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Business News » Companies News

Indians flock to buy branded apparel; cast out new entrants, online retailers

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Indians flock to buy branded apparel; cast out new entrants, online retailers
Models dressed in Romani Design clothes walk the catwalk at a fashion show. Image Source: Reuters

Branded retail segments have outperformed the new entrants and online fashion retailers as Indian consumers are seen to upgrade to the big players.

“The big winners in this market will be apparel companies that have a robust brand portfolio across segments/price points, with a strategy of consistent product launches, a steady price-value equation and efficient working capital management,” Manish Podar, Varun Lochab and Aditya Joshi, analysts from Religare said in a report – A Brand New World, dated November 15.

New brands have added to the big players’ sales fragmentation woes however the analysts said that the established players in the market will take it all.

“Brand fragmentation is a risk but big brands tend to outperform new entrants due to a wide presence, buyer loyalty and novel collections,” the analysts said.

While the online segment has been preferred on convenience and festive season sales, it does not pose much of a threat to established brands, the report added.

"Consumers across developed and developing markets are shopping online which is a concern for distributors/retailers, not brands," the analysts said.

In the last three years, the top 10 brands in India have effectively doubled their market share in the branded apparel segment.

“Two-fold increase in market share of Top 10 brands in last three years to 7.2% share in India’s apparel industry,” the report said.

The demonetisation move by PM Modi to ban Rs 1,000 and Rs 500 notes on November 8 will affect consumer wholesale spends and cripple the liquidity; however, the analysts said this would lend ‘further impetus’ for consumers to shift to branded apparel in the medium term.

The apparel segment has been estimated to grow at a Compound Annual Growth Rate (CAGR) of 7.9% from FY16 to FY20.

With the rising per capita income and growing urbanisation, India’s apparel and retail segment will be creating a large consumption opportunity in the coming years.

“India’s large consumption opportunity will be supported by rising discretionary spends as per capita income grows (>US$ 2,000), a demographic shift alongside growing urbanisation, an increased media reach and the emergence of online/modern shopping channels,” the report said.

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TAGS:
Fashion Retailbranded apparelbrandsonline retailersConsumer Goodswholesale marketDemonetisationPM Modi
Updated: Thu, Nov 17, 2016
03:36 pm
Mumbai, ZeeBiz WebDesk
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