In 2018, the fashion market started overcoming the economic challenges, with the apparel and footwear categories alone posted a growth of 14 percent in 2017-18. Manufacturers in apparel and footwear adapted to the new tax structure and the government introduced initiatives to help domestic manufacturers…
2018 was a mixed bag for the fashion industry in India. The fashion market (apparel, footwear, personal accessories and eyewear, personal luxury) in India experienced many challenges in 2016 and 2017, which led to slower value growth particularly in apparel and footwear. The industry was recovering from the effects of demonetisation in 2016 and the introduction of the goods and services tax (GST) in 2017. These nationwide reforms adversely impacted both consumers, manufacturers and the industry at large. However as seen in 2018, the industry was on the path to recovery, overcoming the economic challenges impacting the industry. The apparel and footwear category alone posted a growth of 14 percent in 2017-18. Manufacturers in apparel and footwear adapted to the new tax structure and the government introduced initiatives to help domestic manufacturers.
Meanwhile, the personal accessories category grew by 13.6 percent in 2017-18 due to rising consumer sentiment and confidence with consumers increasing their expenditure, especially on jewellery and watches. Per capita expenditure on jewellery and watches registered a CAGR of 16 percent and 15 percent respectively, during the period 2013-2018.
The positive economy and growing disposable income complimented the rising consumer confidence in the country. The revision in tax rates made personal accessories more organized as some of the regional and local companies that previously operated out of the purview of the tax system, were required to obtain a GSTIN to avail input credits.This helped well-established companies to compete head-to-head with regional and local companies on price.
Personal luxury grew by 17.5 percent in 2017-18 consistent with previous year’s growth. The concept of luxury has evolved, with more importance placed on personalised product offerings and experiences associated with luxury brands. Whilst the demand for iconic brand logos continues, more consumers are scrutinising the trade-off between the value derived and the premium price.
CATEGORY DEFINITIONS
Apparel and Footwear
Apparel is the aggregation of clothing and footwear. This dataset covers retail sales of apparel through both store-based retailers and non-store retailers.
Excludes black market sales (i.e. untaxed, generated within informal retailing) and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded.
Apparel
Articles of dress; wearing apparel; garments. Items must be new when sold to the consumer; second-hand/used clothing is excluded. Antique and/or vintage clothing is also excluded. Sports clothing (broken out as a separate category) is included in total clothing figure. Apparel also includes children’s wear.
Footwear
This is the aggregation of children’s footwear, men’s footwear and women’s footwear. Includes all men’s, women’s and children’s outdoor and indoor shoes made of materials as leather, fabric or plastic. Outdoor shoes includes all dress shoes, trainers, sports shoes, sandals, boots, pumps, and high heels. Indoor shoes includes house-shoes and slippers. Items must be new when sold to the consumer; second-hand/used footwear is excluded. Antique and/or vintage footwear is also excluded. Sports footwear (broken out as a separate category) is included in total footwear figure. One pair of footwear constitutes one volume unit.
Sportswear
Sportswear is an aggregation of performance, outdoor and sports-inspired clothing and footwear. Sportswear includes products designed for all ages including sportswear for children. Sportswear includes items across all clothing and footwear categories: shorts and trousers, dresses and skirts, tops, jumpers, jackets & coats, track suits/athletic sets, underwear, swimwear, hosiery, accessories including headwear, gloves, scarves. Please note sportwear is duplicated category and sports clothing and footwear products are also included across all relevant clothing and footwear categories.
Personal Accessories
Personal Accessories refers to a diversified group of personal products including Bags & Luggage, Jewellery, Watches and Writing instruments.
Bags and Luggage
Bags and Luggage includes bags and cases which serve common everyday purposes or specific functions during travel, sports, or formal occasions. However, all sports equipment bags (e.g. golf, tennis, and bowling), insulated food and beverage bags, and musical instrument cases are excluded.
Jewellery
Jewellery is a kind of personal adornment usually made with various precious and semi-precious materials such as gemstones, precious metals, beads, glass, and shells. Jewellery segment as either real or costume jewellery. Hair Accessories are not included as part of Real or Costume jewellery.
Personal Accessories
Personal Accessories refers to a diversifi ed group of personal products including Bags & Luggage, Jewellery, Watches and Writing instruments.
Bags and Luggage
Bags and Luggage includes bags and cases which serve common everyday
purposes or specifi c functions during travel, sports, or formal occasions.
However, all sports equipment bags (e.g. golf, tennis, and bowling), insulated
food and beverage bags, and musical instrument cases are excluded.
Jewellery
Jewellery is a kind of personal adornment usually made with various precious
and semi-precious materials such as gemstones, precious metals, beads,
glass, and shells. Jewellery segment as either real or costume jewellery. Hair
Accessories are not included as part of Real or Costume jewellery.
Watches
Watches are timekeeping instruments usually worn on the wrist or carried as an accessory in a pocket. Includes wristwatches, pocket watches, and watch jewellery (gemstone-studded watches).
Writing Instruments
Writing instruments is the aggregate of pens, pencils, colouring, markers and highlighters and writing accessories.
Personal Luxury
Personal luxury includes – Designer Apparel and Footwear (Ready-to- Wear), Luxury Eyewear, Luxury Jewellery, Luxury Leather Goods, Luxury Portable Consumer Electronics, Luxury Timepieces, Luxury Writing Instruments and Stationery, Super Premium Beauty and Personal Care
Designer Apparel and Footwear (Ready-to-Wear)
This is the aggregation of designer clothing and designer footwear.
Luxury Eyewear
This is the aggregate of luxury sunglasses and luxury spectacle frames.
Luxury Jewellery
This is the aggregation of luxury fine jewellery and luxury costume jewellery.
Luxury Leather Goods
This is the aggregation of luxury bags, luxury travel goods and luxury small leather goods.
Luxury Portable Consumer Electronics
Luxury portable consumer electronics include luxury mobile phones, luxury MP3 players and luxury wearables.
Luxury Timepieces
This is the aggregation of luxury men’s and women’s luxury timepieces.
Luxury Writing Instruments and Stationery
This is the aggregation of luxury writing instruments and luxury stationery.
Super Premium Beauty and Personal Care
This is the aggregation of super premium bath and shower, super premium colour cosmetics, super premium deodorants, super premium fragrances, super premium unisex fragrances, super premium haircare, super premium skincare, super premium hand care, super premium sun care, super premium sets/kits.
In 2018 several trends from the previous years intensified and have become a part of the overall fashion industry. Few noteworthy ones were:
Personal branding fosters the desire to trade up
The demand for branded apparel, footwear and eyewear is synonymous across all consumers, especially in urban areas, with rising aspirational level influencing consumers to continuously seek more premium and luxurious brands. The strong desire to trade up is because more people are becoming conscious of their image and want to keep up with the latest trending clothes. Further, the desire to own apparel from multiple luxury brands aided sales in recent years.
Athleisure remained a key driver of sales in both apparel and footwear in 2018:
Companies have now become more welcoming to the thought of adopting a casual attire format at workplaces, resulting in demand for comfortable clothing possessing attributes such as being stretchable and breathable. This has resulted in athleisure clothing gaining prominence amongst the working youth who want these attributes.
As this fashion trend continues, people wearing fashionable sport clothing at work such as hoodies and t-shirts is only going up. This is also backed by the number of health-conscious consumers which has been on a rise, leading to increasing demand for performance and sports-inspired apparel and footwear for workouts and other physical activities.
Social media platforms become key influencers in driving purchasing decisions across all age groups:
Social media platforms such as Instagram, Pinterest, Facebook and Snapchat have become essential channels for communication between brand owners and consumers. Most of the well-established apparel and footwear brand owners such as Louis Philippe, Van Huesen, Arrow, Zara, Adidas, etc. have increased their digital campaigns in addition to their online marketing and advertising campaigns to build connect with consumers
Growing levels of aspiration amongst men, coupled with an increasing desire to be different, have led many to follow famous sports personalities and actors to keep up with the latest fashion trends.
Women consumers are known to be fashion conscious and more adept in adopting new fashion trends given that they have larger variety of clothing styles to choose from such as ethnic clothing, formal wear, etc. that could be worn at work or at college. Taking this into consideration, social media platforms have allowed this consumer base to follow fashion bloggers and celebrities to keep up with the latest trends and make online purchases at discounted prices across the year. Men are also becoming increasingly influenced by various social media platforms. Growing levels of aspiration amongst men, coupled with an increasing desire to be different, have led many to follow famous sports personalities and actors to keep up with the latest fashion trends. Increasing internet and smartphone penetration should help social media platforms to make inroads in smaller cities and towns in the future.
Furthermore, well-established companies improved their digital strategies and online presence to target a larger audience and provide consumers with a more seamless shopping experience.
Personal accessories are increasingly becoming a very important segment that is contributing to the fashion industry in India. With improving consumer sentiment consumers are spending more on personal accessories in India. There were few trends that prevailed in 2018:
Technological innovation boosts growth of personal accessories
Well-established companies such as VIP Industries and Titan Ltd tapped into the premiumisation trend by introducing innovative products such as water and scratch resistant bags, safety watches for women and customised jewellery designs using CAD (computer- aided design) and 3D printing.
Furthermore, internet retailers also used technology to replicate the physical shopping experience with the help of chat bots and augmented reality. With rising aspiration levels, especially in metropolitan areas and tier-II cities, consumers were spending more money to trade up to new innovative products.
Leading companies also focussed on technological advancements, leveraging them to reduce production costs and the sourcing of quality raw materials.
Personal accessories remains a fragmented market in India
The personal accessories market is highly fragmented in India as the coverage and number of small local companies is higher in comparison to well-established players. Major companies hold a presence across urban areas and are yet to penetrate rural markets. Furthermore, competitively priced products offered by regional companies discouraged consumers from shifting towards branded products. With the introduction of GST, the personal accessories category is anticipated to become increasingly organised. Price differences between regional companies and established manufacturers are also anticipated to reduce in the future.
Internet retailing continues to gain ground
In recent years, companies have continued to focus on building their online presence through both e-commerce marketplaces as well as their own digital platforms, thus seeking to tap into consumer demand for convenience. Many have recognised the importance of a strong online presence to achieving success in the Indian market. In addition, consumer trust in internet retailing has increased thanks to the efforts of e-commerce players and companies alike. Free delivery, easy payment options such as cash on delivery, frequent discounts, a wide product range and the ability to compare products and prices have made online shopping both easy and convenient. Particularly consumers living in rural areas who do not have access to a wide range of products are increasingly appreciating the fact that they can shop online and easily return goods which are not suitable for whatever reason.
Luxury goods witnessed a slowdown in 2018 from the previous year. The government’s stringent regulation in the form of high customs duty on luxury goods and the increased local taxes and cess on luxury goods adversely impacted the category. However, the demand for personal luxury goods continued to drive the current value growth of overall luxury goods:
Affordable luxury products are key to tap into the younger consumer group
Personal luxury goods in India is embracing young aspirational consumers by offering affordable luxury products at competitive prices, incentivising them to expand their budget and trade up. In recent years, however, the increasing availability of affordable luxury brands such as Michael Kors, Coach, Kate Spade and Marc Jacobs, amongst others, effectively catered to younger consumers and the middle-income population. By 2023, millennials and generation Z will account for 65 percent of the total population, with the latter accounting for 35 percent of the total population during this year. As a result, luxury brands will look to expand their product lines to effectively tap into this consumer group.
Store-based retailing maintains its dominance
Consumers in the country, especially younger consumers, are shifting towards online purchasing due to several factors, such as convenience, easy comparison with other brands and availability in locations where physical stores are absent, to name a few. However, the dominance of store-based retailing continues, due to the in-store experience that is offered to consumers, which gives a premium feel. Although consumers are purchasing luxury goods due to their higher disposable incomes, they still consider them as an investment.
Each of these categories within the fashion industry in India are forecast to post double digit percent growth in cumulative terms up to 2023. As consumers are increasingly spending on fashion and with connectivity amplifying the awareness of fashion styles and trends, the Indian market is expected to post sustained growth in the coming years.
