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Textile & apparel sector to grow by 9% - Technopak

26 Oct '09
6 min read
Mr Arvind Singhal, Chairman, Technopak Advisors
Mr Arvind Singhal, Chairman, Technopak Advisors

Current state of Indian textile and apparel Market-
•The present size of Indian textile and apparel market is US$ 62 billion. Of this US$ 22 billion is contributed by exports while the rest US$ 40 billion is domestic market.
•Exports in textiles and apparel have registered a strong growth in the last few years with 11% CAGR from 2004-05 to 2007-08; the single largest category is woven apparel followed by knitted apparel, made-ups and cotton based textiles.
•The domestic market has shown a significant growth in past registering a Compounded Annual Growth Rate (CAGR) of ~13%. Despite the recent demand slump, the domestic market is expected to grow at around 9% in the next 5 years. In this context, the industry needs to focus on the domestic market more intensely and understand the market dynamics in more detail in order to tap the complete potential.

Evolving Indian consumers and Their Changing Consumption Patterns-
•India has been witnessing sustained high growth of GDP since 1991 of ~ 6% per year leading to fundamental transformation of the economy. Primary growth drivers include predominantly young consumers, potential of the literacy rate to touch nearly 90% by 2013, and the reduction of the dependency ratio as 13 million new people join the work force every year.
•Family ties are still the most important factor in an Indian's life though family structures and how time is spent together is changing. Families are turning nuclear and children have become a focal point of all shopping and purchase decisions. Shopping and eating out remain top family leisure activities. With time poverty, shopping with family helps increase time shared with family.
•The overall size of the apparel market is still growing at 9% CAGR and the aspirational apparel category has the potential to grow much faster. Hence, apparel will have to re-define itself in a new avatar to appeal to this evolved consumer i.e. as a category that fulfills a desire rather than a need.

Opportunities in the Domestic Apparel Market-
•It is evident that the Indian consumer is ready for change, demanding options and looking out for product that suits and matches its needs and aspirations. The Indian apparel market is moving away from the traditional segmentation to a much deeper and wider segmentation based on consumer needs. Some of the segments that are potential opportunities to watch out for are: Women's wear, Casual wear, Kids wear, School Uniforms, Inner wear, Plus size clothing, Active hwear / Exercise wear / Swimwear, and Youth fashion / College fashion.
•With more and more international brands and retailers looking at India as their next destination, the competition in the domestic market is expected to shoot up significantly. However, at the same time the international brands / will also bring with them superior technology and economies of scale across the supply chain, thus making it imperative for the domestic players to tighten their operations. Already established retailers in India are looking to upgrade their existing systems and are also looking at partnerships with global majors for improving supply chain scales and efficiencies.

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