Apparel Online India Magazine August 2nd Issue 2018 | Page 21

COVER STORY
India under this flagship brand.
Additionally, the company operates
showrooms under the popular Park
Avenue brand of clothing and men’s
requirements.
e- commerce market...
India is expected to become the
world’s fastest growing e-commerce
market, driven by robust investment
in the sector and rapid increase in
the number of internet users. Apparel
sales has been witnessing a great
jump in the last two years with lot of
mergers and acquisitions happening
in the industry. The Bangalore based
Myntra is expected to touch an annual
turnover of US $ 1.6 billion in 2017-
18 surpassing all major bricks and
mortar retailers. It controls about
60 per cent of online apparel retail
market along with its subsidiary
Jabong. Amazon is making quick
investments to capture a larger pie
of this market followed by Reliance
Ajio which was created last year to
dive into this fast-growing segment of
online apparel retail. With Walmart
staking claims in Flipkart, the market
will only get bigger.
Shopclues has raised US $ 150 million
from Singapore Government’s GIC and
its existing investors Tiger Global and
Nexus Venture Partners, at a valuation
of US $ 1.1 billion, thereby becoming
the latest among several e-commerce
companies from India reaching a
billion-dollar valuation.
Cash-and-carry model
also on the upswing…
The cash-and-carry format has a
critical role in the multi-layered
distribution system predominant
in India. It helps manufacturers
supplement their own direct reach
for better access in traditional retail,
without relying on the unorganised
and fragmented indirect distribution
system. The overall organised
wholesale cash-and-carry trade
consists of four large companies –
Metro Cash and Carry India Pvt. Ltd,
Walmart India Pvt. Ltd., Reliance
Cash and Carry, a unit of Reliance
Industries Ltd, and Booker Wholesale,
a subsidiary of UK’s Booker Group
– which together have 92 stores.
Thailand’s Siam Makro is the latest
ESSENTIALS foreign retailer to announce a 100 per
cent cash-and-carry operation in India.
The vibrancy of
the domestic
market for
apparel and
lifestyle products
is attracting not
only garment
exporters
but also
manufacturers
from the
neighbouring
country –
Bangladesh.
While the global
conditions
have resulted
in slowdown of
retail business
worldwide, India
has emerged
as a lucrative
market. Less
than a decade
ago, most
exporters
did not even
consider the
domestic market
as an option
for increasing
business, but
things have
changed! Cash-and-Carry operators buy
goods in large quantities from the
manufacturer or buying group and
then sell these goods to their retail
customers. Apparel is also sold in
the cash-and-carry format and is
considered among the fastest growing
segments. The Rs. 6,800 crore cash-
and-carry market has been growing
at 13 per cent annually, faster than
modern trade, albeit on a lower base,
said Nielsen, a global data, information
and measurement company, in its April
2016 report. No wonder that Walmart
India plans to add 50 more cash-and-
carry stores in India over the next four
to five years. The retail giant has just
acquired Flipkart for online space.
Who will grab the
manufacturing
advantage…?
In a fast-growing retail scenario for
apparel, organised retail accounts for
approximately 30-35 per cent of the
total market and in the past, to a large
extent, organised retail in apparel
had been confined to menwear and to
a lesser extent kidswear, which was
primarily more in the unorganised
sector, while the womenswear
readymade segment was practically
non-existent. A recent survey still
puts menswear as the hottest selling
category in domestic retail.
Less than a decade ago, most
exporters did not even consider the
domestic market as an option for
increasing business. The focus was on
how to capture more markets abroad
and if possible, add new product
categories to get better responses
from the buyer. The success stories
were few and exporters found the
effort, not worth the ‘headache’. But
times have changed… even the most
accomplished exporter is now looking
to get a footing into the domestic
market, either working with leading
Indian brands/retailers or creating
his/her own brands that can compete
with international brands that already
exist in the market. Yet, it is not an
easy marriage and challenges remain.
The vibrancy of the domestic market
for apparel and lifestyle products is
attracting not only garment exporters
but also manufacturers from the
neighbouring country, Bangladesh.
While the global conditions have
resulted in slowdown of retail business
worldwide, India has emerged as a
lucrative market. Post policy upheavals
like implementation of GST, the
opportunities to explore the Indian
market by Bangladesh has increased
and according to Export Promotion
Bureau of Bangladesh, India has
imported US $ 87.4 million worth
of readymade garments from the
country during July-November 2017,
registering a sharp rise of 56 per cent
compared to US $ 55.92 million during
the same period last year.
The free access of 61 items (48 of
them in apparel) from Bangladesh,
recently introduced to balance the
trade between India and Bangladesh,
on one hand, give an alternate low-
cost sourcing option to retailers, but
on the other hand, increase the woes
of the smaller manufacturer working
for the domestic Industry. On their
part, the domestic retailers want to
ensure that the product costing meets
their budget while getting reliable
supplies for the stores. Reliability can
be measured in the form of meeting
the product specification, on-time
supply and compliance to required
systems.
By 2020, if the industry grows three
times and even if one out of the three
parts is imported from Bangladesh,
the one part – equivalent to US
$ 30 billion, will need to be created
within India only for the domestic
market. The export growth will
need additional capacities over the
current ones. Eventually, the ideal
factory will be one, which works on
modern manufacturing techniques,
with reduced inventories and faster
throughput – capable of delivering
a quality product out of a compliant
factory.
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