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Apparel Retail in India
 

Apparel Retail in India

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    Apparel Retail in India Apparel Retail in India Presentation Transcript

    • Apparel Retail In India Presentation By: Shubha Brota Raha EMBA 2011-14, SIBM Bangalore Presentation by Shubha Brota Raha 1
    • Index» Introduction to Indian Retail 04» Key Players: Indian Retail 06» Market Size: Overall Indian Retail 07» Category Wise Break-Up: Overall Indian Retail 08» Market Size: Organized Indian Retail 09» Category Wise Break-Up: Organized Indian Retail 10» Components of Indian Retail’s Growth 11» Internet/e-tailing Opportunity 12» Indian Apparel Industry 13» Market Size: Overall Indian Textile & Apparel 15» Market Size: Domestic Indian Textile & Apparel 16» Market Size: Indian Apparel 17» Market Break-Up: Indian Apparel Retail 18 Presentation by Shubha Brota Raha 2
    • Index» Contribution to GDP: Indian Apparel Retail 19» Market Size: Global Apparel Retail 20» Components of Indian Retail’s Growth 21» Market Demand Growth: Indian Apparel Retail 22» Market Segmentation: Indian Apparel Retail 23» Market Segmentation: Men’s Wear Market 24» Market Segmentation: Women’s Wear Market 25» Market Segmentation: Boys Wear Market 26» Market Segmentation: Girls Wear Market 27» Strengths: Indian Apparel Retail 28» Growth Opportunities: Indian Apparel Retail 29» Critical to Success Factors: Indian Apparel Retail 32» Acknowledgements 33 Presentation by Shubha Brota Raha 3
    • Introduction to Indian Retail•Currently, India is one of the fastest growingeconomies in the world and by 2030 Indiawould be one of the Top 5 economies in termsof GDP•Agriculture now accounts for only one-fifthof the gross domestic product (GDP), downfrom 59 percent in 1950•The Indian retail sector accounts for over20% of the country’s gross domestic product(GDP) and contributes 8% to totalemployment Presentation by Shubha Brota Raha 4
    • Introduction to Indian Retail•The cumulative foreign direct investment (FDI) inflows in single-brand retail trading,during April 2000 to June 2011, stood at 69.26 million USD•The current estimated value of the Indian retail sector is about 500 billion USD and ispegged to reach 1.3 trillion USD by 2020•The penetration level of modern retail (currently 5%) is expected to grow about six timesfrom the current 27 billion USD to 220 billion USD in 2020, across all categories andsegments•In terms of financial returns, Apparel is the most attractive product category amongstretail product categories both in terms of Returns on Capital Employed and EBITDA.Garmenting & Technical Textiles are the most attractive segments within the Apparelvalue chain in terms of ROA and EBITDA. Presentation by Shubha Brota Raha 5
    • Key Players: Indian Retail Presentation by Shubha Brota Raha 6
    • Market Size: Overall Indian RetailThe India retail market is estimated at US$ 470 Bn in 2011, accounting for ~35% of GDPand is expected to grow to US$ 675 Bn by 2016, @ CAGR of 7.5% Presentation by Shubha Brota Raha 7
    • Category Wise Break-Up: Overall Indian RetailThe total retail market in India is estimated at US$ 470 Bn in 2011. The Food & grocerysegment is the largest retail category and accounts for ~70% of the total retail market,followed by the Apparel Sector Presentation by Shubha Brota Raha 8
    • Market Size: Organized Indian RetailThe organized retail market is estimated at US$ 26 Bn and accounts for ~6% of the overallretail market for 2011. The organized retail market is projected to grow to US$ 84 Bn by2016, @CAGR of 26% Presentation by Shubha Brota Raha 9
    • Category Wise Break-Up: Organized Indian Retail•The organized retail market is estimated at US$ 26 Bn in 2011 and is expected to grow toUS$ 84 Bn by 2016 at a CAGR of 26.0%•At 35%, Food & Grocery has the highest share of organized retail . Food & Grocery alongwith Apparel, Jewellery & Watches andConsumer Electronics & IT accounts for ~80% of the organized retail market in India in 2011 Presentation by Shubha Brota Raha 10
    • Components of Indian Retail’s GrowthFactors driving the organised retail sector growth include the following:• Higher incomes driving the purchase of essential and non-essential products• Growth of modern trade format across urban, Tier I, Tier II and Tier III cities and towns• Evolving consumption patterns of Indian customers• New technology and lifestyle trends creating replacement demand• Increase in rural income as well as urbanisation• Increase in easy access to credit and consumer awareness• Rapid urbanisation and growing trend towards nuclear families Presentation by Shubha Brota Raha 11
    • Internet/e-tailing Opportunity•The current market for non-store retailing in India is estimated at US $ 3.2 billion and isgrowing at over 23%•The industry is largely services driven (85% share) with product sales (e-tailing & homeshopping) accounting for the rest of the market Presentation by Shubha Brota Raha 12
    • Indian Apparel Industry•India’s Textile & Apparel industry (domestic + exports) is expected to grow from the Rs3,27,000 crores (US$ 70 Bn) in 2011 to Rs 10,32,000 crores (US$ 220 Bn) by 2020.•The expected CAGR is 11%•Domestic Apparel Retail market was worth Rs 1,54,000 crores (US$33 Bn) in 2009 and isexpected to reach Rs 4,70,000 crores (US$ 100 Bn) by 2020•Men’s wear has the majority share of Apparel market currently (43%). However,women’s wear is growing at a higher rate of 12% compared to men’s (9%), boys’ wear(10%) and girls’ wear (11%). Due to high growth, women’s wear share is expected toreach 43% in 2020 from the current 37% share. Presentation by Shubha Brota Raha 13
    • Indian Apparel Industry•Home Textile market is estimated at Rs 15,570 crores (US$ 3.5 Bn) in 2009 and expectedto reach Rs 40,000 crores ( US$ 9 Bn) by 2020 growing @ 9% CAGR.•Technical Textiles market is estimated at Rs 49,000 crores (US$ 10.5 Bn) in 2009 andexpected to reach Rs 1,46,000 crores ( US$ 31 Bn) by 2020 growing @ 10% CAGR.•The main drivers of domestic growth are increasing population, increasing income levels,rapid urbanization, improving demographics, increased organized players and increasingpenetration of retailers into smaller cities.•Global Textile and Apparel trade is recovering after a slump during the economicrecession in 2008-09, and is expected to reach US$ 1 Trillion by 2020 from the current US$510 Bn. The growth in trade is driven by increased outsourcing of western / developedcountries towards lower cost countries in Asia. Presentation by Shubha Brota Raha 14
    • Market Size: Overall Indian Textile & ApparelIndia’s total Textile and Apparel (export plus domestic) industry size is valued at Rs 3,27,000crores (US$ 70 Bn) in 2009 and is estimated to grow @ 11% CAGR to reach Rs 10,32,000crores (US$ 220 Bn) by 2020 Presentation by Shubha Brota Raha 15
    • Market Size: Domestic Indian Textile & Apparel Presentation by Shubha Brota Raha 16
    • Market Size: Indian Apparel Retail Presentation by Shubha Brota Raha 17
    • Market Break-Up: Indian Apparel Retail Presentation by Shubha Brota Raha 18
    • Contribution to GDP: Indian Apparel Retail Presentation by Shubha Brota Raha 19
    • Market Size: Global Apparel RetailThe global apparel retail industry grew by 2.1% in FY10 to reach a value of$1,078.2 billion, whereas, the Indian apparel retail industry Presentation by Shubha Brota Raha 20
    • Components of Indian Apparel Retail’s GrowthIndian domestic Apparel market is expected to grow @ 11% CAGR, primarily driven by highunit value growth (due to growth in organized and branded segment), apart from increasein per capita consumption of clothing due to favorable consumer demographics Presentation by Shubha Brota Raha 21
    • Market Demand Growth: Indian Apparel Retail Presentation by Shubha Brota Raha 22
    • Market Segmentation: Indian Apparel RetailCurrently Men’s wear is the biggest segment of the market, however Women’s wear isgrowing faster than other Apparel segments and is expected to gain majority share in future.Kids wear is also growing rapidly with higher growth in girls wear. Presentation by Shubha Brota Raha 23
    • Market Segmentation: Men’s Wear Market Presentation by Shubha Brota Raha 24
    • Market Segmentation: Women’s Wear Market Presentation by Shubha Brota Raha 25
    • Market Segmentation: Boys Wear Market Presentation by Shubha Brota Raha 26
    • Market Segmentation: Girls Wear Market Presentation by Shubha Brota Raha 27
    • Strengths: Indian Apparel RetailAvailability of Raw Material :•India produces 8 mn tons of fibre annually and production has increased @ 4% CAGR inthe last 3 years. Fibre exports have also grown significantly in the last 3 years @ 20 % CAGR•India’s yarn production is 5.3 mn tons, increasing @ 5% CAGR in the last 3 years. 20% ofthe yarn produced is exported• India’s fabric production is 54,966 mn sq mtrs increasing @ 3% CAGR in the last 3 years.5% of the fabric produced is exported. Exports are increasing at a high rate of 14% CAGR inthe last 3 years, driven by significant growth of knitted fabric exports.Availability of Expertise and Skilled Labour:•India is a major exporter of apparels and textiles for the last many years. The availability ofcheap labour and raw materials has always made India a very attractive sourcingdestination. India is projected to export apparels worth US$ 25 billion in 2015•All these years of expertise and skill in manufacturing branded apparels will makesourcing for domestic brands easy and economical Presentation by Shubha Brota Raha 28
    • Growth Opportunities: ROCE vs. EBITDAApparel retail is better than other product categories in terms of ROCE (Return on CapitalEmployed) and EBITDA and hence the most attractive segment for retail investment Presentation by Shubha Brota Raha 29
    • Growth Opportunities: Size of Organized Retail Presentation by Shubha Brota Raha 30
    • Growth Opportunities: Key Drivers Presentation by Shubha Brota Raha 31
    • Critical to Success Factors: Indian Apparel Retail Presentation by Shubha Brota Raha 32
    • Acknowledgements I extend my sincere acknowledgements to Professor K Venkat of SIBM Bangalore,without whose this teachings, this study would have meant meaningless.I am indebted to the following annual reports published by Technopak Advisors, theconsultancy firm, I work for: • Emerging Trends in Indian Retail & Consumer 2011 • Indian Textile & Apparel Compendium 2010 I am also grateful to the report titled, ‘The Indian Kaleidoscope – Emerging Trends inRetail’ published by PWC for FICCI IndiaAll data and graphs belonging to the above reports, wherever used, have been dulyacknowledged. Presentation by Shubha Brota Raha 33
    • Thank You ! Presentation by Shubha Brota Raha 34