Fast fashion, a phrase used for designs that move quickly from the catwalk to showrooms to tap the latest consumer trends, is growing at a yearly pace of 25-30%, twice the rate of the overall market, according to Abhishek Malhotra, a partner at Booz and Co., a consultancy firm.
“Brands such as Zara, Marks and Spencers, Benetton and Tommy Hilfiger posted a healthy jump in their year-on-year revenues and have ambitious expansion plans for India,” said Anuj Puri, chairman and country head at real estate advisory firm Jones Lang LaSalle India.
“These four global brands collectively achieved sales that equalled the apparel sales of established department store chains such as Shoppers Stop and Lifestyle International,” Puri wrote in a report reviewing the real estate sector’s performance in 2013 and looking at its prospects for 2014.
That’s impressive given that consumers are cutting back on discretionary spending at a time when economic growth is forecast to slow further this fiscal year after having slumped to 5% last year, the least in a decade.
Fast fashion brands bucked the economic downturn by offering stylish designs at prices that were reasonable to Indian consumers, Puri wrote in his report.
“Fast fashion is like fast food,” said Darshan Mehta, chief executive officer (CEO) at Reliance Brands Ltd that has introduced premium brands such as footwear label Steve Madden and men’s clothing brands Thomas Pink and Brooks Brothers to the Indian consumer. “It is cheap, of good quality, and is quick,” he said, explaining the reason for their success.
The apparel market accounts for 6% of India’s consumption expenditure and is expected to touch $225 billion (around Rs.14 trillion today) by 2020, a fourfold increase in the space of a decade, according to a 2012 Boston Consulting Group report. No figures are available on the share of fast fashion brands.
Since its launch in India in 2009, Zara has become one of the fastest growing fashion brands in India. According to a November report by Reuters, Inditex Trent Retail India Pvt. Ltd, which operates the Zara stores in India, reported a profit of Rs.38.3 crore on sales of Rs.260 crore for the year ending March 2012.
Zara’s success has prompted large fast fashion apparel retailers to announce significant investments in India.
H&M received approval from the Foreign Investment Promotion Board (FIPB) for an investment of Rs.720 crore in November. H&M stores are likely to open by July next year. Forever 21, which has six stores in the country, has committed $50 million for expanding its presence in the country.
“We will open six-eight stores every year,” said Dipak Agarwal, CEO of DLF Brands Ltd that sells Forever 21 in India.
In May, German retailer s.Oliver said it would add 20 points of sale to its existing 10 stores over the next six months after announcing a €20 million investment in 2012. British retailer Marks and Spencers plans to add 44 stores in India by 2016. Japan’s Uniqlo and the American brand GAP are waiting to make their debut in India.
Mehta of Reliance Brands said the entry of more fast fashion brands in the market will help create more consumers.
“As the Indian consumer continues to evolve, these brands will not only cater to the existing shoppers, but (also) create potential consumers over time, thereby feeding growth and demand for western labels,” he said.
Even as they get a grip on the urban markets, expansion into the non-metros will be a key challenge for brands looking to scale up.
“Fast fashion will fare well depending on how the brands scale up. No one wants to be a Rs.100 crore brand in India, and to reach scale they have to be able to go deeper and localize these foreign brands,” said Debasish Mukherjee, a partner at consulting firm AT Kearney.
That’s something some fast fashion brands are already beginning to do. Zara opened its 14th store in the country this year in Surat, Gujarat. Marks and Spencer entered Kochi in Kerala and is now seeking to open a store in Kanpur, Uttar Pradesh, said Venu Nair, managing director of Marks and Spencer Reliance India.
Nair says a large population of consumers is likely to trade up to branded apparel, spurring demand.
S.Oliver will add more stores in cities such as Pune, Kanpur, Ludhiana and Dehradun, apart from adding stores in Delhi and Mumbai
“It shows the potential of consumer demand for both premium and trendy brands in different pockets of India,” said Anupam Yog, director of marketing at Virtuous Retail Services Pvt. Ltd.
Virtuous Retail develops retail properties across India and built a mall in Surat that houses brands such as Marks and Spencer, Zara, Vero Moda and MAC.
Best Seller Retail India Pvt. Ltd, the local unit of the Danish retailer Bestseller A/S, which operates brands such as Jack and Jones and Vero Moda, is seeking to expand in markets such as Ludhiana in Punjab, Jaipur in Rajasthan and Nagpur, Maharashtra, said a retail industry analyst, who didn’t want to be named. The company has 400 point of sales in India so far.
The advent of e-commerce, according to Anurag Rajpal, CEO at e-retailer American Swan Lifestyle Co., is also helping consumers in the non-metro areas gain access to brands available in physical stores only in the larger cities.
Rajpal said e-commerce is helping build latent demand in smaller markets that are still under-served by brick-and-mortar retail stores.
To be sure, a part of the demand for fast fashion is being spurred by promotions and discounts offered by retailers to beat the slowdown.
“The year saw larger, wider, deeper, more extensive discounting,” said Govind Shrikhande, vice-chairman and managing director, Shoppers Stop Ltd.
For India’s oldest department retail chain, the total number of days of discounting increased to 48 days in the year from 34 last year. And the contribution of discounts and promotions to sales nearly doubled from 12% in 2012 to 22-23%.
Discounts apart, more brands and a larger range of products are helping attract more customers.
According to Binu Sehgal, head of DLF Place mall in New Delhi that houses brands such as Marks and Spencers, Vero Moda and Forever 21, consumers shopping for these brands are not just the young, but even women in their 40s.
“Fast fashion brands are not only targeting youngsters, but their entire bandwidth of consumption is actually expanding,” said Sehgal.
http://www.livemint.com/Industry/ll0DswclMpprlxZaYs4GjO/Fast-fashion-catches-fancy-of-Indian-consumers.html
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