The past decade has seen an influx of international brands into the Indian market. These brands have fathomed the local potential for westernwear and are ready to tap this, across segments, niche categories and formats. The seriousness of these brands is also reflected by their choice of India-entry strategy. Previously, cautious brands entered the Indian market through distribution, a trend that is now shifting to licensing and joint ventures. While some brands such as H&M are waiting for FDI approval, various others are reviewing their entry strategy in order to exercise greater control.
These brands are also changing their sourcing strategies in favour of local procurement channels to gain a competitive advantage and become the preferred brand for Indian consumers. With a keen understanding of the Indian consumer and the adoption of India-focused strategies across sourcing, business models, and assortment, international brands will continue to consolidate and expand, in the years to come.
The Changing Definition of Value
In the current inflationary scenario, the consumer spend on the discretionary basket is strained. The sheer increase in the options available to consumers across gadgets, entertainment options, travel, hobby classes, and fashion ensures that price has a crucial influence on the spend decision. However, consumers have now begun evaluating product value along various attributes apart from price, with equal importance given to all.
Young adults across the metros as well as tier I and tier II cities are extremely discerning and seek value through such attributes as quality, pack size, and convenience, in addition to price. The youth are more aspirational and experimentalist, and evaluate value using enhanced parameters such as fashion quotient, width of assortment, styling, fit, and convenience.
Lifestyle and Apparel Dominating the Youth’s Wallet Share
The increased exposure resulting from the penetration of such entertainment and lifestyle channels as television and social media, which target the youth and young adults, is a trigger for contemporary fashion trends. Their frequency of outings to multiplexes, and for eating out or shopping, has also multiplied, further driving the aspiration to engage with fashion.
As a result, lifestyle categories such as apparel, footwear, and fashion accessories continue to occupy the largest share of the youth’s wallet at 32 per cent. Activities such as eating out and travel, in comparison, make up 25 per cent of the wallet, while indirectly impelling fashion and lifestyle purchases.
Emergence of New Categories
The foray by international brands has led to a trend of accessorising and layering rendering the ‘complete lifestyle’ look. Lifestyle and fashion accessories now find high acceptance across all consumer segments, and are fuelling the growth of the shoes and accessories market, and creating a high growth opportunity across price segments and products. Given this strong growth potential, domestic and international brands are also diversifying into accessories.
Tier I and II Cities Fuelling Brand Engagement
A significant share of the increased demand for aspirational brands is propelled by youth residing outside of the top 20 Indian cities. The growth of brands will also be aug mented by the boom in the service sector in tier I and tier II cities, thanks to the increased presence of youth in the salaried class. Going forward, India’s GDP will be made up largely by the service sector, which may account for more than 66 per cent of the total. This represents an opportunity for brands to be present in over 100 cities and continue to achieve scale and be of relevance.
E-tailing Ensuring Growth of Apparel Across Cities
Digital shopping formats have emerged primarily in response to the growing real estate and scalability challenges that hinder the tapping of demand from small cities. The large number of Internet users in the age group of 15-34 years (approximately 75 per cent of all users), with 65 per cent of them residing outside of the top 8 cities is another impetus for digital retailing. Recognising this to be a potentially rewarding opportunity, a large number of lifestyle-focused players are venturing into the e-tailing space.
