. Rising per capita income and a growing middle class have been key demand drivers within the Indian apparel market. Also, a new preference for branded products and India’s growing population contribute to increase the domestic demand for clothing.
Following the same trend, apparel exports from India have registered a growth of 17.6 per cent in the period April—September 2014 over the same period in the previous financial year, thanks to new favourable trade policies, a high-capacity industry and low-cost production per unit. India is currently the world’s 6th largest exporter of clothing.
With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The organised apparel segment still accounts for a smaller share than the unorganised segment, but grows faster. Thus, it is expected to grow at a compound annual growth rate (CAGR) of more than 13% over a 10-year period. International brands currently account for 18% of the segment, set to move up to 25% by 2018. Zara opened its first shop five years ago, and is set to open 18 more stores. Gap opened its first store earlier this year, and has planned to open 50 more. In queue, H&M, is about to open its first store in September, plus 50 others later across India. And many more major fashion retailers are to come: Uniqlo, Abercrombie & Fitch and Topshop
In 2015, the average annual online spending of Indians was supposed to reach 10,000 rupees (increase of 67% over 2014). The e-commerce industry was valued at US $17 billion in 2014, and is expected to reach 100 billion in five years. Online apparel sales hold a greater share of it; we expect to see a turnover of US$ 35 billion in online fashion retail in India by 2020. According to Nitin Bawankule, Director – Ecommerce, Retail, Online Classifieds, Technology, Education and Government at Google India, “Online apparel sales are set to grow four times in the coming years”. Why is it growing at such a high rate? We can list here some reasons:
- Better price categories, discounts (India is notoriously price conscious!) and better return policies.
- Better brands and a growing middle class to buy from them.
- Online population in India is growing fast, with a high share of smartphone users – a device that is getting cheaper. By 2018, India is expected to have 500 million Internet users, of which 280 million would be smartphone users (supposedly the key drivers for e-commerce portals).
- Improved Internet penetration in Tier II cities in India, therefore, better access to online selling platforms. Plus, the biggest growth rate for online fashion retail is coming from Tier II and Tier III cities in India, as offline retail brands are not available there.
In the apparels sector, e-commerce seems to be an opportunity for the retailers to grow fast. However let’s not forget that online shopping of apparel only accounts for 1% of the Indian fashion market, even though it remains, by far, the fastest growing retail channel of the sector.
How is this growth interesting for European brands?
When the European market is slowing down in terms of growth and purchasing power, India is on a rise.
While PM Modi is promoting the “Make in India” factor, there is a lot to also “sell in India”. A few sectors still have a lot to offer, where the demand is high and the offer too low. In the lingerie sector for example, AGALINE is booming thanks to its different offer and its new category of products, which were not available in India but were very well used all around the world. Its French identity helped us to promote the brand as high-end lingerie and nightwear brand and thus, enabled us to sell it at a price point, which was very profitable, and still acceptable for a European brand. Working on our second collection, which we will sell online in India as well as Europe, we have tripled our quantities, to be able to fulfill the demand in new trendy products.
The booming online sales are one factor that has helped us developed our brand and our sales in India, without having to invest much. India, being large country, it was a fantastic opportunity to be able to sell easily to all the major cities from one area. We just had to wisely select the platforms that we were using to distribute our brand. Also, as India is very price conscious, we had to ensure that we were presented along with brands of the same quality and price so that we would not be wrongly compared to mass market brands.
India is, thus, a growing market with a population that is always willing to discover more, and catching the market now is the right time as the demand is growing and technology is allowing every brand to reach its every customer at a low cost.
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 According to Mr Prashat Agarwal, Managing Director, Wazir Advisors.
 UN Comtrade data.