Indians flock to buy branded apparel; cast out new entrants, online retailers
Branded retail segments have outperformed the new entrants and online fashion retailers as Indian consumers are seen to upgrade to the big players.
“The big winners in this market will be apparel companies that have a robust brand portfolio across segments/price points, with a strategy of consistent product launches, a steady price-value equation and efficient working capital management,” Manish Podar, Varun Lochab and Aditya Joshi, analysts from Religare said in a report – A Brand New World, dated November 15.
New brands have added to the big players’ sales fragmentation woes however the analysts said that the established players in the market will take it all.
“Brand fragmentation is a risk but big brands tend to outperform new entrants due to a wide presence, buyer loyalty and novel collections,” the analysts said.
While the online segment has been preferred on convenience and festive season sales, it does not pose much of a threat to established brands, the report added.
"Consumers across developed and developing markets are shopping online which is a concern for distributors/retailers, not brands," the analysts said.
In the last three years, the top 10 brands in India have effectively doubled their market share in the branded apparel segment.
“Two-fold increase in market share of Top 10 brands in last three years to 7.2% share in India’s apparel industry,” the report said.
The demonetisation move by PM Modi to ban Rs 1,000 and Rs 500 notes on November 8 will affect consumer wholesale spends and cripple the liquidity; however, the analysts said this would lend ‘further impetus’ for consumers to shift to branded apparel in the medium term.
The apparel segment has been estimated to grow at a Compound Annual Growth Rate (CAGR) of 7.9% from FY16 to FY20.
With the rising per capita income and growing urbanisation, India’s apparel and retail segment will be creating a large consumption opportunity in the coming years.
“India’s large consumption opportunity will be supported by rising discretionary spends as per capita income grows (>US$ 2,000), a demographic shift alongside growing urbanisation, an increased media reach and the emergence of online/modern shopping channels,” the report said.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How many years will it take to reach Rs 3 crore corpus if your monthly SIP is Rs 4,000, Rs 5,000, or Rs 6,000
IRCTC Dividend 2024: Railway PSU announces 200% interim dividend - Check record date and other details
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
Reduce Home Loan EMI vs Reduce Tenure: Rs 75 lakh, 25-year loan; which option can save Rs 25 lakh and 64 months and how? Know here
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
PSU Oil Stocks: Here's what brokerage suggests on these 2 largecap, 1 midcap scrips - Buy, Sell or Hold?
Power of Compounding: How many years it will take to reach Rs 2 crore corpus if your monthly SIP is Rs 3,000, Rs 4,000, or Rs 5,000
03:36 PM IST