistance and feature integrated armor pockets at both the knees and hips, unlike normal commuter denim.
- Ably Apparel – An eco-friendly brand which introduced apparel made up of 100% cotton activated with Filium™, a technology that makes natural fabrics repel liquids, stains and odors.
While functionality continues to increase consumption, the urban consumers desire to be more fashionable overrides all other factors boosting sales for apparel retailers and brands. While considering apparel as a functional purchase, the urban consumers also see apparel as a form of self-expression. They consider it as a reflection of their personality and status.
In an attempt to remain up to date with the latest fashion trends, urban consumers get influenced by their social circles, Instagram feeds and facebook updates. Therefore, more urban consumers are buying apparel based on latest fashion trends and styles as well as aspiration based purchases rule. They are allured by brands and retailers that rapidly translate catwalk fashion trends to their stores.
In 2015, Zara became the fastest apparel brand in India to cross the USD 100 million sales mark within five years since its launch in 2010. Zara created this benchmark by leveraging the insatiable appetite of urban consumers for brands selling fashion. In order to tap the potential that Indian market possesses, the prominent international brands like H&M, Gap, and Aeropostale also entered India in 2015.
Despite having seen phenomenal sales growth, the overall market sales of all these international fashion brands hardly accounts for even 1-2% of total market sales. The Indian apparel market offers much bigger opportunity for the emergence of new as well as existing Indian fashion brands that stand a fair chance to benefit from their better understanding of local fashion preferences and market dynamics. Hence, it is in this space that Indian brands and retailers are launching new brands like “Cover Story”
Trend 4: Return of Custom-Fit Clothing
The Menswear market in India transitioned from tailor-made to ready-made clothing due to the popularity of ready-made clothing among young and working Indian men. But now, the trend of custom-fit clothing in India is reviving as more and more men who have been buying premium or luxury readymade clothing brands want to wear a shirt or a trouser that fits them perfectly.
Custom-fit clothing is a term that is used to represent any garment that has been transformed to fit a customer on the basis of his/her measurements and styles. Custom-Fit Clothing is of two types – Made-to-Measure and Bespoke Tailoring. In case of made to measure, standard patterns of clothing are fitted to the measurements of the customers.
Although, made to measure clothing fits better than readymade clothing but it is still not made 100% according to the customer’s measurements. On the other hand, bespoke tailoring in terms of fit is incomparable. In this, customers have to choose from different options of body types, fabrics, cuffs, collars, pockets and buttons along with usual size measurements. After finalization of all the details, a pattern is made for the garment on the basis of which it is designed and constructed. Therefore, bespoke tailoring offers higher exclusivity than made to measure.
In India, the premium brands like Raymond and Louis Philippe, as well as luxury brands like Armani, Versace, Zegna, Cadini, and Canali, are offering made to measure service. Moreover, the premium brands like Van Heusen’s MY FIT and Creyate by Arvind Group have also introduced bespoke tailoring in an attempt to capture the growing trend of custom-fit clothing among Indian men.
The menswear ready-to-stitch market in India is expected to grow to INR 52,000 Crores by 2020. Although, the share of ready-to-stitch in men’s wear market is decreasing because more and more customers of local tailors who largely exist in small towns and villages are shifting towards readymade clothing. But there is high growth potential for premium and luxury brands offering custom fit clothing as this gives Indian men personalized clothes with perfect fit combined with a new experience, freshness, and exclusivity which contribute positively to sales and consumer acceptance of brands.
Trend 5: Integration of Fashion and Technology
The increasing access to digital devices and internet is enabling masses to have online shopping experience irrespective of whether they are living in urban or rural areas. The online shopping experience today gives rich, immersive and personalized shopping experience to a customer and this is a major reason which is driving growth.
While the online apparel sales are growing, the opportunity to build digitally driven fashion brands is also emerging. The success of digitally driven fashion brands will be driven by vast young population with access to technology and desire to be fashionable. These brands will have to master the “content” as it is the only thing that runs the internet.
These brands will utilize the power of curated content to build their brand identity. They will present new fashion ideas and inspirations to people and effectively leverage proliferating social media as a marketing and distribution channel. Through collaboration with existing e-commerce websites, a digitally driven fashion brand will be able to access large customer base at very low costs.
Moreover, the interaction of customers with a database of brand’s product range will reveal which products have the highest potential of selling. This customer interaction data will be used to address all the inventory related issues. Therefore, profitable business strategies developed through the smart use of data mining techniques and sharp strategic analysis of data gathered through these techniques will effectively fuel the success of digitally driven fashion brands. This success can be further utilized for sales channel integration as well as expansion.
- Baqar Naqvi, Business Director Wazir Advisors, Baqar at wazir.in
- Willson Anand, Associate Consultant Wazir Advisors, Wilson at wazir.in
Wazir Advisors : Wazir is an Indian management consulting firm focused on providing strategy, alliance, implementation and skill development services in the sectors of Textile, Apparel, Retail and Consumer Products.