1880. indian retail & its effect on fashion trend [mktg]
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DISSERTATION REPORT
On
INDIAN RETAIL & ITS EFFECT ON FASHION TREND
A REPORT SUBMITTED TO ITS-IM, GREATER NOIDA AS A MANDATORYPART OF PGDM CURRICULUM
SUBMITTED TO SUBMITTED BY
PROF. NISHIKANT BELE MD. MIDHAT AZHAN KHAN
ITS-IM GREATER NOIDA ROLL NO.- 13079PGDM [2011-2013]
I.T.S. - INSTITUTE OF MANAGEMENT
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GREATER NOIDA
STUDENTS DECLARATION
I, Md. Midhat Azhan Khan, student of PGDM, hereby declare that
project titled Indian Retail & Its Effect on Fashion Trend is the
original work done by me and submitted to the AICTE, New Delhi in
partial fulfillment of requirements for the award of PGDM is a record of
original work done by me.
Signature of the Student:
Date:
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ACKNOWLEDGEMENT
I would like to take this opportunity to thank the following people who
have directly or indirectly contributed towards the completion of this
Project work and without their help this in the present form would
have not been possible.
I would like to like to thank my Faculty Guide, Prof. Nishikant Bele, ITS-
IM, Greater Noida for guiding me throughout the project.
I am thankful to my parents without their support my PGDM course
would not have been possible.
MD. MIDHAT AZHAN KHAN
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EXECUTIVE SUMMARY
Retailing is the final step in the distribution of merchandise - the last link in the
Supply Chain - connecting the bulk producers of commodities to the final
consumers. Retailing covers diverse products such as foot apparels, consumer
goods, financial services and leisure. The organized retail sector is expected to grow at
6% by 2010 and touch a retail business of $ 17 billion as against its current growth level
of 3%, which at present is estimated to be $ 6 billion. As India moves towards the
service oriented economy, a rise in this percentage is expected. The number of the retail
outlets is growing at about 8.5% annually in the urban areas and in towns with
population between 1,00,000 to I million; the growth rate is about 4.5%. Organised
retailing is witnessing a wave of players entering the industry. These players areexperimenting with various retail formats. Yet, Indian retailing has still not been able to
come up with many successful formats that can be scaled up and applied across India.
Some of the notable exceptions have been garment retailers like Madura Garments &
Raymonds who was scaled their exclusive showroom format across the country.
This research project was undertaken with a view to analyse the trends in the Indian
Apparel Industry with reference to changing trends in buying behaviour of consumers.
The aim was to understand the effect of increasing income levels of consumers on the
apparel industry.
The research has been structured into five chapters. The first chapter is Introduction in
which the introduction to the area of research presented. The definitions of key terms
have also been covered in this chapter. The second chapter is the research methodology
where in the details of objectives of the study, hypothesis, data collection tools, sampling
techniques, tests used for thesis testing and limitations of the research have been
discussed. The rationale for choosing each research method has been described in this
chapter. The third chapter is Literature Review where in all the relevant literature on
Changing trends in Consumer Buying behavior for apparel have been discussed. The
fourth chapter is Finding & Analysis in which analysis and discussion of literature and
survey findings has been done. The fifth chapter is Conclusion in which concluding
remarks of the research have been presented.
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After the research it can be concluded that the Indian Apparel industry is definitely on
the growth path and with increasing income levels of consumers the trends are changing
across apparel retailing that includes retail formats, merchandise and increased market
share in the organized retail.
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TABLE OF CONTENTS
S.No Chapter Name
Executive Summary
1. Introduction to Retail Apparel Industry
2. Research Design, Objective & Methodology
3. Literature Review
4. Findings And Analysis
5. Conclusion and Recommendations
6.
7.
Questionnaire
References
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CHAPTER 1
INTRODUCTION
The Indian textile and apparel industry is one of the largest in the world with US$ 19.24
billion of exports and US$ 30 billion of domestic textile and apparel sales during 2006-
07. It is one of the largest foreign exchange earners for the country and accounts for
about 35% of the total foreign exchange earned by the country.
Size of the Indian Textile and Apparel Industry
The textile industry is the third largest industry in India next to tourism and Information
Technology. It occupies an important place in the economy of the country because of its
contribution to the industrial output, employment generation and exports. At present, the
industry accounts for about 14% of our total industrial production and contributes nearly
15% of total exports. It contributes about 4% of the countrys GDP. Being the second
largest employer after agriculture, the industry provides direct employment to more than
35 million people in both organized and unorganised sectors including substantial
segments of weaker sections of society. Another 56 million people are engaged in allied
activities. With a very low import-intensity of about 1.5% only, it is the largest net
foreign exchange earner in India, earning almost 35% of total foreign exchange.
Textile exports have registered a growth of 10% to US$ 19.24 billion during 2006-07
from US$ 17.11 billion during 2005-06. The size of the Indian Textile and Apparel
industry is estimated to reach US$ 85 billion comprising US$ 45 billion in domestic
sales and balance in exports by the year 2010.
This is the only industry that is self-sufficient and covers the entire value chain. From
growing its own raw material (cotton, jute, silk and wool) through spinning, weaving,
knitting, dyeing and finishing to providing value added products to consumers such as
apparel and home textiles, the textile industry covers a wide range of economic
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activities. The sector has the capability to produce both basic garments in long runs and
fashion goods in smaller and more flexible runs.
Although the sector is primarily cotton based, it benefits from access to a wide range of
textile fibres for which India is a major world producer such as manmade fibres, jute,
linen and silk. Besides natural fibres such as cotton, jute and silk, synthetic raw material
products such as polyester staple fibre, polyester filament yarn, acrylic fibre and viscose
fibre are also produced in India. However, these manmade fibres account for only 40%
share in the cotton-dominated Indian textile industry.
The sector also benefits from access to a vast pool of workers, both skilled and unskilled,
as well as technicians and managers, at relatively low wage rates; and English is the
language of business. With exports as well as domestic sector growing rapidly, the
Textile and Apparel Industry is expected to provide direct employment to about 40
million people by year 2010.
Source: Ministry of
Textiles
Sector
Units
(In million)
Volume
(In billion sq. mtrs.)
Employment
(In million)
(2004-05) (2005-06) (2004-05) (2005-06)
Organized
Textile Mills
1789 1780 1.5 1.0
Power loom 0.426 0.434 28.3 4.8
Handloom 3.487 3.487 5.7 6.5
Jute - - 1.6 4.4
Handicrafts - - - 6.4
Sericulture - - - 6.0
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The textile industry was de-licensed in 1991 and under the current policy no prior
government approval is necessary to set up textile mills. The per capita cloth availability
in the country has increased from 22.87 square meters in 1991-92 to 36.10 square meters
in 2005-06.
Per Capita Availability of Cloth (In sq. mtrs.)
Year CottonBlended/Mixed
Fabrics
100% Non-
Cotton FabricsTotal
1991-92 13.71 2.90 6.26 22.87
1992-93 15.57 2.57 6.36 24.50
1993-94 15.92 3.58 6.72 26.22
1994-95 15.24 3.27 7.47 25.98
1995-96 16.32 3.48 8.19 27.99
1996-97 16.24 3.98 9.08 29.30
1997-98 15.94 4.57 10.41 30.92
1998-99 13.07 4.13 10.99 28.19
1999-00 14.16 4.48 11.91 30.55
2000-01 14.22 4.50 11.96 30.68
2001-02 14.82 4.69 12.46 31.97
2002-03 14.40 4.38 12.59 31.37
2003-04 13.41 4.51 13.09 31.01
2004-05 14.08 4.11 15.32 33.51
2005-06 16.37 4.32 15.41 36.10
Source: Office of the Textile Commissioner
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Indias position in the World Textile Economy
The Indian textile industry accounts for 12% of the world production of textile fibres and
yarns (including jute). India is the largest producer of jute, second largest producer of
silk and cellulosic fibre/yarn, third largest producer of cotton and fifth largest producer
of synthetic fibres/yarns in the world. All this data clearly indicates the position of India
in the World Textile economy.
It can be very clearly said that India holds a very significant position in the Worlds
Textile economy, especially in the cotton textile sector. India's cotton textile industry has
a high export potential. Cost competitiveness is driving the penetration of Indian basic
yarns and grey fabrics into the international commodity markets. Small and flexible
batches of apparel can be manufactured in India which can provide a larger variety of
casual wear and leisure garments at significantly lower costs.
Structure of the Indian Apparel Industry
The garment industry is made up of a complex chain of actors whose roles often overlap.
In very general terms, the industry includes the following entities:
Apparel manufacturers are primarily engaged in the design, cutting and sewing of
garments from fabric. Some manufacturers are contractors or subcontractors, which
generally manufacture apparel from materials owned by other firms. Larger
manufacturers often contract production to many such contractors or subcontractors
in the U.S. and abroad. Some manufacturers are vertically integrated, producing the
textiles from which they make garments, or even operating retail outlets.
Apparel merchandisers generally design and market clothing, but contract the
actual production to manufacturers.
Buying agents locate, qualify and inspect foreign suppliers/producers of garments,
negotiate with suppliers/producers, and often monitor production for quality control
and compliance with other standards. U.S. companies that do not have a large
presence abroad, or in addition to a U.S. Companys own buying staff may use them.
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Retailers are primarily engaged in the distribution, merchandising, and sale of
garments to consumers. Apparel retailers include department stores, mass
merchandisers, specialty stores, national chains, discount and off-price stores,
outlets, and mail-order companies. A relatively new development is the rise of
electronic forms of retailing such as interactive TV and on-line shopping services.
Some retailers who sell their own private labels go beyond their traditional role as
distributors and become directly involved in the design and sourcing of garments
from manufacturers and contractors.
Stages of Development in Apparel Manufacturing
The figure above shows the different levels of services offered by manufacturers or
vendors. At the first stage, the manufacturer sews the cut garment pieces as a contract
service.
The next level of garment industry development is cutting and sewing. At this stage, the
factory still generally operates as contractor, and does not procure the raw materials
needed to produce the garments. The production patterns are also provided by the
apparel company.
Stage 4Full Package, FOB or LDP
Stage 3Cut, Sew & Source
TRIM
Stage 2Cut & Sew
Stage 1Sew
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At the third stage, manufacturer takes the next step and sources trim, particularly for
basic products for which the trims are standard, such as white buttons for a mens shirt.
At the final stage, a manufacturer becomes a full package supplier. He is responsible for
many aspects of the garment production from purchasing the fabric and trim, pattern-
making to full production and packaging, ready for retail sale. The level of service for
full-package producers can vary. Even though the manufacturer purchases the fabric and
trim, the retailer or Apparel Company often chooses the actual fabric and the mill to
produce the fabric. Sometimes the full-package supplier will select the fabric and fabric
suppliers, or suggest alternative suppliers that are able to meet the fabric specifications
given by the customer. Full-package suppliers must be financially solvent in order to
obtain financing for the purchase of raw materials.
The Supply Chain in Textile and Clothing Sector
The supply chain in textile and clothing sector is illustrated in the diagram below. The
dotted lines represent the flow of information, while the solid lines represent the flow of
goods. The direction of the arrows indicates a demand-pull-driven system. The
information flow starts with the customer and forms the basis of what is being produced
and when. It is also worth noticing that information flows directly from the retailers tothe textile plants in many cases. The textile sector produces both for clothing sector and
for household use. In the former case there is direct communication between retailers
and textile mills when decisions are made on patterns, colors and material. In the second
case, textile mills often deliver household appliances directly to retailers.
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At each link in the production chain to the left of the distribution centre in the diagram,
there are usually several companies. In order to make goods, information and payment
flow smoothly, a number of logistics and business services are needed.
CHAPTER 2
RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY:
The report explains the factors that affect the Indian retail apparel market and the
changing trends in the apparel industry with the income levels.
To study the Indian Textile Industry with reference to key success factors.
To analyze the Indian Retail industry with reference to the recent developments.
To study the changing trends in the Apparel Retailing in India
To study the consumer buying behavior for Apparels.
HYPOTHESIS:
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Increasing income levels of consumers have a positive effect on the growth of
apparel industry.
RESEARCH METHODOLOGY
Research in common parlance refers to a search for knowledge. Once can also define
research as a scientific and systematic search for pertinent information on a specific
topic. In fact, research is an art of scientific investigation. The Advanced Learners
Dictionary of Current English lays down the meaning of research as a careful
investigation or inquiry especially through search for new facts in any branch of
knowledge. Redman and Mory define research as a systematized effort to gain new
knowledge. Some people consider research as a movement, a movement from the
known to the unknown. It is actually a voyage of discover. We all possess the vital
instinct of inquisitiveness for, when the unknown confronts us, we wonder and our
inquisitiveness makes us probe and attain full and duller understanding of the unknown.
This inquisitiveness is the mother of all knowledge and the method, which man employs
for obtaining the knowledge of whatever the unknown, can be termed as research.
Research is, thus, an original contribution to the existing stock of knowledge making for
its advancement. It is the pursuit of truth with the help of study, observation,
comparison and experiment. In short, the search for knowledge through objective and
systematic method of finding solution to a problem is research. The systematic approach
concerning generalization and the formulation of a theory is also research. As such the
term research refers to the systematic method consisting of enunciating the problem,
formulating a hypothesis, collecting the facts or data, analysing the facts and reaching
certain conclusions either in the form of solutions towards the concerned problem or in
certain generalizations for some theoretical formulation.
Data Collection Approach:
The data for this research was obtained as a judicious mix of both secondary and primary
data, which were obtained from various sources as mentioned below.
Secondary Research:
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The secondary research was undertaken through collection of above-mentioned
secondary data, which has been presented in the report as the literature review and
discussion in findings. The chapter 3 covers the existing literature on the changing trends
in the Consumer buying behavior for apparels. The information relevant to the topic has
only been included in the report.
Primary Research:
The different options available to the researcher for the purpose of collecting the primary
data were as follows:
Interviews: Interview is a technique used to gain depth information on the subject,
feelings and attitudes of the interviewee.
But the interviews tend to be used on small sample and are generally time consuming.
Secondly at times the interviewer can be preoccupied or need more counter information
may distract interviewers trend of discussion. Thirdly the information gathered from
interviews tends to highly subjective and there can be loss of information during
transcribing. So this method was not chosen for the purpose of the research.
Questionnaires/surveys: There are three types of questions in a questionnaire, which are
open, closed and a combination of both open and closed questions.
Open Questionnaires:
The open-ended questions allow the respondent to answer in his or her own words.
These questions result in more information, as the respondents are not refrained from
giving their views in short. But the large information thus collected is difficult to
analyze. Thus the information collected cannot be easily generalized.
Closed Questionnaire:
These questions limit the options given to the respondent and thus the information
collected becomes easy for tabulation and interpretation and thus resulting in finite
results.
Combined questionnaires:
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Through combined questionnaires, the combination of quantitative and qualitative
responses can be obtained. Quantitative data will complement and support the qualitative
responses, therefore adding validity to the data collected.
Rationale for choosing the research method:
The researcher has selected the combined questionnaire for the purpose of the study. The
questionnaire was designed on the basis of literature review and was presented to
respondents by the researcher at selected Malls and Stores in Delhi. The advantage of
using questionnaires method is that it is an economical method to collect information. It
gives the user an option to vary the selected sample size without much of a problem and
to get more information if it is observed that the collected information was not sufficient
or revealing.
The researcher designed two questionnaires for the purpose of survey, the first
questionnaire was prepared for the Retailers and the second questionnaire was designed
for customers of Delhi city.
Sample Design
The researcher decided to undertake his research at the following Malls in Delhi:
Ansal Plaza, Khelgaon.
MGF Metropolitan, Gurgaon
Sahara Mall, Gurgaon
DT city centre, Gurgaon
The Great India Place, Noida
The Centerstage Mall, Noida
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Sample Element: The basic units, which needed to be examined through the study, were
Customers visiting and the Stores in-charge of the Retail outlets in the selected Malls
and stores.
Population : - The universe of the study comprises all the Store in- charges andCustomers.
Method : - The approach of convenience sampling was used for survey.
Sample Size : - The total number of respondents surveyed was as follows:
Retailers Contacted : 20
Customers Contacted : 75
Sample Extent : - The scope of study was restricted to the geographical areas ofDelhi.
Reliability and Validity
The researcher considered the survey to be reliable because the respondents were Store
Incharge who has been associated with the selected outlets for quite a reasonable length
of time; therefore they had knowledge of Industry. Moreover the researcher has tried to
get the view of Customers contacted at Apparel Stores. They gave sufficient time to the
researcher for filling the questionnaire in the right way. But still there might be some
discrepancies on the part of the researcher, which have been mentioned in the
limitations.
For the purpose of survey, the researcher has tried to get quality data and also tried to
quantify the collected information in terms of values and percentages, as and where
applicable. The researcher has tried to get the most relevant information for the analysis.
LIMITATION OF THE STUDYFor every research there are restrictions and limitations. Without them the world does
not exist. Similarly there are some restrictions in my research work, which could not be
controlled. The following were some limitations, which I faced in the making of this
research.
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The study was restricted to selected Malls and Stores in Delhi.
Time was the biggest constraint. It was difficult and time consuming to get
the questionnaires filled personally from the respondents thus the sample
size was restricted to 20 Retailers and 120 Customers. Nevertheless all
efforts were made to get relevant information for the successful completion
of the research.
There may be some discrepancies in views as some people might give false
information in the Questionnaire, as they might not be interested in filling the form.
The respondents may be biased in their opinions.
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CHAPTER 3
LITERATURE REVIEW
In a research conducted by Business World 2007-2008 the following behavior pattern
related to Apparel buying has been observed.
The New Indian Consumer
When it comes to loyalty, branded garments are a cut above all other sectors. More than
51 per cent of respondents say they are loyal to the apparel bands they own. And even
though consumers can easily switch brands, only 24 per cent consumers say they are
likely to do so. Allen Solly, a premium brand positioned for the yuppie and upcoming
professionals, and marketed by Aditya Birla Nuvo's Madura Garments tops that list with
68 per cent of its customers falling in the 'true loyal' category.
Performance Measures (Apparel)
Apparel
Industry*
Allen
Solly
Provogue Louis
Phillipe
Levis Van
Heusen
Store
Experience
74 81 72 72 69 76
Merchandise 63 71 64 60 67 62
SalesPersonnel 63 69 63 62 55 66
Billing 60 65 64 57 55 59
Packaging 64 65 64 66 58 65
Additional
Services
52 62 51 51 5410 46
Schemes &
Promotions
54 62 56 48 5013
53
Advertising &
Commn.
55 58 5510 55 56 57
Superscript: Percentage of people who were unhappy in these parameters;
* Customers who rated performance as excellent or very good.
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The Rankings
6759 58 56 56 55 55 55 53 51 49
1110987654321
0
10
20
30
40
50
60
7080
Allen
Soll
y
Prov
ogue
Lou
isPh
ilippe
Levi'
s
VanH
euse
n
Golor
plus
J
ohnP
layer
sLe
eAr
row
Wills
Lifes
tleUC
B
CSIScore
Rank
Loyalty Segmentation
1721 20 21
25 25
28
25 22 24
39
24
1015 15
20 18 1715
22 2520
17 18
5 69
5 5 711
6 711
17
7
68
58 56 54 53 5247 47
45 44
37
51
0
10
20
30
40
50
60
70
80
AllenSolly
Provogue
Louis
Philippe
Levi's
Colorplus
VanHeusen
JohnPlaers
Wills
Lifestyle
Arro
Lee
UCB
Industry
Average
High Risk Trapped Accessible True Loyals
LIFESTYLE
As India's retail sector booms, customer expectations are rising much faster than the
pace at which retailers are able to roll out their services. That is the conclusion drawn
from the performance of companies in three segments - lifestyle and fashion stores,
coffee chains and fast food joints. For example, though lifestyle and fashion stores like
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Shoppers' Stop, Pantaloon, Lifestyle, and Globus are offering a shopping experience that
is decidedly better than what was available five years ago, customers are demanding
more.
The segment has managed to muster a loyalty of only 36 per cent. A similar story playsout in the coffee chains category. Thirty-two per cent of customers feel they are trapped.
Now, that's not a comforting thought for a coffee bar. In fast foods, Pizza Hut comes out
far ahead of competitor Domino's because customers think that the Pizza Hut's staff is
more service-oriented.
Performance measures (lifestyle and fashion stores)
Lifestyle
&
Fashion
store
Industry*
Shoppers
Stop
Life
style
Globus Westside Pantaloon
Store experience 70 76 68 68 70 65
Merchandise 62 67 51 56 70 52
Sales personnel 60 62 57 58 66 55
Billing 58 64 51 57 03 47
Packaging 56 58 58 59 56 51
Additional
services
55 54 57 54 62 5013
Schemes &
promotions
52 57 49 54 53 51
Loyalty
programmes
4020 3317 29 3917 4025 6313
Advertising &
Commn.
51 57 52 52 45 4910
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Superscript: Percentage of people who were unhappy in these parameters;
* Customers who rated performance as excellent or very good.
The Rankings
54 53
43 4239
54321
0
10
20
30
40
50
60
Wests ide Shoppers' Stop Lifesty le Pantaloon Globus
CustomerSatisfactionIndex
Rank
Loyalty Segmentation
20 18
3224
3626
2330
3337
38
316
7
3 10
7
6
5144
32 3020
36
Westside Shoppers' Stop Pantaloons Lifestyle Globus Industry Average
Hig h R isk Tr ap ped Accessi bl e Tr ue Lo yal s
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School Goer (Age 12-16)
Close to 50% of their annual spending of Rs. 2,133 (USD 46) on apparel is on Western
wear, with Western casuals occupying a larger share (27.9%) of the pie. High utility and
comfort vis--vis other modes of dressing at this age is a contributor to the higher spends
on this type of apparel. There is a fair proportion spent on fabric as well, at 21.1%. Inner
wear expenditure accounts for more than 15%, marginally higher than that accounted for
by ethnic wear. Share of expenses on Western wear is visibly higher among the boys at
55-9%. But a sizeable 42.4% among the girls is a visible sign of increasing
consciousness of fashion trends and shift towards Western wear. Fabric and ethnic wear
purchase is higher among girls. Share of spends on inner wear is largely similar between
the two genders.
Shares of Wallet apparel types
All Boys Girls
Western Casuals 27.9 30.8 24.8
Western Formals 22.0 25.1 17.6
Fabric 21.1 18.8 24.3
Inner Wear 15.6 15.9 15.2
Ethnic Wear 13.3 9.4 18.7
All figures in Per cent
Outer wear
In the last year, 47% have purchased Western formals and 60% have purchased Western
casuals. Ethnic wear purchases are restricted to 29%. Among those who buy, most (70%
-72%) buy at least once in six months.
Small shops selling local brands are the preferred format for making final purchases for
all apparel types. Branded outlets, both multi and exclusive brand, are also vying for the
attention of this life stage. Only a few (-11%) travel beyond 5 Kms for shopping.
Shopping for apparel is invariably done (in 80%+ cases) at cither local neighborhood
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markets or popular big markets in the city or town, regardless of the kind of apparel
shopped for.
Although bulk of the outlets regularly shopped at are likely to be within a 2 km range
from their residences, l/3rd do not mind travelling upto 5 kms, especially for Westernformals and casuals. Shop loyalty is the highest for Western formals and Western
casuals.
20
51
29
23
49
28
18
52
29
0
10
20
30
40
50
60
AllFiguresin
Percent
Western Formals Western Casuals Ethnic
Outer Wear: Purchase Frequency
Once in 3 Months Once in 6 Months Once in a year
22
47
18
85
25
42
18
11
3
29
42
16
94
0
10
20
30
40
50
AllFiguresinPercent
Western Formals Western Casuals Ethnic
Spends on Outer Wear
Upto Rs. 250 (USD 5.4) Rs 251-500 (USD 5.5-10.8) Rs. 501-750 (USD 10.9-1.63)
Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+)
Inner wear
Most (87%) have bought inner wear in the last one year. Among those who have bought,
86% buy once in six months. Purchases are made to a large extent from smaller shops
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selling local brands (51 % buy mostly at such outlets) rather than management or
employee buy-outs (MBOs or EBOs), which are patronised by 20% and 17%
respectively. The shops bought from are located in the neighbourhood markets in 55% of
the cases and the larger shopping markets in the city in 36% of the cases. Most (70%)
people do not travel more than 2 kms for their inner wear shopping.
A third state loyalty to a particular brand or set or brands while another third express
loyalty to the shop they buy from. The remaining third say they are not particular about
either the brand or shop. Most do not spend more than Rs. 250 (USD 5.3) in a six month
period; 37% spend upto Rs. 100 (USD 2.1) while 45% spend in the range of Rs. 101-250
(USD 2.2 5.4)
Preferred Formats, Location for Purchase
FormatWestern
Formals
Western Casuals Ethnic Wear
Purchased from
Small shops selling local
brands
39 40 42
MBOs 26 25 26
EBOs 25 23 18
Large department stores 10 10 10
Location of the store
Popular, big shopping
market
51 50 43
Local neighborhood/colony
market
34 37 42
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Markets popular for selling
that prod jet
12 9 11
Shopping malls 5 5 4
Distance from home
Upto 1 km 26 27 32
l.l-2kms 28 27 31
2.1-5 kms 35 33 27
More than 5kms 12 13 9
All figures in percent.
Loyalty to Outlets (All figures in percent)
% who say Western
Formals
Western
Casuals
Ethnic
Wear
Fabric
I buy only from one or a few shops that I
like/trust
52 52 51 47
If I dont find a brand at my shop, I buy
some other brand from the same shop
37 34 29 34
Corporate Group (Age 21-25)
The share of expenditure on Western wear exceeds 50% from the annual spending of Rs.
2,727 (USD 59.3). The difference in the allocation of funds to formals and casuals is
stark. The share of spending on inner wear and fabric is nearly the same (~13%).
The workingman buys more formals (~28.5%) with preference for classy, contemporary
brands. However, ethnic wear and fabric ate preferred among women. The wallet share
of inner wear is nearly the same amongst both men and women.
Share of wallet (apparel types)
All Boys Girls
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Western casuals 24.8 26.8 20.5
Fabric 22.9 21.6 257
Ethnic wear 13.3 9.9 20.5
Inner wear 13.2 13.2 13.3
All Figures in per cent
Outer wear
The purchase of Western formals has been by 52%. As for casuals it is 58%, ethnic wear
(~33%) and fabric (64%). Nearly 70% of the people buy Western wear once in six
months, as compared to ethnic wear (62%).
The median spends are in the range of Rs. 251-500 (USD 5.5-10.8) for nearly 43% of the
people for Western casuals and ethnic wear. However, spending goes above this for a
substantial number of them.
The majority of people purchase branded products especially for their Western wear.
The focus for ethnic wear is also shifting towards branded wear. The loyalty towards
brands is quite high. In fact the youth is quite branding conscious.
The purchases are from MBOs as well as EBOs with a good assortment of brand
offerings. Even department stores are preferred by a chosen few with a good number
buying local brands from small shops as well.
The most preferred and frequented locations are, popular shopping markets by more than
50% of the people for Western wear and 48% for ethnic outfits. People do not prefer to
travel much for shopping except for 10% who manage to travel more than 5 kms.
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The decision of the final purchase format is made by more than 90% of the corporate
climbers on their own. Seemingly, shop loyalty is also high with more than 40%
preferring to buy from shops they trust.
23
47
30
19
52
29
17
45
38
14
47
38
0
10
20
30
40
50
60
AllFiguresinPercent
Western Formals Western Casuals Ethnic Wear Fabric
Purchase Frequency of Apparel
Once in 3 Months Once in 6 Months Once in a year
14
37
21
16
11
15
43
21
14
7
21
44
1513
7
25
41
16
13
4
0
5
10
15
20
25
30
35
40
45
AllFiguresinPercent
Western Formals Western Casuals Ethnic Wear Fabric
Spends on Apparel
Upto Rs. 250 (USD 5.4) Rs 251-500 (USD 5.5-10.8) Rs. 501-750 (USD 10.9-1.63)
Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+)
Preferred Formats, Location for Purchase
Format Western Western Ethnic Fabric
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Formals Casuals Wear
Purchased from
Small shops selling local
brands
37 35 43 47
MBOs 29 31 25 26
EBOs 25 23 19 20
Large department stores 8 7 8 5
Location of the store
Popular, big shopping
market
53 51 58 44
Local
neighborhood/colony
market
34 37 39 46
Markets popular for
selling that product
7 6 9 7
Shopping malls 7 8 4 3
Distance from home
Upto 1 km 29 31 34 39
l.l-2kms 29 28 31 27
2.1-5 kms 28 27 25 24
More than 5kms 14 13 10 10
All figures in percent.
Loyalty to Outlets (All figures in percent)
$ who say Western
Formals
Western
Casuals
Ethnic
Wear
Fabric
I buy only from one or a few shops
that I like/trust
46 48 44 46
If I dont find a brand at my shop, I
buy some other brand from the
same shop
36 33 34 31
Inner wear has been bought by 93% of the people in the last one year whereas 88% buy
at least once during six months. The spending of the majority (-42%) is in the range of
Rs. 101-250 (USD 2.2-5.4).
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Around 52% still make their lingerie purchases from small shops selling local brands.
Nevertheless the trend has been changing with the foray of national chains in major
metropolitan cities of the country. Close to l/5th of these consumers buy from outlets
that house multiple brands and are also ready to travel a distance of 2.1-5 Ions. Close to
38% of the employed is brand conscious and hence buy brands of their choice.
Cautious Planner (Age 31-45)
Western formals and fabric account for more than half of their expenditure on apparel.
The higher proportion allotted to fabric is contributed more by the women for whom it
accounts for over a third of their apparel expenditure.
The share of expenditure on Western wear among working women is substantial at 35%,
an evidence of the increasing adoption of Western wear for a variety of occasions.
Outer wear
Fabric purchase has the highest incidence 62%, over a one-year period. Close to half
(47%) bought Western formals. And sizeable segments have purchased Western casuals
(40%) and ethnic wear (37%).
Among the buyers, purchase frequency is at least once in six months for close to 70% in
the case of Western wear. Ethnic wear and fabric is purchased as frequently by 63-64%.
Spends on each of the different types of apparel arc spread over various brands. A larger
proportion spends in the region of Rs. 250-500 (USD 2.2-10.8) for any kind of apparel.
Spends on Western wear tend to be higher.
About 60% buy branded apparel in Western wear, while proportions buying branded
ethnic wear or fabric are lower at 49%. Brand loyalty is a shade higher for Western
casuals with a slightly larger number of people who say they will buy only brands they
like or trust and will seek out their brands at other outlets if it is not available in the
outlets they frequent.
These individuals ate the decision makers on the outlets to purchase from in nearly all
the cases. Purchases ate invariably made at the local neighbourhood market or one of the
larger, popular markets in the city which arc located within a 2 km radius in 60%+ of the
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cases, particularly for ethnic wear and fabric purchases. For Western wear purchases,
there is slightly higher inclination to travel beyond 2 kms.
Purchases from small shops selling local brands are most prominent. But purchases from
MBOs and EBOs are also substantial, especially for Western wear.
Loyalty to outlets
About half express loyalty to a particular outlet or set of outlets. And in the event of non
availability of what they are looking for, a third would settle for whatever is available at
that outlet. Shop loyalty factor seems somewhat higher for Western formals and casuals.
Inner wear
Nearly all (91%) have bought inner wear in the last year. It is bought by 85% of them at
least once in six months. Spends are above Rs. 250 (USD 5.4) in less than a fifth of the
cases; 37% have spent upto Rs. 100 (USD 2.1) and 44% have spent Rs. 101-250 (USD
2.2-5-4) in the last six months. Nearly all have bought inner wear using cash.
About half have bought from smaller shops selling local brands but purchases from
MBO and EBOs are significant at 23% and 18% respectively. The purchases from EBOs
are particularly interesting as it is similar for both men and women. These shops are
typically in the neighborhood markets (61% of the times) or in popular, shopping areas
(31%), within a 1 km radius from their residence in nearly half the cases. Travel exceeds
2 km for a significant one-fourth. Loyalty to shops and brands is largely similar to that of
apparel, with proportions being spread over those loyal to outlet, those loyal to brand
and those who are neither.
Share of wallet (apparel types) (All figures in percent)
All Men Women
Western Formals 27.7 28.9 19.2
Fabric 25.7 24.5 34.4
Western Casuals 19.3 19.8 15.9
Inner Wear 14.7 14.5 15.7
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Ethnic Wear 12.6 12.3 14.9
17
53
30
18
51
31
17
47
36
16
47
37
0
10
20
30
40
50
60
AllFiguresinPercent
Western Formals Western Casuals Ethnic Wear Fabric
Purchase Frequency of Apparel
Once in 3 Months Once in 6 Months Once in a year
15
43
19
15
6
22
36
23
13
7
26
39
16
13
4
25
39
19
12
4
0
5
10
15
20
25
30
35
40
45
AllFiguresinPercent
Western Formals Western Casuals Ethnic Wear Fabric
Spends on Apparel
Upto Rs. 250 (USD 5.4) Rs 251-500 (USD 5.5-10.8) Rs. 501-750 (USD 10.9-1.63)
Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+) 3-D Column 6
Preferred Formats, Location for Purchase
Format Western
Formals
Western
Casuals
Ethnic
Wear
Fabric
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Purchased from
Small shops selling local
brands
38 35 41 45
MBOs 39 30 28 27
EBOs 24 23 21 20
Large department stores 10 11 9 5
Location of the store
Popular, big shopping
market
45 44 48 38
Local
neighborhood/colony
market
41 42 40 51
Markets popular forselling that prod jet
8 7 6 7
Shopping malls 7 7 6 4
Distance from home
Upto 1 km 33 36 36 39
l.l-2kms 28 28 33 30
2.1-5 kms 30 25 21 22
More than 5kms 10 11 10 9
All figures in percent.
Loyalty to Outlets (All figures in percent)
$ who say Western
Formals
Western
Casuals
Ethnic
Wear
Fabric
I buy only from one or a few shops
that I like/trust
49 52 46 45
If I dont find a brand at my shop, I
buy some other brand from the same
shop
37 32 30 33
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The Home Makers (Age 26-60)
Fabric and ethnic wear purchases account for a larger share of the wallet among these
women. Western wear also has a considerable share in their spending. Share of inner
wear is largely similar to that seen in other life stages.
Outer wear
Purchase incidence of fabric is highest in this group, with 58% of the women having
bought some fabric in the last year. Close to half have bought ethnic wear, while a
substantial 35% and 33% have bought Western formals and Western casuals. Among
buyers o all these categories, frequency of purchase is at least once in six months in
almost 70% of the cases.
Fabric and ethnic wear purchases are in the lower ranges, to some extent. For instance
almost a third has spent only up to Rs. 25 1 (USD 5.4) on fabric, while these proportion
are much lower for Western wear. The value of spends is higher for Western casuals in
particular.
Brands are more popular in purchase o Western casuals (-61%) and formals (-57%!
However, close to 48% of the housewives buy branded clothes for their ethnic wear as
well fabric purchase.
The housewife is the decision maker in 86% of the cases. Among the remaining
women, the husband plays some role in outlet choice. On fabric purchase however, the
housewives are the unilateral decision makers.
Popular large shopping areas and the local neighborhood markets are patronized for
apparel purchase. Smaller shops selling local brands are frequented in more than 40% of
the cases. But purchases from MBOs and EBOs are also significant, especially for
Western wear.
As seen in the other life stages, distance of these shops is within a 2 km radius from their
homes in a larger number of cases.
Brand and shop loyalty is lower for fabric purchase. Brand loyalty is higher for Western
casuals.
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Share of wallet (apparel types) (All figures in percent)
All Housewives
with no children
Housewife with
dependent
children
Housewife
with
Independent
Children
Fabric 25 22 26 27
Ethnic Wear 24 26 23 22
Western
Formals
17 18 17 15
WesternCasuals
17 17 17 17
Inner Wear 17 17 17 19
17
51
29
19
54
27
16
51
33
20
48
31
0
10
20
30
40
50
60
AllFiguresinPercent
Western Formals Western Casuals Ethnic Wear Fabric
Purchase Frequency of Apparel
Once in 3 Months Once in 6 Months Once in a year
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19
44
19
13
4
21
34
24
14
7
24
41
18
12
4
31
35
18
12
3
0
5
10
15
20
25
30
35
40
45
AllFiguresinPercent
Western Formals Western Casuals Ethnic Wear Fabric
Spends on Apparel
Upto Rs. 250 (USD 5.4) Rs 251-500 (USD 5.5-10.8) Rs. 501-750 (USD 10.9-1.63)
Rs. 751-1000 (USD 16.4-21.7) Rs. 1000 + (USD 21.7+)
Preferred Formats, Location for Purchase
Format Western
Formals
Western
Casuals
Ethnic
Wear
Fabric
Purchased from
Small shops selling local
brands
44 41 43 49
MBOs 24 28 30 27
EBOs 23 21 17 15
Large department stores 9 9 7 6
Location of the storePopular, big shopping
market
45 44 45 41
Local
neighborhood/colony
market
41 41 44 49
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Markets popular for
selling that prod jet
9 8 6 7
Malls/Shopping Complex 5 7 6 4
Distance from homeUpto 1 km 31 31 35 38
l.l-2kms 30 33 34 31
2.1-5 kms 28 24 21 22
More than 5kms 10 13 10 8
All figures in percent.
Inner wear
Four out of five housewives have bought inner wear in last year, with 82% having
bought at least twice a year. A substantial 44% have spent in the range of Rs.101-250
within a six month period. More than half buy at the smaller shops selling local brands
but purchase from branded outlets are also substantial (MBOs-23%, EBOs-14%); which
is clear evidence of branding' beginning to play a more important role in the inner wear
category.
Loyalty to Outlets (All figures in percent)$ who say Western
Formals
Western
Casuals
Ethnic
Wear
Fabric
I buy only from one or a few shops
that I like/trust
48 51 45 43
If I dont find a brand at my shop, I
buy some other brand from the same
shop
42 42 31 34
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CHAPTER 4
FINDINGS & ANALYSIS
Retailing
Retailing is the most important part of the entire logistics chain in a business especially
in consumer related products. Without proper retailing the companies can't do their
business. Retailing is the process of selling goods in small quantities to the public and is
not meant for resale. Retail is derived from the French word retaillier, meaning to cut a
piece off or to break bulk.
There are various ways of making goods available to consumers like:
Company to distributor to wholesaler to retailer to consumer
Company to salesperson to consumer
Company to consumers (online/ phone/ catalog ordering)
These three are among the most common ways of making the goods available to
consumers. But in India the three layered system of distributor, wholesaler and retailer,
forms the backbone of the front-end logistics of most of the consumer-good companies.
In this system the company operating on all India basis appoints hundreds of distributorsacross the country that supplies to various retailers and wholesalers. Wholesalers in turn
can either directly sell in the market or can supply to retailers. The current retailing
system prevalent across the country is highly fragmented and unorganized. Anyone with
some money and some real estate can open a small shop and become a retailer catering
to the locality in which he opens the shop.
There are a number of reasons behind this fragmented retail market. Some of the major
reasons being:
Poverty and lower literacy levels.
Low per capita income.
Savings focused and less indulgence mindset.
Poor infrastructure facilities like roads etc.
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Restrictions on intra-state good movement.
High taxes.
No exposure to media.
High import duties on imported goods.
FDI in retailing is not allowed.
Retailing is not considered as a business or industry by the government.
Hitherto none of the business schools in India were offering specialized courses
on retailing.
Expensive supply chain.
Besides these there are other reasons too, which led to stifling of growth of organizedsegment of retailing sector and which instead led to highly fragmented market.
Today in India we have more than 12mn retail outlets and most of then are family run
and locally owned. There are very few nationally present retail stores. In India the
process of buying and selling at these unorganized retail outlets, is highly characterized
by bargaining and negotiations. But slowly with increasing influence of media and
urbanization the market is shifting towards organized segment. Seeing the huge market
size of retail business in the country and the current level of organized segment, many
players have jumped into the fray and many are waiting for the right opportunity to enter
it.
Classification of Retailing
Retailing is not bound or restricted by product categories, any consumer products
manufactured by a company and available in the market can be retailed ranging from
food to books to toys etc.
Entire retailing market in India can be divided into traditional retail stores and modernretail stores. While traditional retail stores form the unorganized segment of the market,
modern stores are a part of organized sector.
Organized retail market can be further categorized in then following different ways:
On the basis the area covered by various stores.
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On the basis of the products retailed by various stores.
On the basis of the ownership arrangement and product categories.
On the basis of readiness for riding the expected retail boom.
Categorization on the basis of area covered by various stores:
Based on the area covered by the store we can categorize retail stores into 5 types,
namely:
Neighborhood stores
High street stores
Small department stores
Specialty stores
Shopping malls, etc.
Neighborhood stores have an area in the range of 100-500 sqft and are most common of
all; these are present every where in every locality. These shops keep items pertaining to
daily use ranging from food and grocery to stationery etc.
High street stores have an area ranging between 300-1000 sqft. These stores are
generally specialty stores keeping only particular product category.
Small departmental stores have area in the range of 500-2000 sqft and these stores
generally keep grocery and other daily use items.Specialty stores have an area in the range of 5000-50000 sqft and these keep items
pertaining to only one particular product category.
Shopping malls come at the top of this retail pyramid and it keeps products ranging all
the product categories.
Categorization on the basis of products retailed by stores:
On the basis of product retailed, we can categorize stores into various types. In fact, the
categorization can be as vast as the number of product categories but taking into account
the importance of the product category we can divide these retail stores into following
types:
Food retailing stores.
Apparel retailing stores.
Pharmaceutical retailing stores.
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Books, music and life-style / entertainment retailing stores.
Fuel retailing stores.
Electronic goods retail stores.
House furnishing retail stores.
Food retailing stores can be further subdivided into fast food retailing stores, other fresh
foods stores and groceries stores and apparel stores can be sub-categorized into women
apparel, men apparel and children wear stores. Similarly we can do sub-categorization in
accordance with product categories and target segment.
Categorization on the basis of ownership arrangement and product categories:
On the basis of ownership arrangement and product category, categorization of retail
outlets can be done in following manner:
Departmental stores
Super Market
Consumer Durable stores
Franchisee Stores
Departmental stores are retail outlets that offer a number of products and a number of
brands under one roof. The entire store is divided into a number of departments with
each department offering one category of products. These stores offer everything exceptgrocery products.
Super markets offer products related to grocery and other food categories.
Consumer durable stores can be sub categorized into two, one electronic goods stores,
and book & music Stores.
Franchisee stores can be categorized into following types:
Apparel stores
Foot wear stores
Gifts and cards Stores
Watches Stores
Jewelry stores
Categorization on the basis of readiness for riding the retail boom:
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The organized sector of retailing can also be categorized into three types on the basis of
their readiness for off take to participate in the boom.
Ready to Go: Those retail categories, which have all inputs in place and all
development for the sector to take off has taken place.
Shape and Adapt: Those retail categories, which require development in logistics, cold
storage facilities and some development in sourcing arrangement.
Wait and Watch: These are the retail categories, which are waiting for the regulatory
permission to take off.
Ready To Go Shape and Adapt Wait and Watch
Men's apparel Women's apparel Liquor Stores
Dry Grocery Fresh Grocery Fuel retail storesElectronics/Consumer
Durables
Fast Food Pharmacy Stores
Life Style Products
Source: Excerpts from CII- McKinsey report on retailing sector
Some of the main factors essential for running a successful organized retail stores
are:
Location of the store.
Sourcing the right merchandise. Developing a promotional plan.
Area for moving around and browsing in the store.
Ambience of the store (designing, building, and fixturing the stores).
Type of staff and its training.
Varieties and choices available to the consumer.
Leveraging and gaining economic synergies across the locations (operational
economies of scale).
Factors that would lead to growth in retailing sector are:
Increasing growth in disposable income.
Increasing demand of products by consumers.
Changing life styles.
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Better product and shopping options available with consumers.
Relaxation of a number of regulations by government.
Rethinking on existing Real estate laws (like governmental plans for ULCA).
Restructuring in Tax regime (like uniform sales tax for all states).
Increased investment and focus on infrastructure by government.
Present Situation
Indian retailing industry is largely in hands of unorganized sector. There are around
12mn retail outlets across the country, which makes India number one in retail outlet
density. There is one outlet serving every 200 consumers. With increasing urbanization
and government following the policy of liberalization the industry is waiting in wings to
fly and grow at stupendous rates. It is in this anticipation a number of studies andsurveys have been done.
All these surveys might be differing in statistics but all have one thing in common: the
expected boom in the sector. The studies are based on a number of apparent changes
that have taken place in the society over past few years with onset of liberalization era in
the country.
Some of these factors are:
Economic reforms ushered in by the central government.
Lower import duties & increase in imported goods.
Increase in exposure to media.
Higher amount of ad-spending by companies.
Increase in disposable income.
Change in spending and indulgence tendencies.
Changing profile of families, shift towards nuclear families.
Changing profile of women.
Higher level of education among women.
More number of working women.
Changing life styles.
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All this led to beginning of a gradual shift in the control on the market from retailers'
hands to customer hands. In India presently the retailing market is dictated by retailers
and now with a number of new players coming in, the shift has started taking place
slowly to consumer dictated market.
The organized sector started with first few players setting up stores targeted at upper
income bracket of people but slowly the focus was shifted to middle and upper middle
class people. Today we have most of these retail stores targeted at middle class and
above.
RETAIL INDUSTRY IN INDIA
Till the early nineties, the organized retail industry had not evolved. There was no
consumer culture, there were limited brands and people bought what was available.
There were no shopping areas. The retail industry lacked trained manpower. It was
difficult to compete with the unorganized sector because they operated with minimal
labor costs and overheads. Tax laws and government restrictions added the problem.
Liberalization has changed all this. Today customer is with more spending power, is
better educated, and more importantly, exposed to brands and products through
television and foreign trips . The Indian consumer now has the desire to acquire.
Personal consumption is on the rise. Customer segments, already diverse, have been sub-
divided with joint families giving way to nuclear families, and the increasing number of
working couples. These changes along with increased availability of retail space and
qualified manpower have had a positive impact. New players are now entering the
market. Instead of retail evolution, there is a retail revolution in India.
The emerging purchasing power of the urban educated middle class and the growingwork culture of the working women has changed the buying habits of families, who are
experiencing a growth in income and dearth of time. Rising incomes have led to
increasing convenience and service. Consumers have started caring about where they
would like to shop, be it multi brand outlet, exclusive stores or malls with development
around them but are also more demanding. They want superior quality at an affordable
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price and they want it instantly. Thus, we see that there is a strong trend in favor of one-
stop shops like malls and supermarkets.
The economy of India is the fourth largest in the world as measured by purchasing
power parity (PPP), with a gross domestic product (GDP) of US $3.611 trillion. When
measured in USD exchange-rate terms, it is the twelfth largest in the world, with a GDP
of US $719.8 billion (2005). India is the second fastest growing major economy in the
world, with a GDP growth rate of 8.9% 2 at the end of the first quarter of 20062007.
However, India's huge population results in a per capita income of $3,300 at PPP and
$714 at nominal.3
The economy is diverse and encompasses agriculture, handicrafts, textile,
manufacturing, and a multitude of services. Although two-thirds of the Indian workforce
still earns their livelihood directly or indirectly through agriculture, services are a
growing sector and are playing an increasingly important role of India's economy. The
advent of the digital age, and the large number of young and educated populace fluent in
English, is gradually transforming India as an important 'back office' destination for
global companies for the outsourcing of their customer services and technical support.
India is a major exporter of highly-skilled workers in software and financial services,
and software engineering.
India has gradually opened up its markets through economic reforms by reducing
government controls on foreign trade and investment. The privatization of publicly
owned industries and the opening up of certain sectors to private and foreign interests
has proceeded slowly amid political debate. Over the past few years the Indian economy
has undergone drastic changes- changes that have had the market flooded with
multinationals and a variety of products. There has been a sudden upsurge in the Indian
industry and exponential growth in specific industries. Todays companies work in a war
zone of rapidly changing competitors, technological advances, new laws, managed trade
policies and diminishing customer loyalty. Earlier the companies could succeed by
producing their products and supporting them with hard selling and heavy advertising.
But
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Todays customer faces a plentitude of products in every category.
Customers exhibit varying and diverse requirement for product and service
combinations and prices. They have high and rising expectations of quality and
service.
Recent Trends in Apparel Industry
The domestic clothing, textiles and fashion accessories market is estimated to be at Rs.
80,000 crore and about 13.6% of this market is believed to be organised. Apparel retail
is the largest segment of this sector and accounts For almost 39% of the organised retail
sector. The men's apparel market in India, valued at Rs. 32,640 crore for the year 2004,
has grown nearly 12 per cent over the previous year in value terms. The women's wear
market is estimated to have grown at about 13.4% in the year 2004 over the previous
year in value terms. The textile manufacturers were among the first to get into branded
menswear in the Indian market. This sector is perhaps the most developed in terms of
supply chain sophistication in the branded clothing market. Let us start by understanding
the composition of the apparel sector. The apparel sector can be broadly classified into
Men's apparel, Women's apparel and Children's wear. Each of them can be further
classified into Formal, Casual, Indian wear, Inner wear, Sports wear and Accessories, as
is illustrated in Figure given below:
46
Apparel
Menswear Women wear Children'swear
Formal Casuall Indian Sportswear Accessories Innerwear
ShirtsTrousersBlazers/jacketsSuits
TShirtsShirtsJeansCasualTrousers
KurtaPyjama
DhotiKurta
Sherwani
TrackSuits
ShortsT Shirts
BeltsTiesSocks
VestsBriefs
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The same classification can be reworked for women's wear and children's wear. Thus we
can see that this sector has many classifications and sub-classifications adding to the
complexity and the competitiveness of this sector. Apparel Retail in India is
characterised by the existence of a large number of regional, national and international
brands. Another important characteristic is that retail occurs through multiple formats,
for example an Arrow shirt would be retailed through stores like Shopper's Stop,
Pantaloon, etc. and also through the company's own retail outlets.
In menswear, the key players are Arvind Brands, Madura Garments, Raymond's/Park
Avenue. It is estimated that by the end of 2009, the domestic: market for textiles and
clothing should touch or exceed Rs. 110,000 crore. At that size, it would be in the top 15
markets in the world even when we consider the substantially lower retail price points in
India. The key brands in menswear are indicated in Table given below.
Formal wear Casual wear Denims Sportswear
Arrow Allen Solly Levi's Reebok
Louis Phillippe Color Plus Lee Nike
Van Heusen Dockers Wrangler Adidas
Park Avenue Benetton Pepe -
Wills sport Ruf n Tuf -
Table: Key Menswear Brands
In India, a national brand in Womenswear is virtually non-existent. Most branding that is
visible in women's wear is only in the western casual clothing segment. However, this is
a growing segment where sizeable opportunities exist in the women's ethnic wear,
lingerie and maternity clothing. Allen Solly, a leading brand in menswear, has entered
the women's western wear market.
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Local manufacturers again rule a large section of the children's clothing market though a
few national brands like Gini & Jony and Ruff Kids have emerged in the market.
Invariably, these brands started by retailing within larger department stores before
setting up their own and franchised retail outlets. Apparel retail occurs through a
company's own outlets or through the multi brand outlets. Over the past few years, this
sector has seen the development of private labels by many department stores. In fact,
Westside focuses strongly on private labels only.
Opportunities, Challenges
The biggest fillip to the industry would be provided by the growth of organized retailing.
As more shopping malls open, adding thereby a few lakh square feet of retail space,
garment manufacturers will have many more options to peddle their merchandise. Thisphenomenon cannot, however, be looked at in isolation and needs to be examined in the
perspective of retail outlets also promoting their in-store brands (see related story for
more details).
Retailers' Challenge
THE big opportunity that has presented itself before manufacturers of readymade
garments today is the growth of organised retailing.
As players such as Shoppers Stop, Lifestyle and Globus embark on ambitious plans to
ramp up the square footage of organised retail space, branded readymades will have
more shelf space to display their merchandise.
INDUSTRY SNAPSHOT
Branded readymade apparel market for men estimated at about Rs.5,000 crore,
expected to grow at 15 per cent
Industry characterised by a high degree of fragmentation
Leading players include Madura Garments (about Rs.350 crore}, Arvind (about
Rs.275 crore) and Raymond (about Rs.350 crore, after acquisition of Color Plus)
Other major players include Zodiac, Wills Lifestyle, Provogue, Indus League,
Bombay Dyeing and Levi's
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Distribution through a combination of exclusive brand stores and multi-brand
outlets
Branded garments retail either through an exclusive brand outlet (EBO), where only the
merchandise of a particular company is showcased, or through a multi-brand outlet(MBO) which stock multiple brands under one roof.
Location in upmarket areas that has sizeable catchment, and an ambience that spells
class and sophistication, large retail stores are but a logical destination for branded
apparel makers.
The retail equation has to be seen in the context of the emergence of in-store brands such
as Stop, of Shoppers Stop, and Oak Valley, of Globus.
As in-store brands gain greater prominence, it is only natural that the retailing outfits
would seek to promote them by allocating a greater floor area for display.
After all, a retail outfit would stand to make higher margins on its own brands compared
to the others that it stocks. Top-end brands are a big draw among customers visiting a
large retail store, as they facilitate comparison-shopping and shoppers are not tied down
to choosing just one brand, which is what happens in the case of an EBO.
This places the retail outlets in a quandary. They would not be willing to let go of the
footfalls that the various brands that they stock generate and, at the same time, would
want to boost revenues from their in-store brand, which is a more lucrative proposition.
The onus would then fall on the retailers to arrive at a balance between these conflicting
issues to ensure that their interests, as also that of the other brands they stock, are best
served.
Finally, the rules for success when it comes to a going-to-market strategy are not cast in
stone. It does pay for a company to be format-agnostic, and ensure that its brands areavailable at all points where a prospective customer is likely to visit.
As more consumers realize the convenience of readymade garments, it will only serve to
hasten the transition from tailored clothing. Unlike in the West, where tailoring is a more
expensive alternative to readymade clothing and makes a fashion statement, it is more
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preferred in India, especially for those who look at it as a lower priced option vis--vis
branded ready-to-wear.
The price differential between tailored clothing and ready-mades is partly because of the
excise duty on the latter. The industry would, naturally, like to see a reduction from thecurrent level, as it would make ready-mades more affordable.
Another challenge confronting Indian garment manufacturers is the need to devise
strategies once the quota on garment exports is abolished in 2005. With garments
accounting for nearly 50 per cent of overall textile exports, the threat from lower-cost
producing nations is real.
To counter the potential loss of revenue, Indian garment exporters are gearing up to
launch ready-mades in the domestic market. Conversely, there is also the likelihood of a
wide variety of fabric coming into the country, providing the exporters opportunity to be
creative with their design.
Women's western wear is another segment that is likely to see action. With increasing
urbanization, the demand for such clothing is likely to rise significantly. It would also
pose a challenge to retailers in terms of how they re-jig their stores to appeal to the more
demanding fairer sex.
Both opportunities as well as challenges abound for players in the readymade garments
business. Substantial investments made in brand building and in establishing customer
niches will ensure that they further build on the gains they have made.
At the same time, brand strategists will have their plate full when it comes to entering
territories such as women's or kids wear, or taking advantage of emerging retail
opportunities. Capitalizing on these opportunities will ensure that the garments industry
is clothed in success.
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Survey Analysis
(From Customers)
OTHER INFORMATION:
Age:
Less Than 20 Yrs 21-35 Yrs 36-55 Yrs 56 Yrs & above
18 23 17 17
Less Than
20 Yrs
24%
21-35 Yrs
30%
36-55 Yrs
23%
56 Yrs &
above
23%
Interpretation: In the survey respondents were chosen from all age groups so as to get a
view on the purchase behaviour for apparel all segments. The respondents were chosen
randomly. Both male and respondents were contacted for the survey.
Marital status:
Single Married
21 54
Single
28%
Married
72%
Interpretation: In the survey 72% respondents were married. 28% respondents were
single and most of them were students.
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Educational Information: (tick one)
SSC/HSC Graduate Post-graduate
Self 18 36 11Spouse 18 21 15
18 18
36
21
1115
0
5
10
15
20
25
30
35
40
SSC/HSC Graduate Post-graduate
Self Spouse
Interpretation: In the survey respondents were from different educational background.
This would help in gauging the buying behaviour of different segments.
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Occupation:
Occupation No. of Respondents
Businessman 16
Executive 13Government Service 6
Academics 2
House-Wife 11
Self-employed 9
Student 18
Self-employed
16%
Student
0% Businessman
27%
Executive
23%
House-Wife
19%
Academics
4% Government
Service
11%
Interpretation: The survey was conducted using convenience and respondents with
different occupational background were selected. The buying behaviour for apparel is
different for students who need trendy/casual clothes while people in service need
formal clothes.
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Monthly Household Income:
< Rs.10000 Rs. 10000-
Rs.15000
Rs. 15000-
Rs.20000
> Rs. 20000
6 31 19 19
Rs. 15000-
Rs.2000025%
> Rs. 20000
25%
< Rs.10000
8%
Rs. 10000-
Rs.15000
42%
Interpretation: Buying behaviour is dpenedent on the househuls income of individuals.
The surveyor has analysed the buying behviour of individuals based on their buying
power i.e. househols income.
Accommodation
My own house Company provided Rented Accommodation
24 8 43
My own
house
32%
Company
provided
11%
Rented
Accommoda
tion
57%
Interpretation: 57% respondents were living in rented accommodation, 11% were
living in company provided accommodations while 32% respondents were living in their
own house.
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1. Which of the following fashion brands are you aware of?
Brands No. of Respondents
Allen Solly 75
Dockers 23
Parx 45
Blackberrys 21
Proline 11
Zodiac 54
Provogue 67
Park Avenue 45
Louis Philippe 58
Van Heusen 61
Peter England 75
Excalibur 75Arrow 56
75
2321
45
21
11
54
67
45
5861
75 75
56
0
10
20
30
40
50
60
70
80
Allen Sol ly
Dockers
Color Plus
Parx
Blackberrys
Proline
Zodiac
Provogue
Park Avenue
Louis Philippe
Van Heusen
Peter Eng land
Excalibur
Arrow
Interpretation: Most of the respondents were aware of Allen Solly, Peter England,
Excalibur, Provogue and Louis Philippe. While very few respondents were aware of the
Proline and Blackberry. Only few respondents were aware of Dockers as these brands
mostly cater to the higher income group..
2. Which of the following brands of Denim are you aware of?
Denim Brands No. of Respondents
Lee 34
Dockers 23
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Levis Strauss 45
Wrangler 69
Numero Uno 34
Pepe 34
Monte Carlo 36Lee Cooper 45
34
23
45
69
34 34 36
45
0
10
20
30
40
50
60
70
Lee
Dockers
Levis Strauss
Wrangler
Numero Uno
Pepe
Monte Carlo Lites
Lee Cooper
Interpretation: Most of the respondents were aware of Wrangler. Other brands were
also known to almost 50% of the respondents. Denim brands were popular in both male
and female segment.
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3. How often do you purchase your readymade garments?
Frequently Occasionally
56 19
Frequently
75%
Occasionally
25%
Interpretation: 75% respondents purchased readymade garments frequently i.e. on
regular intervals. While 25% respondents purchased the readymade garments
occasionally.
4. How often do you purchase clothes?
Once a week Once in a months Once in 3 months Once in 6 months
9 45 17 4
Once a
week
12%
Once in amonths
60%
Once in 3
months
23%
Once in 6
months
5%
Interpretation: 60% respondents purchase clothes once in a month, while 23%
respondents purchase clothes once in 3 months. While 12% respondents purchased
clothes once a week and 5% purchased clothes once in 6 months.
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5. Factors you consider while purchasing a readymade garments.
Factors No. of Respondents
Cloth type 56
Color 75
Brand 49
Fashion/Trend 34
Price 75
Availability 39
56
75
49
34
75
39
0
10
20
30
40
50
60
70
80
Cloth type
Color
Brand
Fashion/Trend
Price
Availability
Interpretation: The most important factor affecting the purchase of the readymade
garments as depicted above is price and color of the garment. The next important factor
is cloth type followed by brand. Availability and Fashion trend are the important but do
not affect the purchase decision to that extent.
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6. Listed below are statements about shopping behavior for clothes and clothing
fashions. Please check one box for each statement to indicate the extent to which
you agree or disagree with each statement.
Agree Neither
Agree Nor
Disagree
Disagree
A. I buy clothes I like, regardless of current fashion. 54 21
B. I buy new fashion looks only when they are well
accepted.
11 45 19
C. I am not as concerned about fashion as I am about
modest prices and wear ability.
45 16 14
D. I prefer to buy well-known designer labels rather
than take a chance on something new.
7 67 1
E. I am confident that I have good taste in clothing. 34 41
0
10
20
30
40
50
60
70
Agree Neither Agree Nor
Disagree
Disagree
A
B
CD
E
Interpretation: After the survey it can be concluded that people buy clothes regardless
of the current fashion. Also it is clear that people do not wait new fashion to be accepted
but here can say that the concept of individualism is applicable to purchase of readymade
garments. People are concerned about the price and wear ability. Designer Labels do not
affect the purchase behavior for most individuals and they are popular amongst the
Higher Income Groups.
7. Who influences you to purchase the brand?
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Family Friends Advertisement Self
37 11 8 19
Family
49%
Friends
15%
Advertisement
11%
Self
25%
Interpretation: The most important influencer in purchase of a particular brand are the
family members, followed by individuals themselves. Advertisements and friends affect
the buying behavior of the younger generations.
8. Where do you shop regularly?
Super Market Local Market Store
26 49
Local
Market
Store
65%
Super
Market
35%
Interpretation: 65% respondents prefer to buy readymade garments from stores in local
markets while 35% respondents prefer to buy them from super markets.
9. How many times in a month do you visit the market?
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1-3 times 3-7 times 7-10 times
Super Market 19 5 2
Local Market 27 13 9
19
27
5
13
2
9
0
5
10
15
20
25
30
1-3 times 3-7 times 7-10 times
Super Market
Local Market
Interpretation: As evident from the above bar graph most of the people mostly visit
the market 1-3 times in a month. While very few people visit market more than 3 times
in a month. Usually people visit markets on weekends for organized purchases while for
non-organized that includes day to day purchases are done on regular basis.
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10. Where do feel you get a better bargain?
Super Market Local Market
18 57
Local MarketStore
76%
Super Market
24%
Interpretation: 57% Respondents feel that they get better bargain in local markets
while 24% respondents feel that they get better bargain in super markets. Respondents
prefer multi brand outlets for purchase of readymade garments.
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11. Which of the following factors influence your decision to shop at a
supermarket and not at the Local market or vice versa?
Factor Supermarket Local Market
Store
Range of products 43 32
Accessibility 18 57
Ease of purchase 39 36
Store timings 49 26
Behavior of sales