Interview with Mr Arvind Singhal

•The global apparel & textile industry is recovering after the slump faced during the recessionary period of 2008-10.

•The growth in global population and sustained economic growth in the emerging countries will drive the trade of global T&A which is expected to reach USD 1 Trillion by 2020 from the current USD 510 billion.

•This increase in trade can also be attributed to the fact that consumption and manufacturing centers are different. Asia is the main manufacturing centre for textile and apparel; whereas US, Europe and Japan are still the major consumption centers.

•Although India and China are emerging as important consumption centres in the years to come, but developed nations will keep consuming more textile and apparel per capita and will be more and more dependent on sourcing these products from major production centres in Asia.

•Exports from developed countries such as USA, Europe, Korea, Canada has been decreasing, whilst the export volumes from emerging Asian countries as Vietnam, Cambodia, China, Bangladesh and India is increasingly growing.

•India will continue to capture a larger share of the exports pie as it leverages its cost competitiveness and other positive aspects like raw material availability, manpower availability etc.

The current environment is driven in the direction of greater investments and the industry needs to be fuelled further with more investments to achieve the target growth. Investments to the tune of USD 68 billion across the entire textile supply chain will be required by 2020 to tap the potential market created due to the growth of the industry fuelled by the domestic as well as the export markets.

Investments required in the garment sector by 2020 is to the tune of USD 14 billion and processing requires another USD 19 billion.

Apparel retail is better than other product categories in terms of ROCE (Return on Capital Employed) and hence the most attractive segment for retail investment.

There is substantial opportunity for investments in sectors like Technical Textiles for which domestic demand has been increasing in recent times.

The domestic apparel retail market shall continue to witness positive growth of 8% over the coming years. The RTW sector shall witness the largest growth fuelled by the coupled effect of its contribution share increasing from the current 79% to 88% over the next 10 as well as the overall growth of the apparel sector.

The segments of women’s wear, kids wear with high growth rates of 12% and 10.5% respectively will be the growth drivers of the RTW sector.

Thus in effect, the women’s wear segment shall increase in volume share from the current 37% to 43% in 2020, thus becoming as large as the current men’s wear segment.

Also, across all the segments, owing to enhanced lifestyles and varied activities, the categories of casual wear and active wear shall get further deeply sliced into sub – categories and shall be growth drivers.

Owing to Indian families becoming increasingly ‘time poor’ and ‘convenience seeking’, large complete family apparel formats shall find salience. And the big box formats of hypermarkets and cash & carry shall continue to attract a large quantum of investments under which the entire apparel category shall thrive.

Adopting to the learning curve of the last 18 months of the slowdown, Indian apparel retailers, in addition to expansion, are focusing on operating efficiencies and keenly monitoring key indicators such as : same store sales growth, category gross margins, andretail space productivity.

Retailers shall have to increasingly invest in tools that capture customer insights at the retail point-of-sale, tracking best sellers, slow movers, highest category contributors, and loss opportunity sales.

International brands such as ZARA, Diesel, Tommy Hilfiger, keen to leverage the optimistic Indian apparel market, shall continue to focus on emerging economies for expansion. These new entrants shall redefine the retail experience across all the elements of retail across store design, service, visual merchandising and assortment management.

Indian retailers would have to increasingly reckon with entrant international brands as competition and constantly adopt learning from them across the entire retail experience.

Over the past years, India’s inherent strength was limited to low cost across raw materials and labour availability. Over the coming years, India shall have to focus on innovation, vertical integration, manufacturing excellence, and efficiency in supply chain .

We should re-invent the entire industry, with audacious and global thoughts, aggressive entrepreneurship and rebranding of companies and the whole industry to attract more investors, entrepreneurs, and management and operational talent.

We should focus on creating many more manufacturing mega clusters similar to what Ahmedabad, Tirupur, Surat, Ludhiana, etc… are today. Cities like Mangalore, Mysore, Ambala and many A and B cities offer huge potential to create more employment and economic growth.

Opportunities of expansion exist across the value chain however a focus on bottle neck areas such as processing and garmenting is vital towards achieving sustained overall growth.

In addition to the above, India should focus on widening the product base with emphasis including man-made fiber base.

With the Indian consumer evolving and becoming increasingly aware, value is not just a price proposition and is no longer defined only by it.

Also, with the apparel category constantly evolving, consumers are increasingly seeking enhanced product attributes and services to fulfill the value proposition.

In keeping with this, Private labels are expected to contribute significantly to the growth of the entire apparel industry.

Apparel retailers shall have to clearly understand the various emerging customer segments and the value proposition of each segment. Value shall be defined, in addition to price, across parameters such as : product attributes, convenience of format, pack sizes, etc.

•It shall be imperative for entrant international brands to develop India centric models around market based pricing, styles, fits and fabrics that are relevant to the Indian consumer

•Thus, even international brands, with increasing focus towards Asian markets, shall have to shift manufacturing, sourcing and distribution capabilities closer to the relevant market to leverage economies of scale and gain a sharper understanding of the consumer

It will take a few more years for this format to generate substantial quantum of business, with consumers still evolving.

Internet and other electronic media can be platforms to grab more eyeballs, but it’s the brick and mortar format which shall drive growth in India in the coming years.

Technopak Leadership Forum: Textile & Apparel is a yearly forum to bring together industry leaders on a common platform and exchange views on the future of the textile and apparel industry.

The theme for this year’s conference was “Resurgence in India’s Textile and Apparel Industry – Vision 2020”.

TLF, for the second year in a row, has become a great platform for CXO level business leaders to brainstorm, share and gain key insights into the present and future of the dynamic Indian marketplace.

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