Branded apparel market on growth track, says Crisil

Though the Indian organized apparel retail continues to grapple with the slowdown and inflation, a research by Crisil, indicates a steady rise in income levels and greater penetration of organised retail. The branded apparel market

in India is expected to witness a positive growth over the next few years.


According to the study, total apparel sales volumes fell 2 percent in 2011 and grew by a modest 2-3 percent in 2012. Imposition of excise duty on branded apparels in 2011 along with a concurrent slowdown in economic growth badly hurt consumer sentiment. Hence, it impacted apparel purchases. However, volume growth has picked up since April 2013, due to the removal of excise duty and growth in demand from smaller towns.

Branded apparel market gets a boost

Crisil forecasts apparel demand (in volume terms) will grow by 4 percent annually in 2013-14. “Branded apparels would grow at a much stronger pace, driven by increased presence of organised retail, rising disposable incomes, changing demographics and increasing brand consciousness,” it says. The research estimates the domestic apparels market to be around Rs 1,250 billion in 2012, of which branded apparels (defined as brands having a strong national or regional presence) contribute about 40 percent. A decade ago, the corresponding percentage would probably have been closer to 25 percent.

The share of organised retail in apparel sales in India is estimated at about 18 percent, lower than countries like the US and EU where the share of organized retail is over 80 percent. Amongst the various categories, branded apparels penetration is probably the highest in men’s formal wear and women’s western wear. In other categories such as women’s traditional wear, casual wear (jeans and T-shirts) and kid’s wear, branded apparels still have a fledging presence.

The robust growth in branded apparels demand is reflected in sales numbers of some players in this space. Over the past five years, sales of Madura Fashions and Lifestyle having brands like Louis Philippe, Van Huesen, Peter England, Allen Solly under its belt grew at 25 percent CAGR, while that of Kewal Kiran Clothing, which owns the Killer and Lawman rose by 14 percent annually. Revenues of Page Industries (licensee of the Jockey brand) grew at 35 percent CAGR in the same period. Growth recorded by these players has been much faster than the expansion in the apparels market – growth of five percent CAGR in the past five years.

Sustaining growth momentum

Crisil research further states that the growing demand for branded apparels has also encouraged many of the domestic players to enter into marketing tie-ups with well-known foreign apparel brands and many established foreign apparel brands are also present in India on their own. It projects domestic branded apparel sales to grow at a CAGR of 10-15 percent over the next 5 years, much faster than the 6-7 percent annual growth in the overall market. Consequently, by 2017, branded apparels would account for over 50 percent of the domestic apparels market.

However, the study points out that the players looking at making a mark in this space will have to learn from the past and judiciously assess customer preferences and calibrate expansion plans. “Adequate investments in product differentiation and branding will be equally critical. In the past 3-4 years, a number of players who were overzealous in their expansion plans were caught on the wrong foot due to their inability to assess demand and increasing inventories choking cash flow. Over the next decade, we are likely to see a number of strong multi-million brands emerge in branded apparels, but some of them will fall by the wayside, given the critical importance of understanding changes in customer tastes and preferences as well as managing cash flows,” it sums up.