In India, the apparel segment holds the majority share with revenue of US $ 9.9 billion in 2019 pegged to grow at CAGR of 21.1 percent from 2019- 2023. The corresponding figures for the footwear and bags and accessories segments are US $ 1.9 billion (CAGR 19.6 percent) and US $ 0.68 billion (CAGR 19.6 percent) respectively…


Fashion retailers need to get serious about their channel strategies and get the basics right.

A global perspective

Despite the on-going global economic slowdown, with GDP for countries like China and India growing at 6.2 percent and 5 percent respectively, India’s fashion market stands stylishly upbeat and more promising than the rest of the world bundled together in terms of growth rate. While China currently holds the number one slot in global fashion revenue rankings, India’s fashion market revenue is projected to grow at a CAGR of a 20.8 percent in the next four years outpacing China’s 11.5 percent (which is also the world’s average) for the same period. This market volume is expected to touch US $ 26.7 billion by 2023 which currently stands at US $ 12.5 billion, thanks to the country’s dynamic demographics and its probusiness economic and regulatory environment.

Projected Growth in Fashion Revenue
(CAGR 2019 – 2023)

India’s Fashion Market

The three biggest segments in any fashion market are apparels, footwear and bags and accessories. So, it is for India. Here, the apparel segment holds the majority share with revenue of US $ 9.9 billion in 2019 pegged to grow at CAGR of 21.1 percent from 2019-2023. The corresponding figures for the footwear and bags and accessories segments are US $ 1.9 billion (CAGR 19.6 percent) and US $ 0.68 billion (CAGR 19.6 percent) respectively. The global CAGR figures for the same period for these three segments are 11.8 percent (apparel), 8.3 percent (footwear) and 13.2 percent (bags and accessories) with India’s fashion market clearly outshining in each of these segments.

While the of offline channels continue to reign in India’s fashion sales, online channels are quickly picking up pace. Online fashion sales in India is forecasted to double its stake in its total fashion market revenue from 5 percent in 2017 to 10 percent by 2023; from US $ 350 million to US $ 2.67 billion respectively.


Projected Growth in Fashion Revenue
(CAGR 2019 – 2023)

Riding the Elephant & Why It Is Important

Increasing Number of Stores
Physical stores or offline channels constitutes the ‘elephant’ share of 92.8 percent in the total fashion market revenue in India. That’s a giant opportunity for pan India fashion retailers seeking to establish or secure a steady customer base. Star names like Titan, Big Bazaar, Reliance Trends, Shopper’s Stop, and Westside are some prime examples of big fashion retailers striving to ride the ‘elephant’. Taneira, the ethnic clothing brand from Titan, is on its way to open 50 stores in the top twenty towns in the next five years. Zara, a Spanish company and a well-known fashion retail brand in India, was quickly outnumbered by its competitor Hennes and Mauritz (H&M), the Swedish retail-clothing MNC, in terms of number of store outlets. While Zara came to India in 2010 and currently, has 22 nationwide outlets, H&M launched its first store in India in 2015 and now it operates 46 stores all over the country. And as of as latest as October 2019, Uniqlo, the Japanese fashion retailer operating more than 2,200 stores in 23 countries, is anticipated to have hit a sales figure of over `2 crores in a span of 2 days after opening its first store in the country’s capital. Rapidly increasing number of stores strongly indicate the intent of the retail fashion brands to strengthen their physical presence in the country’s fashion retail market. And this is very much in alignment with the statistical figures and projections. The ‘elephant’ just cannot be ignored.

Increased Offline Presence in Smaller Cities
A major problem with the offline channel in India is finding suitable real estate properties especially in the cosmopolitan cities. However, the focus of fashion brands has been shifting towards the emerging smaller cities (Tier II, III and IV cities) where not only it is relatively easier to find space, but this cluster of cities also presents an exciting market base. Reliance Industries is targeting to massively increase Reliance Trends stores to 2,500 over the next 5 years spanning across 300 cities. Similarly, footwear veteran Bata is already talking about expanding its presence in the domestic market with proposed addition of as many 500 new stores in the next five years with emphasis on the smaller cities. This is yet another indication of fashion retailer’s strong inclination in the offline format while targeting the smaller cities.

Driving the Drone and Why It Is Important

Increased Focus on In-Store Experience
Physical stores give an up-close opportunity to fashion businesses to showcase their products and touch multiple dimensions of service. Service-scape and in-store experiences can be moulded. Positive and delightful in-store experience can leave a more profound impact on customers. International sportswear brand Puma recently opened its second experience store in Bengaluru after New York. The techdriven store includes interesting and exciting features like interactive displays, personalized product customization, Formula 1 simulators, and placing orders and getting it home delivered. Similarly, other leveraging technologies like AR (Augmented Reality), VR (Virtual Reality) and improved checkouts are quickly finding a place in- retail stores. Changes like these are taking the vogue stores to an entirely new level of experience for the customers. And these developments are suggestive of an increased focus on the part of fashion brands to qualitatively enhance the offline format.

Expanding Online Retail Market

From US $ 26.9 billion in 2018, the online retail market in India is expected to reach US $ 84.6 billion by 2023 and US $ 170 billion by 2030. And the online fashion market in India is expected to touch US $ 14 billion by the year 2020. More and more fashion retailers are jumping into the bandwagon of the online marketplaces or are taking off with their own web stores to grab a pie of the online market share.

Better Outreach in a Vast Country with One of the Largest Customer Bases In The World
Albeit its favourable demographics from a marketing perspective, geographically, India is a vast country; the seventh largest in the world. There’s no better way to reach out to distant markets than taking retail online. A strong evidence for this is apparent in the recently concluded online sales festivals by Amazon India (and also by Flipkart). Amazon India recorded orders from 99.4 percent of pin codes in the country and for the first-time shoppers, fashion sales outnumbered smartphones and consumables purchases.

Increasing Mobile Phone & Internet Users
From a meagre 524.9 million in 2013, the number of mobile phone users in the country currently stands at 813.2 million (CAGR of 7.57 percent as against the world’s average of 3.05 percent). And increase in mobile phone users is closely followed by improving internet penetration in the country. From 2015 to 2019, the number of internet users in India has doubled from 259.88 million to 525.3 million respectively. This presents an excellent channel opportunity for retailers to reach out to an extensive customer base by taking the online route. Many fashion retailers already use the social media platforms for content advertising and display and checkout.

Growing Trends in Online Fashion Shopping
Per online shopper spending figure of `12,800 per year in India is projected to almost double to `25,138 by the year 2030. Apparel continues to remain one of the favourite online shopped categories for Indian customers. In the past decade, the online marketplaces have already afflicted serious worries for the offline retailers in the fashion segment and it is very likely that online fashion players will continue to intensify their efforts in the backdrop of a growing online fashion market powered by favouring demographics, logistics and demand.

Preferences, Process Transparency, Control & Convenience
What has significantly changed with the advent of online retail platforms is that now customers have better access and control over their shopping process and experience. Customer is now empowered with instant shopping, altered product search, access to product reviews and experiences of other customers, quicker and instant customer support, control over real-time delivery specifications, wide range of payment options, product replacement, ability to question listed retailers and the list goes on. Such a customer-centric approach gives online retail mode a significant edge in boosting customers’ shopping experience and confidence. In the predominantly unorganized retail fashion market in India, fashion retailers can attract new customers (or otherwise hesitant ones) by attributing their shopping experience with preferences, process transparency, control, and convenience over an online shopping platform.

Pricing Economies
The inventory-based model gives online retailers sufficient space to afford discounts and competitive pricing and still be profitable. This is a win-win situation for both customers and retailers. Although the general online shopping discounts are on a declining trend (except during the festive seasons) the heavy discounted pricings offered by the online marketplaces in the early years have casted deep impressions with customers. The online prices have become a source of reference for customers to cross-check offline price tags. Fashion brands can make their product lines more affordable to a growing middle-class and easily accessible to remote markets in India.

Going Omnichannel

Neither the elephant ride (offline channel) nor could the drone drive (online channel) of India’s fashion market be ignored by retailers in this industry. Going omni-channel is no longer an option but has become a strategic necessity as competition is no longer confined to intra-channel and cross-channel rivalries have been silently flagged off. It is no longer a wise strategy to merely sit on an elephant ride and ignoring the drone drive which is capable of wider and deeper market coverage in a quicker span of time. Nor will it be a wise move of ignoring the elephant ride which could give a relatively secure and stable wading through the massive offline customer base and widely spread conventional, brick and mortar based markets of India.

Going omni-channel is about combining an elephant ride (offline channel) with a drone drive (online channel) so that the utilities of both could be simultaneously put to use. Omni-channel means the unification of the online and offline channels to work as one integrated channel strategy. It provides a seamless shopping experience for customers. For businesses, going omni-channel can have a boisterous
impact on its growth and operations. Raymond Apparel Ltd., came up with a very interesting omni-channel innovation by launching ‘Raymond Custom Tailoring’ – an omni-channel platform where customers can book home appointments online followed by trained and professional stylists paying scheduled visits to customers for custom tailoring specifications and preferences. And the customized tailored clothing reaches the doorsteps of customers as per delivery schedule. Raymond used the drone (online channel) to create a medium to reach out to customers and used its experienced elephant (offline channel) to carry forward the rest of sales and delivery process creating a pathway for a seamless experience for customers without the latter having to put a step outside their routine.

Another appreciable omni-channel initiative has been carried out by Pepperfry – a renowned online furniture store in India. The company came up with its offline-based Studio Pepperfry. In these multilocational studios (count 66); customers can access free consultation from expert designers in choosing the right furniture products. Pepperfry used the elephant (offline channel) in the form of pre-sales customer support to boost the fly of its drone (online sales channel).

In an evenly matched offline and online retail fashion market in India, it just makes sense to go omni-channel. At one pole, there’s a massive offline fashion market encouraging retailers to extend their physical channels and on the other pole, there’s a sharply (and promisingly) growing online fashion market powered by dynamics of demographics, mass technology (smartphone and internet) and boons of online shopping making the same retailers add their online wings. The emerging markets in the smaller cities and towns have already attracted the focus of the fashion retailers and they are trying to reach out to those markets in the channel combinations possible for them. While some have joined the online marketplaces, others are doing it in the form of brick and mortar or with their own innovative omni-channel strategies. If the online channel can provide better preferences, process transparency, control and convenience, the offline channels are being equipped with futuristic in-store shopping experiences. At the end of the day, fashion retailers need to ask themselves – where the prospective customers and markets are located and what could be the best integrated channel strategy to reach them and have them stay in today’s easily-misunderstood business environment.

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