Future of Fashion Retail for home-grown brands

If current market trends are anything to go by, then the Indian apparel retail market is expected to grow by 21% in the next four years. And if India manages to attain the projected market share of close to 90 billion USD by the end of this year, then it will help the country become the third largest apparel retail market globally.

Indian textile Industry

The textile and clothing sector apart from being the oldest is also among the largest in the country. According to the Indian Brand Equity Foundation (IBEF), “The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries”.

The Indian textile industry is one of the largest contributors to the Indian GDP. The industry also employs over fifty million people directly and close to a hundred million people indirectly. The Indian Textile Industry contributes approximately 5 per cent to India’s gross domestic product (GDP), and 14 per cent to the overall Index of Industrial Production (IIP). The textile industry is also one of the largest contributors to India’s export with approximately 13.5 per cent of total exports.

Apparel Retail Business in India

In the course of the past few years, organized Indian apparel retail has come out to emerge as one of the fastest-growing markets in the world. Even with the menacing wrath of the pandemic which did impact the industry in 2020, despite all the pandemic-induced constraints, the industry seems to be coming back with a vengeance – at least that’s what the numbers state.

In the latest business survey conducted by the Retailers Association of India (RAI), the overall retail business has grown by 10 per cent in February 2022 compared to what it was in the same month a year ago. Apparels, in particular, showed double-digit growth in the month with a consistent fall in Omicron cases.

Government Schemes for Retail Businesses

So, it’s been a decent start to the year for the apparel retail market. And it’s not just from RAI! The previously mentioned report by Statista amongst others points towards a healthy and more promising market scenario for Indian retailers big and small. With the evolution and the rapid changes in market penetration strategies, the Indian market now offers a very favorable environment for new small players to come out and explore the option. Many government-sponsored schemes for the Ministry of Micro, Small & Medium Enterprises offer support and opportunity for these smaller players. Apart from the central government, even many states have realized the importance of the contribution of a wider network of small homegrown companies in terms of employment, revenue and an index of development supporting and leveraging other existing industrial setups. 

The Government of India has launched the 'Apparel Park for Exports' scheme for imparting a focussed thrust for setting up apparel manufacturing units of international standards at potential growth centers. Fiscal Benefits- 75% of the capital expenditure will be incurred by the State Government on the infrastructural facilities, 25% by the agency - limited to a maximum of INR 10 crores. INR 5 crores for setting up of an effluent treatment plant, creche/s, any multi-purpose center/hall for marketing /display etc. Grant up to 50% of the cost of any training facility created in the park - up to a maximum of INR2 crores. There are various non-fiscal benefits e.g., free land, flexibility in labor laws, etc.

New Age Retail Networks

The current resources present a plethora of strategies for the new smaller players, as to how one can enter, sustain and grow in the Indian retail market or any new market for that matter. The below might not be limited to fashion but offers a brilliant solution for any new firm.

1. Social Commerce uses networking websites like Facebook, and Instagram to promote & sell products directly from the brand to the consumer. With younger audiences hooked to social media platforms, fashion brands realize this and consider it to be an important avenue. As per Research and Markets, s-commerce is expected to grow at a CAGR (Compounded Annual Growth Rate) of 62.4% during 2022-28, majorly this is because of current and expected growth in mobile and internet penetration in India. The GMV (Gross Merchandise Value) in India will increase from US$8, 258.8 million in 2022 to reach US$1, 43, 583.3 million by 2028. Covid 19 has also contributed to this growth. People are staying indoors and spending more time on their smartphones. This industry has seen investments from several Venture Capitalists. In 2020, during the pandemic Indian homegrown brand, Meesho was backed by SoftBank which is currently standing at a valuation of $2.1 billion. Top e-commerce players such as Myntra have also entered the market trying to take advantage of this new trend of buying through social media platforms. Myntra launched its M-live to engage consumers and fashion brands by letting influencers host live videos to talk about the product and share stylist tips through YouTube allowing the customers to shop instantly. Myntra did involve 2500 influencers for a 6-day event. This event led a whopping 50 lakh shoppers to conclude a shopping spree. Other than these, for social commerce, the market at an emergent stage will show promising results in the coming future. 
2. Omnipresent model, there was a time when home-grown brands in India followed single channel retailing which means they used to push or sell products to consumers through one limited channel only, either online or offline. Initially, this method gained popularity as these minimized expenses led to sales growth. Then target audiences came online, brands had to juggle online and offline. Now, brands started following a multi-channel approach which gave birth to a new way of retailing. As customers became aware they wanted more of a seamless experience. This led to the introduction of Omni-channel Retailing. It is a multi-channel approach with an integration of online and offline setups. Omni channel did not only lead to increased profits rather even better reach, customer engagement, and customer satisfaction, this helped planned assortments better. Homegrown Indian brands, like Zivame, understand different customers have different preferences of channels. They, being the biggest lingerie wear destination wanted their consumers to experience the brand through whichever channel they are comfortable with, and Omni channel retailing was the answer. Giving their customer the choice to choose the products offline and place orders online. This helped Zivame tap the customers in the tier-1 markets followed by increasing the online presence overall. 
3. Virtual Trial Mirror is primarily apparel items people can try without physically touching the product itself. It happens using Augmented Reality and Artificial Intelligence technology where the mirror can check the size, style, and fit of the product before customers buy the product. As per Shopify, it is predicted that the virtual fitting room market will grow from $3 million in 2019 to $6.5 million by 2025. This technology has especially become popular since the beginning of the Pandemic. This technology helped decrease the risk of exposure to the virus. Fashion retail home-grown brand in India, Van Heusen greets his customers with a 42-inch digital display which helps Fit scan by an infrared device. Additionally, the store also has a “style bar'' that helps consumers identify their style personality. Customers are recommended various options from which he/ she can try them using the Virtual Trial Mirror, without actually stepping into the trial room. This gives immense convenience to customers, builds relations and helps retain the customers.  
4. Sustainability has become an important thing these days because consumers have become aware and conscious of the environmental issues which have led to a big shift in the choices of retail fashion brands to take action towards it. Here are some ways in which retailers can focus on activities to cater to more audiences,

1.      Sourcing sustainable products from an Indian homegrown brand, Nicobar has completely committed itself to making clothing and accessories from recycled materials. For instance, Nicobar is using the roots of a throw-away tree to make a wooden homeware collection. 

2.      Using recycled and reusable packaging, some brands like Doodlage are using fabric wastes to make packaging for existing products. Another brand Suta is using old sarees to make packaging bags.

3.      Redesigning green stores by using paper usage in price tags and receipts. Another way is to use more efficient lighting instead of using traditional light bulbs. 

4.      Offer eco-friendly delivery options- Brands can use electric vehicles to deliver.

Although it’s hard for retailers to step out of the quick delivery game, it’s possible to take steps in the right direction. Amazon, famous for its same-day Prime delivery, said it now moves most of its inventory without air transport and has pledged to make 50% of its deliveries “net zero carbon” – meaning they won’t create any harmful emissions – by 2030. The brand also plans to start using a fleet of electric vehicles.

Business Giants Entering the Indian Retail Market

Yes, Indian fashion retail is definitely poised for ascendancy. The revival started sometime in late 2021 when people came out and started buying everything they couldn’t in 2020 and early 2021 – especially apparel and fashion accessories.

Over the last 15 months, one of the most notable developments has been the successful acquisition of many small brands/retailers by big retail giants. It happened across the globe, and it happened in India. One such recent development was in March 2022 when India’s retail giant Reliance Retail Ventures (RRV) bought a majority stake in Clovia, a popular lingerie brand, for US $ 125 million or Rs. 950 crores (owned by Purple Panda Fashions). And it’s not the only one! RRV had earlier announced an investment in 30-year-old designer brand Abraham & Thakore (A&T) for a majority stake.

Earlier this year, we saw Aditya Birla Fashion and Retail (ABFRL) buy a 51 per cent stake in House of Masaba Lifestyle for around Rs. 90 crores to enhance its portfolio of fashion labels. This is in addition to its investments in Sabyasachi and Tarun Tahiliani. RRV and ABFRL have today left a mark on the global front too.

More on this, Ananth Narayanan, Founder of Mensa Brands, says, “In all our categories (apparel, beauty, and home), we are not trying to build a brand for India, but a brand for the globe. 30 percent of our revenue already comes from overseas markets.” Bengaluru-based Mensa Brands has been successfully acquiring direct-to-consumer brands and helping them scale within the home market and overseas.

With markets opening and the economy reviving, happy days are here again for Indian fashion retailers/e-tailers, and the pace at which the market is growing is good enough to make it one of the biggest in the world this decade.

And that’s not an exaggeration!