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Is value a dirty word in the Indian apparel market? Mid-value brands in the $40-billion apparel market are seeing some rough times even as the industry is upbeat about growth.
The industry is rife with stories of brands such as Spykar, Lilliput and Gini & Jony that are either on the block are or are in the process of being sold.
It is very clear that Indian consumers are now spoilt for choice, both in offering and pricing. Therefore only a combination of smart pricing and high brand value will work, say analysts.
Ms Pakhie Saxena, Associate Director, Retail at consulting firm Technopak Advisors, observes, “The evolving Indian consumer no longer evaluates ‘value’ only on a price metric and seeks a multitude of attributes across convenience, merchandise width, fashion quotient, pack size and quality.” In addition, high profile brands are straddling the entire spectrum of premium and medium segment offering, thus wooing away consumers from the “value players.” Levi’s launched Denizen targeted the “emerging market.”
“Zara, Tommy Hilfiger, Marks & Spencer too have been leveraging this potential and offering products with high value perception coupled with smart pricing,” points out Ms Saxena. Spykar as well as Lilliput did not respond to queries on their business plans. Throwing light on another development, Mr Krunal Mehta (VP Branding & Corporate Communication) at analyst firm Angel Broking, says that as consumers prosper, they will naturally spend more of what they earn on what they wear. “Consumers worldwide typically spend an average of five per cent to six per cent of total income on apparel, but the figure is often significantly higher in emerging markets.”
In addition, organised retail has captured the mid-range buyer with its private label range, which is posing a threat to the mid-value apparel brands.
The good news is that the Indian apparel market is poised to grow to a $49-billion industry in the next two years.
But, as Mr Mehta says, threats for small and mid-value brands would be cost-based competition from Bangladesh, Vietnam, and Sri Lanka, fluctuations in demand in exports, rising input costs and higher borrowing costs which affect the profitability of the SME firms.
Also PE funds may find value in other industries, he adds.
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