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| Issue date:01/08/2009 |
| ATA Journal for Asia on Textile & Apparel - Aug 2009 Issue |
| Source:Journal for Asia on Textile & Apparel |
| Sanjay Chawla |
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| Before recession hit this industry, the Indian men’s apparel market was expected to burgeon at a compound annual growth rate (CAGR) of 14.86% from 2008 to 2010, according to an Indian research firm, RNCOS. It was estimated that increasing at a 24% CAGR, the branded apparel industry for men will cross US$5 billion by 2010. How has the current global financial downturn affected the prospect of the menswear market in India? |
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| 2004 to 2008 was a phase of incredible changes in Indian menswear. Men in urban India became more fashion-conscious, leading to experimental colours in menswear. |
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These figures indicated prosperous future in the menswear segment partly due to drivers of the apparel industry as a whole, namely rising young population, increasing income levels, boom in organized retail sector in India, growing brand awareness through media exposure and advertising.
2004 to 2008 was a phase of incredible changes in Indian menswear. Men in urban India became more fashion-conscious, leading to experimental colours in menswear, even those for formal occasions. Some of the prominent menswear brands in India like Park Avenue, Zodiac, Levi’s, Van Heusen, ColorPlus, Allen Solly, Louis Philippe, Pepe Jeans, Provogue, Monte Carlo, Killer and Spykar adapted strategies to be the choice of the new generation of consumers.
Drawing inspiration from the changing trend, several brands launched new ranges.
Van Heusen, for instance, first launched InFormals in 2004 with trimmer silhouettes. The brand’s latest spring/summer collection this year continues experimenting with fresh colours.
Van Heusen’s 2009 spring/summer collection |
Similarly, with a slew of premium international brands such as Salvatore Ferragamo, Armani Collezioni, Versace Collection,Kenneth Cole, Valentino, Ermenegildo Zegna, John Varvatos and Hermes entering the country, local firms have had to innovate to stay in the market.
Today’s Indian men are also more knowledgeable about global fashion, which goes a long way in influencing the kind of clothes he chooses to wear.
Recession in short term
How has recent global economic recession played its cards as far as Indian menswear is concerned?
Menswear brands present in India considered that they were not much affected by the unfavorable external economy.
Puma Sports is actively penetrating into India |
Rajiv Mehta, Managing Director, Puma Sports India Pvt Ltd, noted: “The menswear casual market that Puma caters to is pretty much buoyant. We have seen some good growth in sales over the last three months (around the second quarter of 2009) compared to last year or even the beginning of the year. That’s primarily because of the merchandise which is cross verticals, whether you are into casuals, whether you are into fashion, whether you are into sports. You can wear our items in different occasions. Secondly, the price levels are not very high. They are affordable by the middle-class consumer. I think the Indian market is cautious. I don’t think it’s gone through any formal recession. People have become cautious and they will wait for a month or two before they start spending again. So my feeling is that this is the right time to set up, to get your claws and feet into the market and wait for people to return and start spending,” he added.
Another retailer, Jawahar Lal Oswal, Chairman & Managing Director, Nahar Group of Industries, shared a similar view. He said: “As far as the Indian market is concerned; we don't see much effect of recession here. In India, the menswear market is still good. However, due to the cluttered market situation, confusion is created. Customers are smart enough to understand brands, which are maintaining quality along with competitive prices. Only these can sustain in the present market circumstances.”
Jay Gupta is delighted with the Indian discount retail segment |
“The market in the full price segment did take a beating due to which the full price retailers did face difficulty resulting in low footfalls and sales. However, value retailers like The Loot who are offering varieties at discount ranging from 25-60% saw a higher growth, so customers are looking to discounts in this recession time,” said Jay Gupta, Managing Director, The Loot.
Survival strategies
Though the current slowdown hasn’t done much harm to the Indian menswear segment, brands are careful. They have followed various steps to make sure that the market sentiment remains positive.
“There has been a lot of focus on reducing business costs. There has been a fair amount of correction in real estate prices; both malls and high streets have witnessed a correction in monthly rentals,” remarked Vishak Kumar, Chief Operating Officer, Louis Philippe, a flagship brand of Madura Garments, India’s largest clothing company. Madura Garments is a member of Aditya Birla Group.
Rajiv Mehta |
Mr Mehta from Puma Sports India said: “There was a reality check in terms of rentals. Secondly, a lot of brands became inwardly conscious of costs. There’s a topline pressure to increase sales and there’s a bottomline pressure to reduce spending, so all these things have been taken into account by brands.”
A number of garment brands present in India, e.g. Puma Sports India, shifted their focus to the second- and third-tier towns, where the consumer sentiment is not as affected as in major cities. According to RNCOS, an Indian market research company, which launched a market report on the Indian men’s apparel industry, the Indian men’s apparel industry is booming and the Indian rural market will play a pivotal role in achieving the growth rate, as the perception of rural young generation about clothing is changing.
The report has also found that rural India, which was till now completely relying upon tailored garments, has created a strong demand for ready-to-wear garments and it is expected to grow at a CAGR of 16.50% by 2010, creating huge growth opportunities. Consequently, giant apparel companies are targeting rural areas by offering affordable but quality products, says the report. But there is still a wide economic disparity between rural and urban consumers and along with cultural and behavioral differences, it is acting as a barrier for expansion of the apparel industry in rural India.
The other factor fuelling growth in the Indian men’s apparel market is a fast expanding market for branded clothes. Branded apparel sales are expected to increase tremendously at a 24% CAGR by 2010, says the RNCOS report after in-depth analysis of consumer behavior, disposable income, retail format, foreign brands, and multi-brand stores.
“India is one country, but there are many different markets with varying consumer habits and preferences. Even in markets beyond the metros, there is no homogeneous opportunity - brands that understand and cater to these differences have a better chance of success,” explained Mr Kumar of India’s Louis Philippe.
Double-digit growth rates expected
Menswear has been dominant in the past in terms of contribution for most retailers but going forward all the segments will see a quantum jump in terms of business. Youth is a very important aspect due to their ability and willingness to buy fashionable clothes, but that doesn’t mean there will be something called youth wear. Instead, brands can design clothes with younger appearance to appeal to young consumers.
Retailers also invest in product extensions to provide target audience a complete wardrobe solution. This concept has been really working well for brands in driving the menswear business.
It will still be one of the fastest growing segments, probably a 25-30% growth year-on-year. That will be true for the next five years as plenty of brands will come in, predicted Mr Mehta from Puma Sports India.
Mr Oswal of Nahar Group of Industries was also optimistic. He said: “We are very positive about the menswear industry in the coming three to four years. We expect its growth constantly as the Indian economy is growing. Before the (global) slowdown, industry growth was 30-40%…Once this phase is over, the industry is expected to grow 15-20% and will reach that level (30-40%) again.”
While there is opportunity, there are rivals as well. As Mr Kumar of Louis Philippe, put it, “There is a lot of opportunity in the market today. But it will be naive to assume a one-size-fits-all solution. Each brand will need to understand the market from its own lenses and create products that will suit varied consumer needs.”
Strengths of Indian menswear sector
Low recession impact
Growing brand awareness
Growth in young working population, growing incomes
Entry of new domestic/international entrants in the organized menswear retail | |
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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