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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 growing
economies in the world and by 2030 India
would be one of the Top 5 economies in terms
of GDP

•Agriculture now accounts for only one-fifth
of the gross domestic product (GDP), down
from 59 percent in 1950

•The Indian retail sector accounts for over
20% of the country’s gross domestic product
(GDP) and contributes 8% to total
employment




                                 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 is
pegged to reach 1.3 trillion USD by 2020

•The penetration level of modern retail (currently 5%) is expected to grow about six times
from the current 27 billion USD to 220 billion USD in 2020, across all categories and
segments

•In terms of financial returns, Apparel is the most attractive product category amongst
retail product categories both in terms of Returns on Capital Employed and EBITDA.
Garmenting & Technical Textiles are the most attractive segments within the Apparel
value 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 Retail
The India retail market is estimated at US$ 470 Bn in 2011, accounting for ~35% of GDP
and 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 Retail
The total retail market in India is estimated at US$ 470 Bn in 2011. The Food & grocery
segment 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 Retail
The organized retail market is estimated at US$ 26 Bn and accounts for ~6% of the overall
retail market for 2011. The organized retail market is projected to grow to US$ 84 Bn by
2016, @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 to
US$ 84 Bn by 2016 at a CAGR of 26.0%

•At 35%, Food & Grocery has the highest share of organized retail . Food & Grocery along
with Apparel, Jewellery & Watches and
Consumer 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 Growth
Factors 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 is
growing at over 23%

•The industry is largely services driven (85% share) with product sales (e-tailing & home
shopping) 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 Rs
3,27,000 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$33 Bn) in 2009 and is
expected to reach Rs 4,70,000 crores (US$ 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 to
reach 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 expected
to 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 and
expected 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 increasing
penetration of retailers into smaller cities.

•Global Textile and Apparel trade is recovering after a slump during the economic
recession 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 / developed
countries towards lower cost countries in Asia.



                                 Presentation by Shubha Brota Raha                    14
Market Size: Overall Indian Textile & Apparel
India’s total Textile and Apparel (export plus domestic) industry size is valued at Rs 3,27,000
crores (US$ 70 Bn) in 2009 and is estimated to grow @ 11% CAGR to reach Rs 10,32,000
crores (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 Retail

The 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 Growth

Indian domestic Apparel market is expected to grow @ 11% CAGR, primarily driven by high
unit value growth (due to growth in organized and branded segment), apart from increase
in 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 Retail
Currently Men’s wear is the biggest segment of the market, however Women’s wear is
growing 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 Retail
Availability of Raw Material :
•India produces 8 mn tons of fibre annually and production has increased @ 4% CAGR in
the 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% of
the 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 in
the 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 of
cheap labour and raw materials has always made India a very attractive sourcing
destination. India is projected to export apparels worth US$ 25 billion in 2015

•All these years of expertise and skill in manufacturing branded apparels will make
sourcing for domestic brands easy and economical
                                    Presentation by Shubha Brota Raha                       28
Growth Opportunities: ROCE vs. EBITDA

Apparel retail is better than other product categories in terms of ROCE (Return on Capital
Employed) 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, the
consultancy 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 in
Retail’ published by PWC for FICCI India

All data and graphs belonging to the above reports, wherever used, have been duly
acknowledged.




                                 Presentation by Shubha Brota Raha                  33
Thank You !




 Presentation by Shubha Brota Raha   34

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Apparel Retail in India

  • 1. Apparel Retail In India Presentation By: Shubha Brota Raha EMBA 2011-14, SIBM Bangalore Presentation by Shubha Brota Raha 1
  • 2. 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
  • 3. 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
  • 4. Introduction to Indian Retail •Currently, India is one of the fastest growing economies in the world and by 2030 India would be one of the Top 5 economies in terms of GDP •Agriculture now accounts for only one-fifth of the gross domestic product (GDP), down from 59 percent in 1950 •The Indian retail sector accounts for over 20% of the country’s gross domestic product (GDP) and contributes 8% to total employment Presentation by Shubha Brota Raha 4
  • 5. 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 is pegged to reach 1.3 trillion USD by 2020 •The penetration level of modern retail (currently 5%) is expected to grow about six times from the current 27 billion USD to 220 billion USD in 2020, across all categories and segments •In terms of financial returns, Apparel is the most attractive product category amongst retail product categories both in terms of Returns on Capital Employed and EBITDA. Garmenting & Technical Textiles are the most attractive segments within the Apparel value chain in terms of ROA and EBITDA. Presentation by Shubha Brota Raha 5
  • 6. Key Players: Indian Retail Presentation by Shubha Brota Raha 6
  • 7. Market Size: Overall Indian Retail The India retail market is estimated at US$ 470 Bn in 2011, accounting for ~35% of GDP and is expected to grow to US$ 675 Bn by 2016, @ CAGR of 7.5% Presentation by Shubha Brota Raha 7
  • 8. Category Wise Break-Up: Overall Indian Retail The total retail market in India is estimated at US$ 470 Bn in 2011. The Food & grocery segment 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
  • 9. Market Size: Organized Indian Retail The organized retail market is estimated at US$ 26 Bn and accounts for ~6% of the overall retail market for 2011. The organized retail market is projected to grow to US$ 84 Bn by 2016, @CAGR of 26% Presentation by Shubha Brota Raha 9
  • 10. Category Wise Break-Up: Organized Indian Retail •The organized retail market is estimated at US$ 26 Bn in 2011 and is expected to grow to US$ 84 Bn by 2016 at a CAGR of 26.0% •At 35%, Food & Grocery has the highest share of organized retail . Food & Grocery along with Apparel, Jewellery & Watches and Consumer Electronics & IT accounts for ~80% of the organized retail market in India in 2011 Presentation by Shubha Brota Raha 10
  • 11. Components of Indian Retail’s Growth Factors 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
  • 12. Internet/e-tailing Opportunity •The current market for non-store retailing in India is estimated at US $ 3.2 billion and is growing at over 23% •The industry is largely services driven (85% share) with product sales (e-tailing & home shopping) accounting for the rest of the market Presentation by Shubha Brota Raha 12
  • 13. Indian Apparel Industry •India’s Textile & Apparel industry (domestic + exports) is expected to grow from the Rs 3,27,000 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$33 Bn) in 2009 and is expected to reach Rs 4,70,000 crores (US$ 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 to reach 43% in 2020 from the current 37% share. Presentation by Shubha Brota Raha 13
  • 14. Indian Apparel Industry •Home Textile market is estimated at Rs 15,570 crores (US$ 3.5 Bn) in 2009 and expected to 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 and expected 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 increasing penetration of retailers into smaller cities. •Global Textile and Apparel trade is recovering after a slump during the economic recession 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 / developed countries towards lower cost countries in Asia. Presentation by Shubha Brota Raha 14
  • 15. Market Size: Overall Indian Textile & Apparel India’s total Textile and Apparel (export plus domestic) industry size is valued at Rs 3,27,000 crores (US$ 70 Bn) in 2009 and is estimated to grow @ 11% CAGR to reach Rs 10,32,000 crores (US$ 220 Bn) by 2020 Presentation by Shubha Brota Raha 15
  • 16. Market Size: Domestic Indian Textile & Apparel Presentation by Shubha Brota Raha 16
  • 17. Market Size: Indian Apparel Retail Presentation by Shubha Brota Raha 17
  • 18. Market Break-Up: Indian Apparel Retail Presentation by Shubha Brota Raha 18
  • 19. Contribution to GDP: Indian Apparel Retail Presentation by Shubha Brota Raha 19
  • 20. Market Size: Global Apparel Retail The 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
  • 21. Components of Indian Apparel Retail’s Growth Indian domestic Apparel market is expected to grow @ 11% CAGR, primarily driven by high unit value growth (due to growth in organized and branded segment), apart from increase in per capita consumption of clothing due to favorable consumer demographics Presentation by Shubha Brota Raha 21
  • 22. Market Demand Growth: Indian Apparel Retail Presentation by Shubha Brota Raha 22
  • 23. Market Segmentation: Indian Apparel Retail Currently Men’s wear is the biggest segment of the market, however Women’s wear is growing 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
  • 24. Market Segmentation: Men’s Wear Market Presentation by Shubha Brota Raha 24
  • 25. Market Segmentation: Women’s Wear Market Presentation by Shubha Brota Raha 25
  • 26. Market Segmentation: Boys Wear Market Presentation by Shubha Brota Raha 26
  • 27. Market Segmentation: Girls Wear Market Presentation by Shubha Brota Raha 27
  • 28. Strengths: Indian Apparel Retail Availability of Raw Material : •India produces 8 mn tons of fibre annually and production has increased @ 4% CAGR in the 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% of the 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 in the 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 of cheap labour and raw materials has always made India a very attractive sourcing destination. India is projected to export apparels worth US$ 25 billion in 2015 •All these years of expertise and skill in manufacturing branded apparels will make sourcing for domestic brands easy and economical Presentation by Shubha Brota Raha 28
  • 29. Growth Opportunities: ROCE vs. EBITDA Apparel retail is better than other product categories in terms of ROCE (Return on Capital Employed) and EBITDA and hence the most attractive segment for retail investment Presentation by Shubha Brota Raha 29
  • 30. Growth Opportunities: Size of Organized Retail Presentation by Shubha Brota Raha 30
  • 31. Growth Opportunities: Key Drivers Presentation by Shubha Brota Raha 31
  • 32. Critical to Success Factors: Indian Apparel Retail Presentation by Shubha Brota Raha 32
  • 33. 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, the consultancy 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 in Retail’ published by PWC for FICCI India All data and graphs belonging to the above reports, wherever used, have been duly acknowledged. Presentation by Shubha Brota Raha 33
  • 34. Thank You ! Presentation by Shubha Brota Raha 34