Apparel Online Bangladesh Magazine October Issue 2018 | Page 14

COVER STORY
Indian Retail
Market on Roll…!
l Burgeoning
middle class, rapid economic growth and consumption boom fuelling fashion retail, bringing in
brands/retailers across geographical locations to cash in on the big opportunity
l Huge
break in offing for Bangladesh RMG makers
T
he Indian retail market is
the cynosure of all eyes, be it
international brands and retailers
or manufacturers looking for new
opportunities. And why not…!
The Indian fashion retail market,
currently at US $ 46 billion, is
expected to reach US $ 115 billion
by 2026, growing at a promising
CAGR of 9.7 per cent. Interestingly,
the share of spending on clothing
and footwear in total consumer
spending at 6.7 per cent is higher
than what is seen in the US (3 per
cent) and the UK (5.7 per cent). Also,
the Year-on-Year expenditure growth
in India at 12 per cent is more than
double the anticipated global rate
of 5 per cent. This is not surprising
considering the fact that India has a
huge population of 1.3 billion people
with a fast-growing middle class with
rising disposable income and the
willingness to spend rather than save.
Indian retailers are on a roll and
leaving China behind, India is now
the most dynamic market with a
rapidly expanding economy and
a consumption boom, says 2017
Global Retail Development Index
report by AT Kearney. As per recent
analysis, the market for apparel
and lifestyle products in India is
currently estimated at US $ 85
billion and is expected to reach
US $ 160 billion by 2025. India has
traditionally been the land of small
unorganised retail with mom and pop
stores, situated around practically
every residential area. Those
who wanted ‘branded’ garments
shopped internationally, while the
upper middle class went to tailors
for customised stitching. Hence the
market was more for textiles and not
so much for readymade garments…
the situation is now far different, with
a rising number of people looking
at readymade garments as against
buying fabric for ‘stitched-garments’.
This exciting retail space is
attracting many international players
besides homegrown brands and
retailers. The FDI norms relaxation
for single brand retail in the country,
including relaxation of mandatory
local sourcing requirement of 30 per
cent, will also be a major boost for
fast-fashion majors to set up shop
in India. Further, India’s improved
ranking on World Bank’s ‘Ease of
Doing Business’ ranking – moving
up 30 places to rank 100 out of
190 countries – will boost foreign
investment in the country.
International retailers/
brands in the Indian retail
landscape…
Many international brands have
already entered the market and
are enjoying various degrees of
success. Global brands like Zara,
H&M, Mango, Guess, United Colors
of Benetton, Gap, Forever21, besides,
Levi’s, Adidas and Nike have made
deep inroads in the Indian apparel
market, as Indian consumers
increasingly prefer these brands for
their perceived quality, fit and style.
In fact, Adidas AG has become the
first foreign sports company to get
Government approval to open 100 per
cent foreign-owned stores in India.
Sourcing from India, Bangladesh,
Turkey and some other countries,
these brands make an offering
which is difficult for Indian brands
to emulate. Among the new entrants,
H&M has already achieved a turnover
of US $ 75 million in its first year and
turned profitable from only 12 stores.
It now is looking at setting up its
first warehousing hub in India, as it
expects to open another 50 stores in
14 Apparel Online Bangladesh | October 2018 | www.apparelresources.com
Advantage Bangladesh
l Bangladesh
is very strong in product
categories that Indian retail has demand for.
l Top
five products to be exported to India are
trousers, shirts, t-shirts, jackets & blazers and
sweaters.
l Indian
Government’s decision to double
import duty on 328 textile products (which
includes 48 apparel items) from 10 to 20
per cent will lead to increased exports from
Bangladesh as imports from Bangladesh are
fully exempt from ‘Basic Customs Duty’.
l Retail
giants like H&M and Walmart have
started sourcing from Bangladesh to cater
to the Indian consumers, already with others
following suit, which would further boost
imports from it.
l The
somewhat unorganised manufacturing
sector in India fails to meet the unregulated
apparel requirements of the organised
retailers, including in terms of compliance,
quality, price and delivery time, which are
huge disadvantage to India but clearly
attuned to Bangladesh’s strengths.
l Though
there is flourishing apparel export
in India, most Indian manufacturers/
exporters are yet to get accustomed to the
payment terms and business practices of
Indian retailers, which puts them in a rather
disadvantageous position compared to
Bangladeshi counterparts.
l Limited
capacity of Indian manufacturers in
terms of volume production vis-à-vis that
from Bangladesh gives a clear cut plus to
the latter.