PE firms bank on rising purchasing power of women

According to a recent industry study, even during the slowdown

men and women responded differently to the price increase in apparel. Surprisingly, while men were quick to postpone shopping for clothes, resulting in a steep decline in volume sales, women shoppers showed resilience. The apparel prices for both men and women witnessed a considerable hike but women continued to spend, especially on western clothing. So while the volume growth in women’s apparel was marginal, the value growth hit a double digit mark. No wonder that the private equity investors (PE) are looking at tapping the opportunity in this segment.

Factors like increase in the number of working young women, growing number of nuclear families, and awareness about branded wear growing even in Tier II and Tier III towns are some of the reasons why women’s clothing sales are witnessing a growth. If the findings of Boston Consulting Group and Confederation of Indian Industry (CII) that predict a tremendous growth in apparel sales in the next 10 years with an estimated consumption expenditure of $225 billion (Rs 12,02,850 crores) by 2020 turn into a reality, PE investors’ decision to focus on women apparel makers, consumer services and cosmetic manufacturing firms for investment could turn into a win-win situation for both.

For instance, PE firm Everstone Capital has invested in beauty cum fitness centre VLCC, Bangalore-based beauty and spa salon chain You Look Great and cosmetics firm FACES Cosmetics Women-oriented consumer sectors have garnered greater interest this year in terms of value. Household durables, personal products, apparels and luxury products together attracted $346 million across 15 deals in 2012 so far against $63 million across 16 deals last year, according to data by PE and M&A deal tracker VCCEdge.