Strategic analysis of the youth fashion industry in India

Abstract

The Indian Fashion and Apparels industry has been witnessing a strong growth in the past decade due to the burgeoning young population of India and the rapid increases in disposable incomes which now allows more freedom to spend on discretionary items like for instance, branded fashionable brands in their consumption basket rather than just fulfilling their necessity of buying clothes. The Indian fashion industry has evolved from an unorganized and fragmented sector to more structured forms of retail like Multi Brand Outlets (Shopper’s Stop, Lifestyle) and focused towards mass consumption of fashionable garments. The total consumer spending on clothing in India increased by almost 49.3% from 1995-2007 and almost 85% of the clothing demand was still met by tailored clothing. The Fashion Industry in India is thus segmented by value into the expensive Couture wear which is around 0.2% of the total apparels market in India, the Premium & Luxury Segment which is largely dominated by the international brands in India with 5.14%, the Mainstream Brands occupied by mid level national brands retailed through Shopper’s Stop and Pantaloons and the huge unbranded and unorganized market occupying around 75% of the total apparels market in India. The total market size for apparels in India has been found to be Rs. 1372.8 Billion with a growth rate of 9.9% for the period 2005-2009. The growth drivers has largely been attributed to increase in the disposable income, number of new occasions, urbanization and increase in youth population, also, fashion is being more seen as a form of expression and individuality, a continued rise in the organized retail and emergence of mall culture for shopping and entertainment and the entry of several international brands. This has also increased competition amongst the brands and is continually growing especially with the lowering of FDI policies for global brands. The Porter’s Five Forces analysis of the Industry reveals that the bargaining power of buyers or consumers is moderate, the bargaining power of suppliers is from low to moderate, the threat of new entrants in the domestic fashion and apparels market has moderate to high barriers to entry, threat of substitutes is low to moderate and the degree of rivalry is high. SWOT and Value Chain are also done later in the study. The major categories of apparels and their percentage share of the market and growth is studied. Then an analysis of some brands for each product category in India is given for major brands like Louis Philippe, Park Avenue and Zodiac in the Men’s Formalwear Category; Spykar and Lee in the Men’s Casual wear segment; BIBA and LEFFET for women’s ethnic wear and Remanika for women’s casual wear category. A detailed study of United Colors of Benetton, a brand that is mostly targeted to the youth has been done with key financial information and brand categories with focus on the Indian subsidiary of Benetton. Apart from this, the major international brands that have entered the Indian market have been studied in detail with entry strategy and category presence.