The Indian innerwear market is estimated to grow at 13 percent to reach Rs. 59,540 crore by 2023. Amit Gugnani from Technopak Advisors, throws light on the growth of innerwear market.
Amongst the core apparel categories, innerwear appears to be a potential growth category across all segments. Currently, the Indian innerwear market is worth Rs. 17,750 crore (2013) and is estimated to grow at 13 percent to reach Rs. 59,540 crore by 2023. Through his research, Amit Gugnani, senior vice president, fashion – textile and apparel at Technopak Advisors, throws light on the growth of innerwear market.
The Indian Textile and Apparel (T&A) industry has emerged from the economic slowdown and is regaining forward momentum. T&A, being an important industry, contributes 5.4 percent of India’s GDP. It was worth US$ 95 billion (Rs. 5, 21, 000 crore) in 2013, and is estimated to grow at a promising CAGR of 9 percent over the next 10 years. This includes both the domestic market and exports. The value of the domestic T&A market is US$ 59 billion which exceeds the value of the exports market, reflecting higher domestic demand and consumption. Shifting demographics, shrinking households, a greater number of educated consumers, the growing number of working women, changing fashion trends, rising disposable incomes, awareness levels, new retail formats, technological innovations, and changing consumer behavior are the trends powering the growth of the domestic market. The apparel sector comprises 70 percent of the total domestic market, which in turn becomes the result of an increase in the per capita consumption by Indian consumers.
The domestic apparel market, which is split into menswear, womenswear, and kidswear, was worth US$ 41 billion in 2013, and is expected to grow at a CAGR of 9 percent to reach US$ 101 billion, in 2023. With a 42 percent market share, mens-wear leads the domestic apparel market followed by womenswear (38%), while kidswear accounts for 20 percent of the market. Menswear has been the focus for many brands and retailers and is therefore comparatively more organised, with higher brand penetration and greater degree of brand awareness. The size of the menswear market was US$ 17.3 billion in 2013; with growth at a CAGR of 9 percent expected over the coming decade, this may reach US$ 39.6 billion by 2023.
Although the womenswear market is relatively less organised and has lower brand penetration, its size was still US$ 15.5 billion in 2013; this is expected to grow, at a CAGR of 10 percent, over the next decade to reach US$ 38.9 billion in 2023 and thus nearly becoming equal to the worth of the menswear segment. The faster growth of this segment, as compared to the menswear segment, has attracted the attention of both national and international brands and retailers. Many menswear brands and retailers have also tapped into this opportunity and have extended their presence into this segment as well.
The kidswear market can be further split into boys wear and girls wear, each of which makes up for 10 percent of the domestic apparel market. The boys wear market was worth US$ 4.3 billion in 2013 and is expected to grow at a CAGR of 10 percent to reach US$ 11.2 billion in the next 10 years. The value of the girls wear market is US$ 4 billion which might be smaller than the boys wear segment, but the former boasts of a higher growth rate. Expected to grow at a CAGR of 11 percent, the girls wear segment will reach the same value as the boys wear segment by 2023. Some of the key drivers of growth in the kidswear segment are the increasing affluence of Indian parents and the consequently increasing expenditure on kids and an increased awareness of kid’s brands.
Opportunities in the Indian Apparel Market
The domestic apparel market, which is expected to grow at a CAGR of 9 percent over the next decade, has just opened its doors to more brands and retailers who can thus establish their presence in India and contribute to the increased penetration of organised retail in India. The apparel retail market is trending towards a high degree of corporatised, or organised retail. As a result, the share of corporatised apparel retail is set to increase from 14 percent, in 2008, to 19 percent, in 2023.
The recent changes brought about by the Government of India, viz. allowing 51 percent foreign direct investment, or FDI, in multi-brand outlets (MBOs), and 100 percent FDI in exclusive brand outlets (EBOs), have provided a lucrative opportunity for international brands and retailers via which to establish their footprint in India. This will lead to an increase in local sourcing by global brands and retailers from India, thus contributing to India’s economy.
Also, there is a wide acceptance of private labels among Indian apparel consumers as they sell at affordable prices and provide reasonable quality. This has encouraged many domestic retailers to establish their own labels and tap into a value-seeking consumer base. Selling apparel under private labels can be a source of generating high profits. This will also add to the expansion of the organised retail business in India.
Indian consumers have become more fashion conscious and want to change or upgrade their wardrobe more frequently. For instance, casual apparel is preferred more nowadays. Consumers now demand apparel with better designs and a trendier look at an affordable price and reasonably good quality. Therefore, the demand for knit apparel is growing faster than that for woven apparel owing to the casual look and comfort provided by knit apparel.
There has been an increase in the purchasing power and purchase frequency among Indian apparel consumers. They now prefer occasion-based dressing, want to look trendy and visually appealing, and are willing to accept fashionable silhouettes and styles in attractive colours. They do not hesitate in buying clothes which catch their attention, thus displaying an impulsive buying behaviour. There is, as a result, an increased demand for latest fashion.
Trousers, denims, woven shirts, innerwear, activewear, t-shirts, suits, winterwear, ethnicwear, and dailywear are the core categories in the men’s apparel segment. The shirts category is pegged at Rs. 28,330 crore and is the largest, with trousers and denims following. Categories like denim, activewear, innerwear, and t-shirts have high growth forecast within the menswear segment with CAGRs of 14 percent, 13 percent, 9 percent, and 12 percent, respectively, over the next ten years.
Indian men today are majorly comprised by youth who prefer occasion-specific clothing. They want to dress in activewear while playing sports or going to the gym; in formalwear, which comprises of shirts, trousers, and suits, at the office; ethnicwear during marriages, festivals, and social functions; in casuals in the evening; and in sleepwear at night. They want to look good yet different in terms of what they wear and therefore want to try different styles, silhouettes, and colours. There is a trend towards casualwear leading to an increased preference for denim bottoms and t-shirts among Indian men. Comfort and a trendy look are the two most important factors behind this rise in preference.
Indian men have also shown an inclination to purchase innerwear, leading to an aggressive growth in this segment. Men are now displaying the waistband of their innerwear above their low-waist trousers as this is considered a fashion statement. Men no longer mind paying a high price for innerwear. Various styles and a variety of brands are now available in this promising segment.
Ethnicwear, tops, shirts, trousers, skirts, innerwear, winterwear, sleepwear, denim, and t-shirts are the core categories within the women’s apparel segment. Apparel categories like denim, innerwear, and tops or shirts, t-shirts have come to be preferred over the ethnicwear category, each promising growth at a CAGR of 15 percent.
The wardrobe of a typical urban Indian woman demonstrates the trend of brand heterogeneity comprising a blend of ethnicwear, fusionwear and westernwear. Young women in India desire lot of varieties, styles and colours in their wardrobe. Today, cosmopolitan Indian women are aware of several domestic and global brands resulting in change in their dressing attitude. The increase in the number of working women is directly influencing the trend of dressing up in westernwear. Women in India want to dress up like their counterparts in the western world and are moving towards wearing dresses and western formalwear which includes shirts, trousers, skirts and suits.
The change in the social mindset in India, and the increased acceptance of westernwear among Indian women in both metros and mini metros, is leading to the deeper penetration of such apparel as denim and t-shirts or tops. Indian women are also giving importance to innerwear and want to experiment with different styles of lingerie, thus transforming innerwear into an aspirational product. Although, ethnicwear is less preferred, the introduction of contemporary or western styles with trendy cuts and silhouette can catch the attention of women consumers and hence can be a promising business opportunity.
School uniforms, t-shirts or shirts, bottom wear, winterwear, ethnicwear, denimwear etc. are the major categories in the boys wear segment. As parents are more focused on providing a better education to their child and therefore school uniforms is the biggest category with a market size of Rs. 7,410 crore. The growing acceptance of westernwear amongst parents and the increased expenditure on the child’s clothing has favoured the growth of denim, t-shirts and shirts.
Similarly, for girls, the main categories are school uniforms, t-shirts, shirts, bottom wear, winterwear, ethnicwear, denim, dresses etc. With the increase in awareness about, and greater focus on educating the girl child, parents do not hesitate to send them to school. Like, boys wear, school uniforms is the biggest category here as well, with a market size of Rs. 6,590 crore. Parents also prefer dressing up their daughters in westernwear. This has resulted in the faster growth of denims and t-shirts or shirts in this segment.
Innerwear as a Promising Segment
Among the core apparel categories, innerwear appears to be a potential growth category across all segments. With rising incomes, higher discretionary spending, greater number of working women and growing fashion consciousness, the innerwear segment is expected to continue to progress. Currently, the Indian innerwear market is worth Rs. 17,750 crore (2013) and is estimated to grow at 13 percent to reach Rs. 59,540 crore by 2023. The innerwear market has traditionally been largely unorganised, although in the past few years, the organised innerwear segment has shown promising growth in both men’s and women’s categories.
Until the pre-1970 era, innerwear was viewed as an essential ‘commodity’ with no focus from any retailer. The market was highly fragmented and was dominated by local and unorganised brands. Since the 1970s, governmental restrictions dissuaded foreign tie-ups, but many Indian brands got launched successfully. Unorganised MBOs dominated the innerwear market until the 1990s, after which there was an influx of Indian and foreign brands. Organised brands came up and there was a gradual increase in the demand for them. Between 2000 and 2008 premium international brands started foraying into the Indian market. Indian brands showcased new designs and styles to woo the new age Indian women. The focus was mainly on the width of the product range. Men’s and women’s innerwear began to be sold through a variety of retail formats such as EBOs, departmental stores, and large format stores (LFS).
Although MBOs selling innerwear alone are still considered to be the most significant retail format for this category, women are becoming comfortable with walking into EBOs for purchasing innerwear. Organised EBOs and departmental stores cater primarily to urban consumers in major cities while, in the smaller cities, neighborhood stores are preferred for the purchase of innerwear. LFS, with their shop-in-shop concept, have carved a niche by showcasing the entire product range. They help in differentiating the brand from key competitors.
Since 2008, there has been greater focus within EBOs on assisting customers with selecting the right styles and sizes through employing trained staff. Online retailing is also gaining momentum, with premium brands pioneering. There is now greater emphasis on customer service and experience; however, product depth is still an issue.
This growth and change is primarily due to increased exposure, media presence, influx of both domestic and international westernwear brands, and the increase in the number of working women. The growth of the innerwear category is primarily centered in urban India with 38 percent of the market spread across the top cities comprising metros, mini metros, tier -I and -II cities.
Innerwear consumers can be segregated into four core groups on the basis of their attitude towards innerwear products and their buying behaviour. The first group comprises men and women employed in high-paying jobs, earning high disposable incomes, having high aspirations, seeking only branded innerwear. The next group also consists of consumers with well-paying jobs, but these consumers assess value along various parameters of which price is just one; others are convenience of purchase, easy availability, style, quality, etc. Again, these consumers do not have any issue with paying a premium for innerwear products of a particular brand as long as the quality is assured. The third group includes consumers from mostly tier -I, -II and -III cities having high aspirations and eager to have a metro-like lifestyle. They are open to experimenting through purchasing aspirational brands. The last group of consumers consists of men and women who have low disposable incomes but have big dreams and aspirations. They have cautious buying patterns and value price over brands. For them comfort, price and quality are most crucial while purchasing innerwear.
The women’s innerwear market, which is driven by value-added innerwear products, contributes around 60 percent to the market. This market is worth Rs. 10,880 crore, and is growing at a promising CAGR of 15 percent. The growing number of working women and the increased share of westernwear in their wardrobe have propelled this growth. Further, with the increase in exposure, there is an increased demand for better fits and quality alongside the demand for a wider range of colours, styles and accessories.
Westernwear usually encompasses specialised innerwear, which the branded players can provide, for the most part. Brand consciousness is no more restricted to external apparel. Among women’s innerwear brands, strong single brands emerge for bottoms and heritage innerwear brands are preferred for bras.
Women are increasingly getting conscious about the brands and styles of their intimate wear. In fact, this changing preference is no longer restricted to just the metros, but has spread to mini metros, tier -I, -II and -III cities. This openness to indulge in branded lingerie has led to a growth in the number of international and domestic innerwear brands present in India.
Largely unorganised, the women’s innerwear market is at present dominated by many local Indian brands. Women tend to exhibit a strong comfort factor in buying lingerie from regular unorganised local stores, predominantly due to price, but departmental stores are also very popular as they provide range and product displays and also have trial rooms. Exclusive brand stores are explored when looking for depth in styles and variety in colours. Even though there is an increase in the purchase frequency and average spends on innerwear, this category is predominantly a ‘planned purchase’ or an ‘occasion-based purchase’ category, especially among women, who tend to purchase and even splurge around such occasions as weddings, anniversaries, holidays etc. However, promotions and offers tend to induce impulse purchases. Again, experimentation in terms of styles is most often done when buying for special occasions; for dailywear, known styles and brands are preferred.
On the basis of product pricing, the innerwear market is further divided into super-premium, premium, medium, and economy segments. Due to the increased awareness, the increase in number of brands, and rising discretionary spending, all segments have registered growth. Foreign brands have brought in variety through international styles and fabrics. Indian women are also willing to spend higher-than-before amounts on innerwear. This has provided an exponential boost to premium and super-premium innerwear brands. Mid-segment brands have started extending their product portfolios. In women’s innerwear, the mid-premium segment makes up 52 percent of the market and is expected to grow the fastest, at a CAGR of 22 percent over the next 5 years.
Within the women’s innerwear segment, there is potentialof growth in maternity wear segment. Currently only select brands, mostly international ones, offer multiple styles of maternity products. Most other brands offer only one or two styles in this category.
The men’s innerwear market is pegged at Rs. 6,870 crore and is growing at 9 percent. Even in this segment various domestic and international brands can be found. Various apparel brands and retailers have extended their product portfolios to men’s innerwear segment to leverage its growth. Apparel players predominantly focusing on activewear, casualwear and even formalwear have launched dedicated sub-brands in men’s innerwear. Even so, consumers largely prefer, due to their stronger association with, dedicated innerwear players. The various sub-categories of men’s innerwear available widely and in most brands include vests, briefs or boxers, basic t-shirts, shorts, pyjamas, sleepwear and activewear. Consumers mostly purchase branded vests and briefs or boxers, which are the largest category with offerings from most leading innerwear brands.
Similar to the segments in the women’s innerwear market, men’s innerwear can also be divided into super-premium, premium, medium, and economy segments. Unlike women’s segment, however, within men’s innerwear, the economy segment is the highest contributor at 55 percent. The mid-price segment contributes 36 percent, and the premium and super-premium segments together constitute 14 percent. It is expected that the premium and mid-price segments will grow fastest, and exponentially, in the next few years. This is largely due to consumers becoming more informed. They seek high fashion quotient along with comfort, hygiene, brand image and smart prices.
Youth residing in metros and mini metros engage mostly with premium brands. It emerges that keenness to show off the brands, coupled with a desire to look good, is a significantly strong attribute in the choice of innerwear products and sub-categories. A high fashion quotient within the product range helps increase the brand’s image and engage consumers. This is usually achieved by incorporating a variety of colour, prints, and designs. Most premium value brands add new products to their range of offerings at regular time intervals. This way, consumers find something new in their chosen brand each time they shop. Regular product innovation helps these brands engage their target customers and not switch brands.
Whereas consumers residing in tier -I, -II and -III cities are not necessarily fond of premium brands alone, they straddle all segments including the mass segment. Premium brands are still aspirational for these consumers. Price, comfort and easy availability form the basis of any purchase for this consumer. Neither the brand nor its image has, as yet, a vital role in the purchase decision.
Most innerwear brands, across both men’s and women’s segments, are gradually expanding their product portfolios. Across consumer segments, it also emerges that products are associated with varying activities packed in the day, viz. lounging at home; outdoor lifestyle activities, etc. Activewear and sleepwear are perceived to be the natural avenues for growth. A merchandise mix of innerwear with such other product categories as activewear and sleepwear is currently not being offered to Indian consumers.
Products within activewear, such as sports bras, running shorts and tops, track pants, jackets, gym bottoms, socks, etc. are not widely available, although consumers’ demand is increasing. A limited range is available at intimate wear stores as the focus there is on innerwear alone. Despite women increasingly indulging in active lifestyle activities, most products tend to get segmented under comfortwear. Women are aware that different types of fitness activities require different attire. For casual fitness activities such as walking and jogging, they are not very specific about the attire. But for serious activities like gym and yoga, they prefer to put on specific sportswear. This is explained by the limited offerings in the women’s activewear category. Even traditional sportswear brands have very limited offerings for women and the untapped opportunity can be cashed in on by brands and retailers.
Foreign brands dominate this category, and along with private labels, are available in major cities through departmental stores, for the most part. These stores offer greater variety, but the most diverse range is still seen at sportswear stores. Traditionally, a few strong Indian brands and manufacturers provided the variety within this category, until the previous decade. Foreign sportswear brands created visibility through a strong distribution network, even into tier -II and -III cities via EBOs, organised MBOs, departmental stores, and unorganised stores. Indian brands continue to be available mainly through the unorganised route. Smaller local and regional players have greater presence through unorganised stores, in regions closer to the manufacturing units.
Further, within the sleepwear category for women, the core sub-products are chemise, pyajamas sets, short length and long robes, tube dresses, nightgowns and nightshirts. Married women and single women staying with their families tend to wear more conservative nightwear such as top-pyajama night suits, full-length night gowns etc. Sleepwear constitutes a fairly significant part of all lingerie outlets, with lower product width and depth compared to intimate wear. In comparison, for men its shorts, t-shirts, and pyajamas that form the core product range. In this category, consumers are not very brand-driven but are design-, style-, and comfort-driven.
Indian and foreign brands, as well as private labels, are available in metros and mini metros through department stores and EBOs. Local, smaller players display a retail presence similar to that for activewear, with product availability concentrated regionally. Departmental stores enjoy a good standing with customers; however, it is the local unorganised stores which are most popular for this category. Within the men’s innerwear segment, there are limited players which cater to all segments.
Within the kidswear space, innerwear is primarily unorganised and features strong regional players. Only some brands have more than a few styles to offer for boys and girls. Although some brands offer teen’s innerwear (especially teen’s bras) there is again only limited product range. Local MBOs and the private labels of departmental stores are the main points-of-purchase for kid’s innerwear. Briefs and vests in packs of 3-4 with cartoon characters tend to be highly popular among kids.
On the supply side, most national, foreign and regional brands have a similar distribution model. Most of them have multiple distributors in each city who handle individual, retailers and regions. Thus, there is no stress about handling extremely large volumes or restricted distributor growth and distributors can offer better services as well. Brands do conduct regular distributor meets where they showcase the complete product range and whence selections can be made and orders booked. Brands also provide good distributor incentives like foreign trip packages, electronic items, etc. Distributors remain motivated by these to walk an extra mile and in return increase sales and profitability. Some brands have their own warehouse and no distributors. They cater directly to MBOs and LFS. This model is usually suitable for the premium product range with small volumes. Here the margins are higher as there are no intermediaries.
Brands in this space also tend to have higher marketing budgets. Apart from trade promotions and meetings, they usually have dedicated marketing plans and teams. Most brands use multiple formats for marketing and promotions. From celebrity endorsements to using print media and other mass media, all formats are employed in order to capture the young Indian consumers’ attention. Brands need to engage and build an association with consumers through a complete, 360-degree marketing strategy.
Conclusion
In both the menswear and womenswear segment, innerwear has made its presence felt. The growing demand for innerwear has made consumers, and especially youth, spend on these products without giving a second thought to its price. It is no longer treated as merely an undergarment but is worn as a fashionable article of clothing that can be flaunted. Innerwear has moved out of the ‘basic necessity’ bracket and is now associated with a feel good factor. Indian consumers have come out of the shyness cocoon and are willing to experiment with new varieties, styles, colours and brands. This growth in demand has carved out a potential market for innerwear in India. As women’s innerwear is expected to grow faster, brands should widen their share thereof. They also have to vary their product offerings and heighten the fashion quotient. Existing brands have the opportunity of expanding beyond just innerwear. Active wear, comfort wear and sleepwear are some natural extensions and promising categories. A smart pricing strategy must be employed in order to attract consumers and boost brand preference. Also, products need to be made available for kids and teens as well to introduce brand comfort and loyalty from a lower age. Further for brands and retailers, there is an opportunity to identify and increase their focus across key consumption cities as well as a mix of formats. Thus, in order to be successful, brands must take the initiative to create a differentiating factor; only then can they establish a loyal customer base in this promising but developing segment.
