Thursday, April 18, 2024
Html code here! Replace this with any non empty raw html code and that's it.

Latest Posts

IFF 2024: Digital will propel modern Indian retail, says Saloni Nangia, President, Technopak

India’s estimated GDP for FY23-24 is about $3.85 trillion and we are slated to reach nearly $10 trillion by 2035 in the next 10 years. Private consumption stands at about 2.27, similar to a lot of other developed nations of the world and this will only grow stronger in the next few years, said Saloni Nangia, President, Technopak India, at India Fashion Forum 2024.

However, consumption growth is concentrated in a few pockets in the country, she said, adding that 20% of the entire consumption was accounted for by Mumbai and Delhi-NCR. The next 20% of consumption comes from the six metro cities, while the third 20% comes from 65 cities in India. The remaining consumption comes from the rest of the country.

She said that India will be crossing the $1 trillion mark in merchandise retail in this financial year, and this will double in the next 10 years. “At 60% India, is similar to a lot of developed countries from a consumption perspective. In the fashion category (apparel) stood at about $70 billion in 2023. This makes it very exciting for anyone who is in the business of merchandise in India,” she said.

Size of the Fashion Retail Market in India
The size of the fashion market inclusive of beauty and accessories is $113 billion. Beauty remains the fastest-growing category and in the next few years, we will see apparel’s share going down However, as a category, apparel will grow its share of modern retail over the next few years.

> Menswear holds the largest share at about 40%. There is a 90%-10% split between Western and Indian clothing.
> Womenswear is the next smaller one but is growing at a fast rate. There is a 30%-70% split between Western and Indian clothing.
> The kidswear segment – which is divided 50%-50% between the branded and unbranded sections – is growing fast, with the branded segment expected to increase over the next few years. There is a 70%-30% split between Indian and Western clothing.
> There will be a growth in Western wear in the coming years, as well as fusion wear.

Consumer Psyche & the Value Segment: A Comparison
USA has recently released a 100-year study of consumer expenditure across categories like food, clothes, housing, etc. From 14%, the USA’s apparel’s wallet share came down to 6% in 1984 and now stands at 2.6%. For India, apparel’s wallet stands at 6%.

In the USA, in 1972, people spent $565 on garments and 3-4 pairs of shoes. In 1991, the spending went up to $1735, which is similar to what US citizens are spending in 2021 as well.

The actual spending, therefore, hasn’t increased, but the number of clothes has gone up from 40 to nearly 70 pairs, and the pairs of shoes have gone up as well. People are buying clothes for a short time, they are buying many more options so it can be concluded that the fashion retail sector is providing value to consumers.

US citizens are not planning long-term spending in terms of fashion, but want quick, disposable and fast fashion, something that’s interesting at the time of purchase and easy to discard when it’s time (quickly) to move on to the next item.

“People are no longer investing a lot of money into apparel and so this past year has been challenging for many businesses,” said Saloni Nangia, adding, “Apart from this, there will be premiumization which will be smaller categories and smaller quantums, but there would be a much larger value market that would be available for many years to come.”

The Indian ecosystem, however, works differently, she said. “The cost of real estate and the supply chain is very high, while the purchasing power ability is very low/average at best, which is very different from what you see in other, more expensive countries.”

“Despite this, the average Indian consumer is very aspirational and India is digitally very well connected. This is why the entire value chain – be it design, merchandising, number of SKUs one is offering, the overall shopping experience – needs to be re-looked at from a value perspective. This is a huge opportunity for India,” she stated.

IFF 2024: Digital will propel modern Indian retail: Saloni Nangia, President, TechnopakInfrastructure Development
While brick-and-mortar retail and modern retail are expected to grow, the valid question is – where is the real estate for this growth in India? She said that digital will propel the growth of modern retail in the country.

Saloni Nangia explained that about $14 billion has been invested in India to develop its infrastructure since Independence. Out of this, 50% ($7 billion) has been done only in the last nine years and the maximum impact of this investment has been seen post-COVID.

Another $7 trillion is expected to be invested in the next six years in the Indian economy. “Just the cascading impact of this investment on our economy is going to be very big and is a very positive shift from a consumption perspective,” she stated. “That’s one of the primary reasons the whole world is looking at India because this is the only country which offers this kind of a growth opportunity plus the fact that it’s coupled with very, very rapid digitization,” she added.

Tracking the DDP (Domestic Product at a District Level) in India shows that while districts may not be active consumption centers just now, they are poised for growth in consumption in the next few years. The Rangareddy district in Hyderabad has the largest DDP in the country, as does Solan. Many similar hotspots are coming up in the country, which is industry-led, so India needs to start focusing on micro markets rather than looking at just the larger cities, Saloni Nangia explained.

Technology & Sustainability
Saloni Nangia said that technology will be a great enabler and a value creator for all businesses. AI will be an enabler as well as a disruptor. The speed at which retail merchandise is churned out is going to be much faster and companies need to focus on agility.

As far as sustainability is concerned, she said ‘green will remain the new black’ for many years to come.

She concluded by saying that it was important that Indians invest in the right type of sourcing and the right capacities, otherwise, that will become a hurdle in a few years.

“The Indian ecosystem is still not organized, but we do need to invest so that the fashion ecosystem continues to grow,” she stated.

Latest Posts

Don't Miss

Stay in touch

To be updated with all the latest news, offers and special announcements.