By: Dr. Subrata Das
Consumer Testing Laboratories (India) Ltd., Inc

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A new focus on the apparel retail sector has attracted attention in recent days. Top exporters have introduced their own brands and are aggressively positioning themselves within segments of the domestic market. The rising importance of branded segments in the domestic market combined with the pressure of import competition is blurring the boundaries between exports and domestic production in countries with large home markets, such as India. With the changing lifestyles, organized retail is playing a key role in structuring the Indian domestic market, reinforced in particular by rising incomes and growing purchasing power among consumers in rapidly growing sectors of the economy such as information technology and business process outsourcing.

Retail sector in India is witnessing a huge revamping exercise as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. The branded apparel market represents the largest source of growth. The mens branded apparel market is growing at a rate of 21.8% and branded womens apparel segments represents 35% of the total branded apparel market and is growing at an incredible 23% annually.

Leading domestic retailers are becoming more firmly entrenched, increasing their scale of operations and stabilizing their logistics and technology initiatives. A few significant foreign players have been selling their branded apparel in India for number of years. But, now, just like their India counterparts, global apparel brands are setting up their own apparel outlets, instead of just selling through departmental stores. Though local retailers generally enjoy higher margins, they wont be able to keep global retailers at bay for long because of international experience, buying power, IT systems and cash flow to tolerate lower profits. Presence of these brands will make the Indian Consumer become more aware of the international fashion and lifestyle trends leading to a move-up of the industry in the value chain. In this paper, the recent trend and prospect of apparel retail sector in India have been discussed.

The Global Retail Scenario

Retailing has been defined as business activities involved in selling goods and services to consumers for their personal, family or household use (1).Although retailing has been around for millennia, the 20th century witnessed a lot of change in the retail sector, especially in the developed countries. Modern formats such as department stores, discount stores, supermarkets, convenience stores, fast food outlets, speciality stores, warehouse retailers and hypermarkets have emerged. Retailing has become more organized and chain stores have been growing at the expense of independent shops.

The chains are utilizing sophisticated information technology and communication to manage their operations and have grown rapidly not only within their home countries like US, UK, France, Germany and Holland but to other developed countries. Walmart Stores, the US retailer, was recognized as the largest firm in terms of sales in 2002 in Fortune magazines list of 500 largest global firms. Modern retail formats have also spread beyond developed countries and are becoming more important in the NICs and developing countries.

Large format retail businesses dominate the retail landscape in the United States and across Europe, in terms of retail space, categories, range, brands, and volumes. Indian retail industry cannot hope to learn much by merely looking at the Western success stories in retail. Their scales of operations are very huge, the profit margins that they earn are also much higher and they operate in multiple formats like discount stores, warehouses, supermarkets, departmental stores, hyper-markets, convenience stores and specialty stores. The economy and lifestyle of the West is not in line with that of India and hence the retailing scene in India has not evolved in the same format as the West nor can we learn valuable lessons from their style of operations.