Kidswear in India: USD 8.2 bn. Mini Rodini 2014 sales: USD 4.5 mn. What ails Indian kidswear?

With parents and children becoming more conscious about kids fashion and trends and foreign retailers beckoning Indian consumers with kids-specific products and choices, the complex kidswear segment in India is drawing attention anew.
Overall, the kidswear market makes up approximately 20 percent of the total apparel market in India, and it is expected to grow at a CAGR of 10.5 percent over the next ten years. The segment is currently estimated at worth Rs 45,220 crore (USD 8.2 billion) and is projected to reach Rs 123,030 crore (USD 22.3 billion) by 2023.
Contrast that against Mini Rodini, a medium-sized Swedish kidswear company founded in 2009, whose 2014 revenues totalled USD 4.5 million.
While until a few years ago, home-grown brands such as Catmoss, Lilliput, and Gini & Jony, among others, were fairly visible on consumers’ radar, India has not been able to build a national kidswear brand since, despite the entry of brands such as Mothercare and Mom & Me..
Capital Cause
“Scalability and pricing mismatches have so far prevented large-scale branding in the segment in India,” believes J Suresh, Managing Director & CEO of Arvind Lifestyle Brands Ltd, which is to launch American retail chain The Children’s Place in India in August this year. “But, we see huge opportunities in this segment,” he asserts.
“Pan India distribution and retail network, brand visibility and awareness are the must-haves for making a national kidswear brand,” points out Manu Indrayan, co-founder and CEO of Gurgaon-based kidswear brand 612 League. “But the fast changing retail landscape and advent of new formats (e-commerce, modern retail, etc) are making the task all the more complicated for traditional retail formats.”
Operating in the segment from past seven years, 612 League currently has 380 stores across 130 cities. Elaborating on factors leading to the absence of a national brand in the category, Indrayan says, “The skill and experience require to manage the twin tasks of ensuring distribution and reach of products to every nook and cranny, and finding out ways to walk along with modern retail formats, is currently missing in our country.”
“Further, generating brand visibility is a capital-intensive activity. Funding options for any apparel company, especially kidswear, are limited and brand building cannot be done merely from bank borrowings.”
The track record of kidswear viability in India has taken a beating in the recent past. Lilliput — once the country’s largest kidswear brand — went into liquidation after being embroiled in a scuffle with its PE investors over cooked up details. According to analysts, the retailer paid the price for reckless expansion, poor brand recall and high rent costs.
But things appear to be looking up. In February 2014, 612 League’s parent company Indian Clothing League raised Rs 50 crore in first-round funding from mid-market private equity fund ASK Pravi PE Opportunities Fund, to fuel its manufacturing capacity and retail expansion.
“The advent of PE capital is changing the capital requirement paradigm,” Indrayan notes.
Ecohing Indrayan’s sentiments, Amit Bhayani, founder of Mumbai-based brand Oks Boys says, “The financial commitments are going wrong fromthe retailers’ end. Geographical disparities further add to the pain of operating in this segment.”
The good news is that, the Indian apparel market is expected to grow at a compound annual growth rate (CAGR) of nine percent, from US$ 41 billion in 2013 to US$ 102 billion in 2023. In 2013, the kidswear segment, at US$ 8.3 billion, alone contributed 20 percent of India’s entire apparel market. However, given its higher growth rate, this share is expected to increase to 22 percent by 2023, as per Technopak.
“We are preparing and following an omnichannel strategy, targeting presence across all retail formats. Our products are now available 24X7 at the touch of a button,” Indrayan says.
“We have been successful in raising PE funding and have started brand building efforts to create the most prefered national kids wear brand,” he concludes.