Situational analysis of apparel industry
LEARNING TEAM C-06
APPAREL INDUSTRY OVERVIEW
◦ India is ranked as fourth most promising market for apparel retailers.
◦ It contributes about 14% to industrial production, 4% to the GDP , 13% to the country’s total export earning, employ about 45million people.
◦ The apparel industry in India is estimated to reach US $141 billion by 2021 from US $67 billion in 2014.
It is a technique of environmental scanning of an industry on the basis of factors like:
POLITICAL &LEGAL ASPECTS
◦ Tax policy
◦ Employment laws
◦ Political stability
◦ Environmental regulations
◦ Trade and tariff restriction
◦ Economic stability
◦ Economic growth
◦ Interest rates
◦ Inflation rates
◦ Exchange rates
◦ Population growth rate
◦ Age distribution
◦ Career attitudes
◦ Consumer behavior
◦ Religion and culture itself
TECHNOLOGICAL & ENVIRONMENTAL ASPECTS
◦ Distribution and communication channels
◦ Technology incentives
◦ Rate of technological change
◦ Environmental and ecological aspect
◦ Barrier to entry
◦ Production level
◦ Outsourcing decisions
◦ A fast growing young population with high exposure.
◦ Massive retail space creation.
◦ Boom in luxury retail segment.
◦ Rising purchasing power
◦ WOW in-store experiences
◦ Social media
Key success factors
◦ Fashion and pricing
◦ The customer experiences
◦ Sales and service strategies
◦ Inventory and distribution
◦ Markups – depends on the uniqueness of the product.
INDUSTRY SIZE AND GROWTH RATE
◦ The domestic apparel retail market was worth US $33 billion in 2009 and is expected to be US$ 100 billion by 2020
◦ Men’s wear has the majority share of apparel market currently(43%). However , women’s wear is growing at the higher of 12% compared to men’s i.e. 9%.
◦ Due to high growth rate women’s wear shar is expected to reach 43% in the 2020 from the current 37% share.
◦ Raw material base
◦ Rich heritage
◦ Domestic market
◦ poor infrastructure
◦ More dependence on cotton
◦ Lower average consumption in domestic market
◦ Lack of professionalism and integration of supply chain
◦ Very low investment on R&D
◦ Increasing demand for brands from the middle class.
◦ Research and new product development to move across the value chain.
◦ Retail sector rural India is untapped.
◦ Integration of information technology
◦ opportunities in high value items.
◦ Increasing competition
◦ Cheaper import
◦ High price of land and lease rental whi;e margins are low.
Companies and brands
◦ Future Retail: Popular retail supermarket chains like Food Bazaar, Big Bazaar, Food Hall and eZone belong to the Future Group. The market capitalisation of Future Retail was valued at Rs. 4,770.27 crore in May 2015.
◦ Trent: Trent is the retail wing of the Tata Group that handles some of the most popular retail outlets in India such as Westside, Landmark and Star Bazaar. In May 2015, the market capitalisation of Trent amounted to Rs. 4,213.76 crore.
◦ Shoppers stop: Shoppers Stop is an Indian retail company founded in 1991.The name ‘Shoppers Stop’ is famous for both domestic and international brands like Tommy Hilfiger, FCUK, Mustang, United Colors Of Benetton, Reebok, Nike and Guess. The market capitalisation of Shoppers Stop was estimated around Rs. 3,252.07 crore in May 2015.
◦ Pantaloons Fashion and Retail: Pantaloons stores across the country sell branded clothing and accessories. It’s market capitalisation was valued at Rs. 1,761.22 crore in May 2015.