The women’s fashion business is doubtlessly captivating from all perspectives. From conjuring chic garments to focused brand strategy, fashion often confounds the specialist, the observer and the consumer alike. Everything from the manner of production, marketing and consumption, cause fascination and controversy, and it would be hardly surprising if this continues. But with the explosion in the number of consumers who can afford fashion, we are witnessing a rare democratisation in the fashion industry…

The last five years have seen multiple disruptions in the way fashion is being consumed across India. The main among these have been: the entry of e-commerce players funded with truck-loads of private equity money, the welcoming of the fast fashion giants like Zara and H&M and reportedly Uniqlo, and the most encouraging proliferation of the department store chains, along with their own private labels.The economy, meanwhile, has shown stability, though a black swan event almost always looms around the corner. De-monetisation already seems one of them, and could impact the economy either way.

A lot of the euphoria is attributed to good fiscal policy, a stable government and a burgeoning middle class. Also, to the increase in disposable income and education levels of the population. No other category has fueled the growth of fashion as much as the women’s western wear business. Department stores have increased the footage of this category by 45 percent in the last five years and the yields per foot have had a CAGR growth of 12 percent per annum.




We live in a decade of excess, customers break into ecstasy over cleverly framed marketing ideas, we buy more than we wear, we eat more than we can digest, and our time is dictated upon by the backlit screens in front of us. All this has happened thanks to the growing number of women in the workspaces, the double income families, the boost in socialising, and multiple festival celebrations. A growing economy, a sense of financial security and political stability are the added factors.

MARQUEE BRANDS: Four marquee brands Biba, FabIndia, AND and W have succeeded in attracting large investments and valuations, which has spurred the growth of more players on the supply side, including Mineral, the business and brand which Priyadarshini Rao and I promote. The aforementioned brands are built on solid fundamentals and are profitable companies, where the excel sheets culminate in a positive number on the last row of every column. All this is a far cry from the e-commerce giants, who are crumbling under their own weight figuring out how they will feed themselves over the next quarter.

Not one of these marquee brands are poseurs of fast fashion. They deliver quality clothing with contemporary styling. This is in sharp contrast to the fast fashion giants, who have entered India and have found easy prey at the crowded oasis.

It’s debatable which way the market will finally move: fast fashion or quality fashion, but here is what I think are the critical determinants of how the market will move.

MALLS: Meanwhile, the malls have swayed from success to extreme failure and shut down in many cases, demonstrating that the mall business model is far from promising when it comes to return on investment. If the fashion business is to grow fast, there has to be quality real estate which has been slow of late. The government does need to look at offering tax sops to real estate developers on the lines that they provided multiplexes to save the dying movie theatre business. This will boost supply as well as consumption.

GOVERNMENT POLICY: While FDI in fashion has been allowed in single brands, it is important to realise that fashion in India has not come into existence from any central planning system either from government or retail body but has grown amorphously. Indian retailers have strived hard to standardise their offerings and can easily say that they can compete with the mass merchandisers of European fashion in quality, though not speed.

There is little thrust in policy to develop manufacturing of garments and the emphasis has always been textiles, which is hardly the same thing. We need more attention to non-export based garment manufacturing as our own consumption base is large.

The GST highway calls out, but what impacts it will have in the short or long run, is pure conjecture. Over time, it should speed up fashion retail.

The world has demonstrated enthusiasm towards the Indian market; but for government to simply seek foreign entrants and investments; while ignoring the Indian industry, would be a travesty of justice. Women’s western wear is filled with Chinese imports and the products are often cheaper and of better quality than what’s available domestically. Indian textile and garment manufacturing units spend no money or time in R&D like their foreign counterparts do; there is little incentive for them.

FAST FASHION CRAZE: The debate over whether fast fashion will win the game over quality fashion is something that can be argued until the cows come home. But one thing is for sure, anything that is fast and cheap will not be durable and there is enough destruction happening in the fast fashion space globally. India might see the curve of fast fashion domination followed by a cycle of better product. Tadashi Yanai of Uniqlo once advocated that continual process improvements in product development will succeed against the race for “bottom pricing”. The markets need new, innovative products in fashion and that’s where the long term competitive advantage will lie and not in simply riding the trend wave.

The Indian market is nowhere close to maturity, leave alone saturation, and there are multiple models that need to be tested than everyone behaves like lemmings. We need to experiment and find our niches.

VALUATIONS & THE Q RATIO: It would be naïve to assume that valuations do not play an important role in the fashion business. Deloitte uses the Q ratio to infer whether retailers are strong in such areas as brand, differentiation, innovation and customer experience. The Q ratio is the ratio of a publicly traded company’s market capitalisation to the value of its tangible assets. A ratio over one means that the financial markets are valuing a company’s non-tangible assets such as brand equity, differentiation, innovation, customer experience, market dominance, customer loyalty and skilful execution. The higher the Q ratio, the greater the share of a company’s value that stems from such non-tangibles. A Q ratio of less than one, on the other hand, indicates failure to generate value on the basis of non-tangible assets. It indicates that the retailer’s strategy failed to generate a sufficient return on physical assets. Indeed, it suggests an arbitrage opportunity. That is, if a company’s Q ratio is less than one, theoretically a company could be purchased through equity markets and the tangible assets. In the near and long term, Q ratios will determine success. So, investments in brand and branding will be crucial.

TECHNOLOGY: Data mining, business process design, adaptive planning and supple ERPs are all crucial to maintaining leadership. The importance of data management can never be understated. With cloud-based computing and the availability of real time data in retail, tactics can be deployed to maximum impact on the topline and bottomline.

QUICK RESPONSE: The assurance of fast cycles and quick-response supply chain: increased sales and lower markdowns. If a retail brand predicts early what customers want and gets it fast to them, revenues will rise. But speed can lead to mistakes. It’s hardly easy to know what fickle minded consumers will buy four times a year. So, planning a six inventory cycles a year can confound even the most experienced merchants and buyers. The bottom line; fashion businesses can end up with just as much excess inventory as before the present, if not more.

DIFFERENTIATING FACTORS: Price architecture, discounting strategies, management of product lifecycle, forecasting models, breadth and depth of assortment, variety of fabrics and finishes, product packaging and presentation, distribution across multiple touchpoints whether virtual or real, operational efficiency and execution bias, cost efficient processes, speed of delivery, flexibility in supply chain are all determinants of success.

When you look at the vast elements that have to be done right, you get a sense of complexity of the business and how much the odds are stacked up against the brands in a capital-intensive business.


Marketing has become more challenging with the advent of social media. The brands are getting accepted through social conversations rather than mainstream advertising, and echo chambers in social media are making the brand promise resonate while keeping out external distractions. With ad-blockers active on internet browsers, with junk filters trashing newsletters, reaching out to them can be hard.

E-COMMERCE: With global fulfilments of e-commerce gaining traction, we are now seeing a borderless customer who buys across countries online. As the internet, satellites and social media proliferate, the diversity in tastes and preferences between markets will shrink, making way for more homogeneity, some that can be seen with the success of brands across the globe without any adaptation for markets. The emerging markets customer will benefit from multi- channel availability of brand and I believe, we shall continue seeing the brick and mortar stores as being the entry point into the customer’s consciousness. Through e-commerce, only private labels will see success as well as failure, just with the same probability they would have in the real estate spaces.

MULTI-CHANNEL RETAIL: Accenture Outlooks Report on Millennial Shoppers (Renato Scaff and Christopher Donnelly) suggests the following success criteria in multi-channel retail. Providing a consistent customer experience regardless of channels, offering connected shopping that allows customers to move across channels, developing merchandising skills which pushes retailers to develop an integrated product assortment, arranging flexible fulfilment and returns, enabling one to one interaction across all touch points, and engaging these consumers fruitfully to keep their custom.

MARGIN GROWTH: As brands grow in size, the volumes of buying will increase, resulting in better costs and higher intake margins. It is unlikely that retail sales prices will come down, simply because brands have to cushion themselves for ten-weeks sale periods each season, which is unlikely to fade away.

As an entrepreneur, I am optimistic that small to medium sized profitable businesses like mine can attract large capital with a land-grab mentality, so these brands can aim to achieve dominance and get into large-scale enterprise, standing up to the big ‘mummies’. This is optimism, because today, there are very few attractive targets in the space and anything is a long bet.

Much as M&A among Indian brands is always bandied about on the sidelines of retail seminars, I believe the social fabric of the fashion industry will fail to amalgamate these egos under one roof, so no consolidation may take place. The other unseen trend on the extreme side of the spectrum is the explosion of low trend, pure functional clothing, that has nothing to do with fashion but is durable and well-priced. There is a market of customers in the low-income strata, who are inured to the promise of fashion and just want cheap, basic core clothing. I would best define this customer as being UrbRal, living in the city with a rural mindset of austerity. This is a space that no one in India is eyeing and represents the biggest opportunity.

We are in interesting times. All we know for sure is that the future is no longer what it used to be.

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