Price, not fashion driving Indian consumers to buy
By FashionUnited
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Flurry of brands but where’s the shopper
According to a 2012 report by Boston Consulting Group the Indian apparel market is expected to touch 225 billion dollars (Rs 14,01,356 crores) by 2020, a fourfoldWhile H&M received approval from the Foreign Investment Promotion Board (FIPB) for an investment of Rs 720 crores in November and plans to open stores by July next year, Forever 21, which has six stores in the country, is planning an investment of 50 million dollars (over Rs 300 crores) for expanding its presence in the country. However, amid muted consumer sentiment, industry experts are uncertain about the response they would receive.
And though Zara, owned by Inditex Trent Retail, a joint venture between Spain’s Index S.A and Trent, part of the Tata group, posted a revenue of Rs 404.80 crores in 2012-13, experts say that it is an exception to the overall apparel retail story. For most other retailers, it is seasonal sales and promotions that are driving business.
It may be noted that, even before Zara entered the country in 2010, its online sales from India was highest in the world. Though compared to their western counterparts, Indian consumers may be shopping at the brand stores once in five to six weeks, given the current economic situation and low consumer buying, it is significant.
Deals attract, not fashion trends
As per domestic apparel retailers, consumers are happy to shop for the latest fashion at end-of-season sales. What’s more they don’t mind sporting the season old style for the next two to three seasons. These views were expressed at the recently concluded Retail Leadership Summit in Mumbai where speakers and industry experts pointed out that this is the reason why sales/discounts are so popular in the country.The current consumer behavior is attributed to the consumer sentiment in India, which is down on account of high inflation, high interest rates and a slowdown in the economy. The Indian economy is expected to grow by less than 5 per cent in the year to March 31, 2014, a decade’s low. As a result the distinction between ‘in-season’ and ‘upper-season’ trends has blurred as consumers buy in January and July sales and typically wear those clothes over the next season as well.
As per Rachna Nath, Executive Director at audit and consulting firm PricewaterhouseCoopers, “With online retailers pushing sales aggressively every few months, offline retailers too are getting more active on the sales and promotions front. This has led to a change in consumer attitude, with people willing to wait if it means a lower price.” Industry projects this trend to continue as Religare Securities’ outlook says that consumer demand is expected to remain mute over the next 6-12 months.