India Fashion Market - ABFRL

India Fashion Market

Private and Confidential

June 2020

India Fashion Market 1

Table of Contents 1 Macro-economic Overview of India ...................................................................................................... 3

1.1 India’s GDP Growth ....................................................................................................................... 3

1.2 Domestic Consumption Share ....................................................................................................... 3

1.3 Key Growth Drivers ....................................................................................................................... 4

Demographics ....................................................................................................................... 4

Growing Middle Class............................................................................................................ 5

High Share of Urban Retail .................................................................................................... 6

2 Indian Retail Market.............................................................................................................................. 8

3 Indian Fashion Market ........................................................................................................................ 11

3.1 Overall Apparel Market ............................................................................................................... 11

3.2 Western Wear & Ethnic Wear Mix .............................................................................................. 12

Western Wear ..................................................................................................................... 12

Ethnic Wear ......................................................................................................................... 19

3.3 Consumer Segments ................................................................................................................... 24

Men’s Wear ......................................................................................................................... 25

Women’s Wear ................................................................................................................... 27

Kids Wear Breakup .............................................................................................................. 29

3.4 Format & Channel ....................................................................................................................... 30

Brick & Mortar Organised Formats ..................................................................................... 30

Online Formats .................................................................................................................... 32

Omnichannel Play ............................................................................................................... 35

3.5 COVID-19’s Impact ...................................................................................................................... 36

4 Competition Benchmarking ................................................................................................................ 39

4.1 General Information ................................................................................................................... 39

4.2 Store Related Information .......................................................................................................... 40

4.3 Revenue Benchmarking .............................................................................................................. 44


Macro-economic

Overview of India

1


1 Macro-economic Overview of India

1.1 India’s GDP Growth India is world’s 7th largest economy and expected to be in top 3 global economies by 2050 India ranks 7th in the world in terms of nominal GDP and is the 3rd largest economy in the world in PPP

terms. In 2018, India was about 1/8th of the size of the US economy and 1/5th of the size of Chinese

economy. India’s GDP is estimated to be ~USD 3200 bn in FY 2020 and by FY 2050 India is expected to be

among the top three economies of the world. Sustained high real GDP growth of over 6 percent since FY

1991, has led to a fundamental transformation of the Indian economy. India’s GDP is estimated to be

~USD 3200 bn in FY 2020.

Exhibit 1.1: GDP Ranking of Key Global Economies (2018)

Country GDP (USD tn) Share of World GDP (%) GDP Growth Rate (%)

United States 20.54 24.4% 2.93%

China 13.60 16.2% 6.57%

Japan 4.97 5.9% 0.79%

Germany 3.94 4.7% 1.53%

United Kingdom 2.85 3.4% 1.39%

France 2.77 3.3% 1.72%

India 2.71 3.2% 6.81%

Italy 2.08 2.5% 0.77%

Brazil 1.88 2.2% 1.32%

Canada 1.71 2.0% 1.90%

Source: World Bank

1.2 Domestic Consumption Share India has an advantage in that its domestic consumption share (measured as Private Final Consumption

Expenditure – PFCE) in its GDP was 59 percent in 2018. In comparison China’s domestic consumption share

to its GDP was 39 percent in the same year. High share of private consumption in the GDP not only

insulates India from the vagaries of global economy but it also implies that a sustainable high economic

growth in India directly translates into a sustained consumer demand for merchandise and services.

Similarly, as more people are expected to move beyond sustenance living with rising income levels

enabled favourably by demographic advantages, India’s household consumption expenditure will

continue to get altered in favour of discretionary purchases. Therefore, categories like apparel, jewellery,

processed foods and consumer electronics are poised to gain a share of this shift.

Exhibit 1.2: Total Private Final Consumption Expenditure (USD bn)

Country 2010 2011 2012 2013 2014 2015 2016 2017 2018

United States 10,186 10,641 11,007 11,317 11,823 12,284 12,748 13,312 13,999

China 2,157 2,732 3,145 3,547 3,948 4,271 4,416 4,704 5,263

Japan 3,292 3,587 3,638 3,040 2,832 2,483 2,745 2,697 2,763

Germany 1,872 2,036 1,937 2,036 2,075 1,777 1,825 1,912 2,058

United Kingdom 1,590 1,709 1,746 1,807 1,975 1,888 1,754 1,733 1,871

France 1,463 1,573 1,469 1,536 1,549 1,318 1,341 1,397 1,497


India 917 1,025 1,032 1,070 1,185 1,241 1,359 1,564 1,615

Italy 1,296 1,401 1,279 1,304 1,309 1,116 1,128 1,180 1,257

Brazil 1,330 1,577 1,514 1,526 1,546 1,153 1,154 1,330 1,220

Canada 922 1,003 1,024 1,033 1,008 900 894 956 994

Source: World Bank

1.3 Key Growth Drivers India’s medium- to long-term growth and its positive impact on private consumption will be determined

by inter-play of demographics and urbanization.

Demographics

Young Population

India has the lowest median age across larger / key developed and emerging countries of world, at 26

years and nearly 65 percent of the population was below the age of 35 years in FY 2012. By 2030, India’s

median age is expected to be under 30 years. India’s sizeable young population augurs well on two counts.

Firstly, it is contributed to declining dependence ratio (the ratio of the dependent population size to the

working-age population size).

These younger consumers are indulgent and are well travelled, brand conscious and well connected. They

have higher spending power and are open to experiment and explore. They expect high quality products

and service standards from consumer brands.

Exhibit 1.3: Median Age: Key Emerging & Developed Economies (2012)

Country Median Age (Years)

India 26

China 35

USA 37

Singapore 38

Russia 38

Korea 39

Canada 40

UK 40

Source: United Nations

The ratio of the number of elderly people and children to the working-age (aged 15-64 years) population

declined from 64 percent in FY 2000 to 52 percent in FY 2016 and is expected to further decrease to 49

percent in FY 2020. This trend not only supports rising income levels and but it also leads to higher share

of discretionary expenditure.

Substantial rise in the working age population (from 36 percent in FY 2000 to 48 percent in FY 2016) augurs

well for growth momentum of the Indian economy going forward, as it will lead to rising income levels.

Moreover, younger population is naturally pre-disposed to adopting new trends and exploration given

their education profile and their exposure to media and technology. This backdrop manifests as an

opportunity for domestic consumption in the form of branded behaviour, organization retail and product

designs.


Exhibit 1.4: Age Dependency Ratio

Source: World Bank

Growing Middle Class

The households with annual earnings between USD 5,000-10,000 has grown at a CAGR of 17 percent from

FY 2011-16 and is further projected to grow at a rate of 12 percent to reach 109 mn in FY 2020. The

households with annual earnings between USD 10,000-50,000 have also grown at a CAGR of 20 percent

over the last five years. Increase in number of households with annual earnings of USD 10,000 to USD

50,000 will lead to increase in indulgence spending by the group. This will lead to increase in expenditure

on apparel & accessories, luxury products, consumer durables and across other discretionary categories.

It is estimated that 23 percent of global middle class will be from India by FY 2030.

Exhibit 1.5: Household Annual Earning Details

Year Total House

Holds (in Mn.) HHs with Annual earning

US$ 5000 - 10,000 (Mn.) % of total

HHs HHs with Annual earning

US$ 10,000 –50,000 (Mn.) % share of total

HHs 2009 221 34 15.20% 10 4.70%

2012 230 55 23.80% 20 8.70%

2014 236 65 26.50% 24 10.20%

2015 239 74 30.90% 32 13.20%

2018 249 103 41.20% 73 29.30%

Source: EIU

Nuclearisation

The increase in household exceeds increase in population growth indicating increasing nuclearization

trend in India. According to census data 2011, 74 percent of urban households have five or less members

as compared to 65 percent in FY 2001. It is expected that fall in the average household size coupled with

rising disposable income will lead to a greater number of urban household units that are pre-disposed to

discretionary expenditure viz. jewellery, fashion, food services.

Exhibit 1.6: Indian Household Size and Growth Trend

Year Total No. of HHs

(millions)

Avg. HH Size Avg. Urban HH

size

Decadal growth

rate of HHs

Decadal growth

rate population

1981 119 5.5 5.4 19.23% 24.65%

1991 148 5.5 5.3 24.68% 23.79%

2001 187 5.3 5.1 26.28% 21.52%

2011 247 5.1 4.9 32.09% 17.64%

Source: India Budget

77% 79%75%

72%

64%

56%

50%

1960 1970 1980 1990 2000 2010 2018


Increasing Urbanisation

India is second largest urban community in the world after China, with an urban population of about 435

mn (FY 2016). Though, India fares lower than global average in terms of urban population’s share in total

population with only 33 percent of India’s population classified as urban compared to global average of

54 percent. But it is the pace of India’s urbanization that is a key trend to note for implication on India’s

economic growth. It is estimated that as of FY 2020, 35 percent of India’s population lives in urban centres

and contributes to 70–75 percent of India’s GDP.

The urbanization trend is expected to continue and by FY 2050, India will have half of total population will

stay in urban areas and will account for well over 80 percent of GDP. This urbanization pace is rapidly

creating a segment pool of Indians that display migrant tendencies and are without past baggage of habits.

They look forward to new products, services and solutions that help them to adopt to new rules of living.

India’s urbanization pace will envelope two key trends that will have implications on India’s domestic

consumption narrative.

Exhibit 1.7: Increasing Urbanisation

Source: Secondary Research

High Share of Urban Retail

The share of urbanization has increased from 28 percent in FY 2000 to 33 percent in FY 2015 and is

expected to reach 37 percent by FY 2025. The number of urban agglomerations with population of 1 mn

or more has increased from 35 in FY 2001 to 53 in FY 2011. Increasing urbanization has led to an increase

in the share of urban retail from 48 percent in FY 2012 to 50 percent in FY 2018. This will further increase

to approximately 55 percent by FY 2025.

Exhibit 1.8: Share of Urban and Rural in Overall Retail

Source: Wazir Analysis

28% 29%31%

33% 34%37%

2000 2005 2010 2015 2018 2025P

48% 50% 55%

52% 50% 45%

2012 2018 2025P

Urban Rural


Indian Retail Market

2


2 Indian Retail Market

India’s retail sector in FY 2020 is estimated to be USD 1002 bn. Food & groceries (F&G) segment forms the

major share of India’s merchandise retail expenditure. High share of F&G is an expected outcome of the

developing nature of the Indian economy. When economies progress, the share of F&G in their retail

consumption basket comes down and stabilizes at around 55 percent as is the case with mature

economies like UK. But such a decline is gradual and spans decades. Decline in share of F&G always favours

a rising share of discretionary retail and in the case of India; apparel & accessories is a primary

discretionary category in the Indian retailing basket. It is expected that in FY 2020 apparel & accessories

will contribute ~ 8 percent of India’s overall retail consumption.

Exhibit 2.1: Share of various Categories in Overall Indian Retail Basket

FY 2015 FY 2018 FY 2020E FY 2025P

Total Retail (USD bn) 559 806 1,002 1,805

Food & Grocery 67.5% 66.7% 65.8% 65.0%

Apparel & Accessories 8.3% 7.9% 7.7% 7.6%

Jewellery & Watches 7.3% 7.7% 8.1% 8.5%

Consumer Durables and Appliances 5.2% 5.9% 6.8% 7.3%

Home & Living 4.2% 4.3% 4.4% 4.4%

Pharmacy & Wellness 2.8% 2.9% 3.0% 3.1%

Footwear 1.2% 1.2% 1.2% 1.3%

Others 3.5% 3.4% 3.0% 2.8%


In India, contribution of organised retail is low (~12 percent in FY 2020) as compared to mature markets

like USA where penetration of organised retail is high. However, in relatively newer market like China the

online market has seen tremendous growth. In India the online channel is expected to grow at a CAGR of

26 percent between FY 2020 and FY 2025, as compared to 20 percent CAGR of organised brick & mortar

channel. India is expected to mimic the Chinese market going ahead, owing to low penetration of

organised retail.

Exhibit 2.2: Overall Retail’s Share across Traditional, Organised & Online Channels

FY 2015 FY 2018 FY 2020E FY 2025P

Total Retail (USD bn) 559 806 1,002 1,805

Traditional 88.1% 88.2% 83.6% 76.0%

Organised – Brick & Mortar 6.5% 9.5% 11.8% 16.0%

Online 0.8% 2.4% 4.6% 8.0%


The organised brick & mortar market in India was USD 118 bn in FY 2020 with categories such as jewellery

& watches (26 percent), food & grocery (23 percent) and apparel & accessories (20 percent) having the

highest contributions. These categories will continue to play a pivotal role in future as well as the

organized penetration within these categories is expected to rise the fastest.


Exhibit 2.3: Organised Brick & Mortar Retail in FY 2020E

Overall Retail Organised Brick &

Mortar Retail Key Retailers

Share (%)

Size (USD Bn)

Share (%)

Size (USD Bn)

Food & Grocery 65.8% 659.4 22.7% 26.9 Big Bazaar, DMart, Reliance Fresh, Spencer’s

Apparel & Accessories 7.7% 77.2 20.2% 23.8

Aditya Birla Fashion, Arvind Brands, Fabindia, Lifestyle, Raymond, Reliance Trends, Shoppers Stop, Westside

Jewellery & Watches 8.1% 81.2 26.3% 31.1 Tanishq, Kalyan, Malabar

Consumer Durables and Appliances

6.8% 68.1 6.4% 7.6 Vijay Sales, Croma, Reliance Digital

Home & Living 4.4% 44.1 3.7% 4.4 Home Centre, Home Stop

Pharmacy & Wellness 3.0% 30.1 2.6% 3.0 Apollo, MedPlus

Footwear 1.2% 12.0 2.8% 3.4 Bata India, Metro Shoes, Khadims

Others 3.0% 30.1 15.2% 18.0

Total 100% 1002.1 100% 118.2 Source: Wazir Analysis

Delhi & Mumbai clusters contribute about 9 percent of India’s total retail spending. The top 72 cities account for 38 percent of total retail consumer spending. The top 24 cities (Metro, Mini-Metro & Tier I) account for 29 percent of total retail spending which highlights the strength of the rest of India that has a share of 71 percent. Major expansion in terms of retail consumer spending is expected to come from India’s Tier II and Tier III cities as consumerism and appetite for organised retail and fashion is perceived to be on the rise in these markets. Retail players with a nationwide presence are expected to benefit significantly from this opportunity.

Exhibit 2.4: Overall Retail Spend Across Different City Types (USD bn)


50 56 50 50

352

90 100 90 90

631

Top 2 Cities Next 6 Cities Next 16 Cities Next 50 Cities Rest of India

FY 2015 FY 2020E


3

Indian Fashion Market


3 Indian Fashion Market

3.1 Overall Apparel Market The overall apparel segment size in FY 2020 was estimated to be USD 67 bn. The market is projected to

grow at ~10 percent and reach USD 107 bn by FY 2025. This growth is expected to be driven by factors

such as more purchasing power driving growth in primary discretionary spend, better access and

availability of products, acute brand consciousness, increasing urbanization and increasing digitization.

Exhibit 3.1: Indian Fashion Market (USD Bn)


The branded apparel sector will witness a growth of 13.4 percent CAGR over the next five years as against

the 10 percent CAGR projected for total apparel sector.

Exhibit 3.2: Penetration of Branded Apparel and Organized Apparel Retail as a % of Apparel Market


Lifestyle retailers, such as Aditya Birla Fashion, which is one of the leaders in Indian fashion industry,

have succeeded in emerging as category leaders with a presence across price segments of value,

premium, super-premium & luxury and a balanced portfolio across segments of men’s casual wear &

formal wear, women’s formal, casual & ethnic wear and kids wear. The company and its subsidiaries are

one of India’s largest pure-play fashion and lifestyle companies in terms of revenue with a strong bouquet

of leading fashion brands and retail formats across various segments and categories with pan-India

distribution. While Forever 21 is a global fast fashion brand with significant popularity primarily amongst

young girls, People is a young brand that seeks to address the fashion aspirations of Indian youth which

used to be an independent brand and it operates primarily as one of the private labels within the

4155

67

107

FY 2015 FY 2018 FY 2020E FY 2025P

25%38%

48% 56%

20% 25% 33% 40%

FY 2012 FY 2018 FY 2020E FY 2025P

Branded Apparel Organised Apparel

~10%


Pantaloons segment with the focus on young customers. Forever 21 is one of the most popular global fast

fashion brands amongst youth. The branded apparel sector is expected to witness increased penetration

from the current levels at 48 percent (FY 2020) to a substantial share of 56 percent by 2025. Aditya Birla

Fashion is well placed to take advantage of this opportunity as it has one of the largest distribution

networks of apparel businesses in the country.

3.2 Western Wear & Ethnic Wear Mix The apparel market in India is dominated by the western wear market (contribution ~69 percent in FY

2020) and it is expected to grow and contribute ~72 percent by FY 2025. Increasing number of working

women, a shift towards aspiration rather than need based buying is expected to drive the western wear

market in India.

The ethnic wear market is also expected to grow at ~7.8 percent and reach nearly USD 30 bn in FY 2025

from USD 20.6 bn in FY 2020. This ethnic wear segment is dominated by women wear as Indian women,

Indian and ethnic fashion is a mainstream need for daily wear use (in addition to strong occasion wear)

whereas for Men it currently restricted to occasion wear viz. weddings and festivals.

Exhibit 3.3: Breakup of Western Wear & Ethnic Wear


Western Wear

The western wear market in India is expected to grow at a CAGR of 10.9 percent between FY 2020 & FY

2025.

Exhibit 3.4: Overall Western Wear Market


In FY 2020, men’s western wear accounts for nearly 93 percent of the total men’s wear market of USD 28

bn, while in women western wear holds 32 percent of the total USD 25 bn women’s wear market. Within

65% 68% 69% 72%

35% 32% 31% 28%

FY 2015 FY 2018 FY 2020E FY 2025P

(Mar

ket

Shar

e)

Western Wear Ethnic Wear

27 37 46 77

FY 2015 FY 2018 FY 2020E FY 2025P


the kid’s segment, western wear accounts for 86 percent of the total USD 14 bn kid’s wear market. This

implies that men and kids western wear is the mainstay for western wear in India.

Exhibit 3.5: Western Wear Market Mix


Exhibit 3.6: Branded Vs Unbranded Mix Across Men’s, Women’s & Kids


T-shirts is considered as one of the most comfortable and dynamic categories of western wear. Due

to its soft knit fabric, fits, and the versatile use, it is highly acceptable to a wide segment of customers.

Due to comfort choices for fabric, designs, fits – categories such as shirts along with tops, trousers

and skirts are quite popular with youth in both urban as well as rural areas.

The Indian denim market is exhibiting continuous growth over the years. With new technologies,

trends and higher market reach, this sector has promising growth potential. Even in rural areas,

denim is becoming highly fashionable with most men and teenager girls opting denim wear over

traditional outfits. Denim is a high growth category as it is fashionable and comfortable, and

enhances style quotient. The value growth within the denim wear owes to increased demand for

stretch and light weight fabric, varying colours, styling and detailing. This trend is emerging across all

categories (men’s, women’s and kids).

58% 57% 56% 55%

17% 17% 17% 19%

26% 26% 26% 26%

FY 2015 FY 2018 FY 2020E FY 2025P

Mens Womens Kids

42%52% 57% 60%

38%48% 53% 55%

23%

42% 48% 51%

58%48% 43% 40%

62%52% 47% 45%

77%

58% 52% 49%

FY 2018 FY 2020E FY 2023P FY 2025P FY 2018 FY 2020E FY 2023P FY 2025P FY 2018 FY 2020E FY 2023P FY 2025P

Mens Womens Kids

Branded Unbranded


Exhibit 3.7: Key Western Wear Categories

Categories % share in total Western Wear Growth Rate

Trousers 19.1% 6.0%

Shirts 18.2% 5.7%

Innerwear 13.8% 10.0%

T-Shirts 10.8% 9.2%


Exhibit 3.8: Share of Casual & Formal in Men’s & Women’s Western Wear


In the illustrative below, we have captured the various business models for adopted by players for

expansion of western wear.

Exhibit 3.9: Comparison of Western Wear Retailing Formats in India

National Players Private Label Online First

Multi-Category

Retailer Brands

Category

Focused

Retailers

Distribution

Focus Brands

Private Label

Format LFS

Multi-Brand

LFS

Online First

Private

Label

Key Brands

Share of

Western

Wear in

total

Business

100% 100% 100% 50-60% 50-60% 100%

68%

32%

Men's Western Wear

Casual Formal

77%

23%

Women's Western Wear

Casual Formal

CAGR – 7%

CAGR – 11%

CAGR – 8%

CAGR – 12.5%


Breakup of

Sales by

Channel

Retail

Presence

Pan-India

presence with

significant

penetration across

Tier 2 and below

towns

Pan-India

presence

with

significant penetration

across Tier

2 and

below

towns

Pan-India

presence

with

significant

penetration

across Metro

& Tier 1

towns

Pan-India

presence

Pan-India

presence

Launched

offline

stores

Price

Positioning Mid to Premium

Mid to

Premium Mass to Mid Mass to Mid

Mid to

Premium Mass to Mid

Source: Wazir Analysis Legend:

Lifestyle national apparel players marked by Arvind Brands, Aditya Birla Fashion have ensured relevant

offering straddling price segments of premium, mid-premium, economy and mass. Through lifestyle

brands, Aditya Birla Fashion is a leading premium branded apparel player in India with three of the largest

apparel brands in India, Louis Philippe, Van Heusen and Peter England. The bouquet of lifestyle brands

with the Aditya Birla Fashion segment are amongst the top fashion apparel brands in the country.

The premium and super-premium segment enjoy 17% of the total apparel market; with the mid, economy

and mass segment taking an equitable contribution share of ~28% each. Hence, brands and retailers that

have developed strategies to cater to the entire spectrum augur well for growth. In the last few years,

Aditya Birla Fashion has expanded its presence in casual wear through brand extensions and gained a

strong position in the fast-growing value fashion segment through Pantaloons segment. International

brands portfolio of Aditya Birla Fashion comprises The Collective, India’s largest multi-brand retailer of

international brands and licensee businesses of select premium/luxury brands such as Ted Baker, Hackett,

Simon Carter, Polo Ralph Lauren, Fred Perry, Ralph Lauren and American Eagle.

This segment of fashion retailers leveraged design, product, and supply chain capabilities to consistently

invest in product differentiation, fashion quotient, fabric attributes to cater to distinct customer

segments and regional sensibilities

As international brands forayed into the country and increased focus on the geography, domestic lifestyle

brands leveraged their strong brand salience, high loyalty factor for category adjacencies and extension

across apparel as well as fashion categories of footwear, accessories.

Whilst Exclusive Brand Formats (EBO) emerged the core format for western wear fashion retail, in the

strive to translate the seamless retail experience as well be available to the relevant customer segments,

these brands adopted a multi-channel strategy with commensurate presence across all channels.

With the online pie within apparel expected to increase to nearly four times, albeit on a small base, over

the next four years, omni channel will comprise a significant share of this online apparel segment.


Organized brick & mortar will continue to enjoy the larger, sizable share at USD 32.5 bn, and three times

the scale of online retail.

Leading brick & mortar (B&M) retailers will lead this offline to online (O2O) drive compared to the online

horizontal and vertical players. These lifestyle retailers enjoy the advantage of a robust wide retail

network across the metro-centric as well as Tier 2 and 3 Indian cities.

3.2.1.1 Growth Drivers – Western Wear

Within the overall Indian apparel market, the western wear market has evolved significantly over the last

couple of years. The industry has witnessed rapid growth, triggered by increasing usage of western wear

by fashion conscious youths. The change in classification of consumer wardrobe has acted as a growth

driver for western wear in India. Western wear brands are growing across all segments of the Indian

market (premium, medium and value). International brands like Zara and H&M have seen rapid growth in

the western wear segment over last few years.

Certain factors which are contributing as key growth drivers of western wear in the country are

enumerated below:

Youth as a growth driver:

Youth (15 to 29 years old) who comprise 26 percent of the consuming population, are a key growth driver

of western wear in the country. Increasing disposable income, comfort, quality and brand consciousness

are major reasons behind increasing acceptance of western wear among this young population.

Influence of International Brands:

The entry of the international brands in the country is one of the biggest drivers of western wear. Their

entry has widened the perspective of consumers which in turn has resulted in higher acceptability of new

trends, styles in the market. With the increasing exposure to international fashion trends, the Indian

consumer today is aware of global trends and has given him more variety to choose from.

Online penetration of Western Wear:

Increased penetration of internet coupled with burgeoning smart phone market has resulted in the

growth of e-tailing in India. Due to ease of ordering online, paucity of time, flexible return policies and the

cash on delivery, the youth of India is more likely to purchase western wear online.

Increased rural spending:

Rural areas are developing at a rapid pace and so is their purchasing power. With the percolation of mass

media, people in rural areas are also aware of fashion trends. Their inclination towards western trends is

another reason for the growing demand of western wear in rural areas. The mid- value segment of

western wear, characterized by quality, value-for-money, and increasing styling quotient, is the preferred

choice of people from rural areas.

Casualization of Fashion:

The Indian casual wear market has evolved significantly over the years. Casual wear categories such as

denim, activewear, casual shirts, and fashionable skirts are outpacing the growth of formal wear in India.

This is reflective of the changing consumer trend and increasing usage of casual wear in offices as well as

home. This shift in consumer’s wardrobe towards casual wear has acted as a growth driver for the western

wear in India. The casualization of fashion is not unique to India and is driven by global phenomena.


Earlier, fashion was considered as a basic need to be purchased on the basis of the requirements.

Consequently, the typical consumer wardrobe was limited to basic categories like shirts, trousers,

sweaters, sarees and salwar kameez. The basic purchase parameters were limited to the basic functions

of the cloth, comfort and price. However, with the changing socio-cultural values, increased per capita

consumption, increasing exposure to international fashion trends and growing disposable income apparel

market is slowly becoming more occasions specific. Consequently, fashion basket has expanded to include

clothing like casual wear, sports/gym wear, jackets, jeans etc.

Rise of Athleisure:

Athleisure is another growing segment which is growing faster and there is an opportunity for brands to

enter this segment. The athleisure trend has really caught up over the last decade as there has been a

growing health and fitness related awareness among Indian consumer, especially the young consumers

who have taken up different fitness activities such as yoga, running, etc. This has resulted in an increased

spending by consumers on purchase of appropriate gear for such activities thus resulting in a significant

growth of the segment.

Lifestyle Brands Increase their Brand Assortment:

Lifestyle brands such as Arrow, Louis Philippe, Park Avenue, Raymond, Van Heusen are leveraging and

combining their popularity and brand presence to increase their assortment width by extending into

related categories such as accessories, footwear, inner wear as they move into tier II & III cities, where

customers have limited strong brand availability for these categories.

Rise of private label:

Branded penetration in the market has a skew towards mid to premium price points and there is very

limited offering in the value price points leading to pricing gaps in the market. These gaps in the market

have provided an opportunity for retailers to launch their private label in the value segment. Private label

led players such as Pantaloons, Westside, FBB, Max and V-Mart identified these gaps and have launched

products in the value fashion segment.

Private labels are win-win solution for both big retailers and value for money first time consumers as these

labels ensure that a certain minimum quality and image. Young population from middle class India is

becoming image conscious and is a significant contributor to the western wear market. The private labels

offers many benefits to retailers such as,

• ability to offer better pricing & value to their customers and drive higher margins owing to low

advertising & promotional costs,

• offer new merchandising options and thus create a differentiation in the market and also drive

customer loyalty,

• better control over processes since they have complete control over important functions such as

design, pricing, merchandising, stocking and distribution,

• higher bargaining power with suppliers


Exhibit 3.10: Private Label Western Wear


Over the years categories that were marked by limited focus from the supply perspective vis-à-vis retail

penetration and city expansion have lent significantly to the private label play. Overlaying these dynamics

were demand led levers of these categories such as relatively high price elasticity, low branded propensity.

Hence categories such as T-shirts, Casual Shirts and Ethnic wear propelled the growth of private label.

These categories tended to get focus from LFS (large format store) owing to the high share of private label

penetration within these formats. Further in the strive to complete the assortment offering from brands

that serve as traffic drivers, the LFS format came to enjoy high salience amongst consumers seeking

fashion.

As consumers in the next rung of Indian cities i.e. Tier 2 and Tier 3 cities become increasingly aspirational

and eager to engage with fashion, the LFS format got segmented further into lifestyle LFS and Value LFS

formats.

Formats such as Pantaloons, Max that offer high fashion quotient and enjoy the strong proposition of

fast fashion combined with value have strong tailwinds for growth as they a) cater to a wide category

offering cutting across the wardrobe of western wear, ethnic wear, casual wear and active wear b)

opportunity to balance price and fashion c) high share of private label d) cater to opportunity in cities

beyond metro-centric India for further growth.

Innerwear – Emerging Category within Western Wear:

No category better exemplifies this statement than the innerwear category which over the last couple of

decades has evolved from a category driven by ‘basic necessity’ to ‘lifestyle fashion category’. The

consumers in metros & tier I cities, who constitute an important market for this category, are increasingly

discerning and chooses products based on both styling and comfort. Consumers in non-metros are also


realizing the importance of better brands, hence this segment will see high growth and thus to attain pan

India presence a brand cannot ignore non metros.

This innerwear category exhibits highest penetration of branded play across retail categories, with brands

contributing nearly 45% share. This, however is marked by commoditized brands that achieved scale

through the wholesale channel. This has led to many national & international lifestyle brands such as Park

Avenue, Levi’s, United Colours of Benetton, Van Heusen, FCUK, Tommy Hilfiger entering this segment at

the premium end. Although the branded play in the innerwear category is very high, but the category is

highly commoditised.

The overall innerwear market in FY 2020 is expected to be USD 6.5 bn with women’s category contributing

nearly 2/3rd of the market. Men’s innerwear mid-premium to premium is dominated by Jockey, and there

is wide space for the demand to be fulfilled. The women’s mid-premium to premium segment is

fragmented in products & prices with no leadership. Women are looking for enhanced attributes such as

plus size, maternity bras & shapewear and formats & brands have not geared up to meet these customer

service demands. There is thus a place for vertical specialist.

Exhibit 3.11: Innerwear Market – FY 2020E


Currently, unorganized general trade segment dominates channel dynamics with 85 percent contribution

share. Owing to distribution focus by brands combined with display characteristics, the hosiery store

format will continue to be important in future as well. However, the online channel will drive growth as it

enables players to offer a greater width and depth in assortment as well as provide conducive buying

environment.

Ethnic Wear

Indian consumers no longer sport formal or casual attire for family functions and marriage ceremonies;

they prefer ethnic wear that reflects uniqueness of the Indian cultural ethos. While, the appeal of apparels

inspired by local/ regional designs, raw material, styles etc. in other markets is restricted to occasion wear

and does not extend to daily wear use. In the case of India ethnic fashion has succeeded to retain its

mainstream appeal. There is high degree of preference and contribution of ethnic wear in the women

47%

43%

35%

40%

16%

15%

2%

2%

Men's

Women's

Economy Mid Premium Super Premium

5.5% 11% 11.5% ~25%CAGR

11.5% 17.5% 20% ~20%CAGR


wear category and is a unique feature of Indian apparel market. Ethnic wear is the largest segment within

apparel industry, most of which lies within the women’s segment.

The category association revolves around comfort, contemporization as well as convenience. Whilst the

consumers in Tier I cities, compared to the metro-centric consumers, tended to be strongly governed by

traditional usage of the sari, the ethnic wear category, with products like salwar kameez, kurtis is

increasingly becoming the category sought as it offers both conformity and style. In the men’s segment,

nehru jackets, indo-western, sherwani and kurta sets are the various categories. In the overall segment,

women’s contribution to the overall ethnic wear pie is almost 9 times to that of men’s contribution.

Exhibit 3.12: Men’s Ethnic Wear & Women’s Ethnic Wear Mix


Women’s ethnic wear has transitioned from just being traditional wear to daily wear that combines

tradition with contemporary fashion. Ethnic wear categories have maintained salience across geographies

as well as across consumer segments of varying socio-economic strata, age groups and lifestyles, in spite

of the increasing penetration of western wear. The mix of key formats in the women’s ethnic wear

retailing is depicted in the chart below,

Exhibit 3.13: Split of Women’s Ethnic Market Across Formats


15%

20%

30%

35%

Men's Ethnic Wear Mix

NehruJackets

Indo Western Sherwani Kurta Sets

42%

51%

7%

Women's Ethnic Wear Mix

Saree Salwar Kameez / Kurti Blouse/petticoat

43%

18%

18%

21%National

Private Labels

Regional Brands

Online Focussed

CAGR - 51%

CAGR - 13%

CAGR - 25%

CAGR - 36%


Exhibit 3.14: Retailing Formats in Women’s Ethnic Wear

National

Brands

Regional

Brands

Large

Format

Stores

Online

Focussed

Formats



Exhibit 3.15: Comparison of Women’s Ethnic Wear Retailing in India

National Players Regional Player Private Label Online

Ethnic

Lifestyle &

Fashion

Retailers

Ethnic

Apparel led

Retail

Brands

Ethnic Apparel

led Retail

brands

In-Store

Ethnic

Apparel

brands of

Multi-

brand

Retailers

In-Store

Ethnic

Apparel

brands of

Multi-brand

LFS

Neighbourhoo

d stores/

Boutique

Shops

Key Brands

Breakup of

Sales by

Channel

Retail

Presence

Pan-India presence

with significant

penetration across Tier 2

ad below towns

Pan-India

presence

with

significant

penetration

across Tier 2

ad below

towns

Limited to a

particular

region. For

example, Ibadat

in North and

Kiara in South

Pan-Indian

presence

with higher penetration

in smaller

towns

Pan-India

presence

Limited to a

particular city

or cluster

Price

Positioning Mid to

Premium Mid to

Premium

Mid to Premium

Mass to

Mid Mass to Mid Mass to Mid

Source: Wazir Analysis Legend:

3.2.2.1 Growth Drivers – Ethnic Wear

Some of the key growth drivers for this category are,

Growing preference of occasion-specific clothing is making ethnic wear the most preferred choice for

social functions

Indian consumers no longer stick to formal or casual attire for family functions and marriage ceremonies;

they rather prefer ethnic wear that reflects uniqueness of the Indian cultural ethos. This trend has

extended to national days like the Independence Day, Republic Day, when ethnic wear takes a lead over

other categories. Innovative marketing and promotion (by brands) that links days of national importance

100%

40-50%

30-40%

5-10%

5-10%

70-80%

20-30% 100% 100% 100%


to display of patriotism through ethnic attire have contributed to the growing demand of ethnic wear for

such occasions. Many corporates, both Indian and international, have started encouraging ethnic dressing

during the occasions of Diwali, Holi.

The ethnic wear consumers are seeking association with brands:

The ethnic wear consumers have started inclining towards branded apparel owing to assurance of better

design, quality and fit. Growing disposable income, increasing aspiration levels among youths are driving

factors for branded ethnic wear market in India. Consequently, the ethnic wear market, in recent years,

has witnessed high growth trajectory of existing brands as well as entrance of many new brands. While

the Indian brands compete with international brands in western wear categories, they have an edge in

ethnic wear products. Proliferation of brands is more distinguishable in women’s ethnic wear as unlike

men, women use ethnic wear as formal wear as well. The growing acceptance of ethnic wear as work

wear is also driving demand for ethnic wear.

The deep-value conscious consumers prefer private labels for everyday use, wait for discounts and

promotion:

The value conscious consumers seek better deals while opting for ethnic wear fashion. They wait for

discounts, gift coupons and special offers to purchase their ethnic fashion. High price inflation in recent

years has increased the number of value conscious consumers. Private label offerings of retailers have

managed to tap the quality and price requirements of these consumers. Almost all the key retailers have

introduced their private labels that offer optimum combination of quality, trust and reliability and

consumers have started viewing these private labels as brands.

Focus of Large Format Stores on ethnic wear:

The ethnic wear category has witnessed significant focus from the large format lifestyle retailers players

through private label offerings owing to its prevalent adoption across geographies and age groups. Few

other categories have received similar high levels of focus from large format stores. In the strive to

complete the assortment offering along with national brands in addition to private labels, the platform,

over time, has evolved to form an essential pillar for the growth of ethnic wear.

Consumers are increasingly adopting alternate retail channels for ethnic wear as well:

The ethnic wear consumers are no longer restricting themselves to traditional retail channels. Indian

consumers have started looking beyond mere products; they increasingly seek quality shopping

experiences combined with best pricing, wide range of product portfolio, multiple brands under one roof.

Consequently, ethnic wear retailing has evolved from traditional family-based stores of cities to large

format stores, E-tailing, home shopping. Consumers have also started accepting ethnic wear-only online

retailers. In fact, some of these ethnic wear-only retailers cater to the Indian diaspora across Asia, Europe

and the US.

Mix and Match:

Indian women have uniquely blended ethnic fashion with western wear and mixes both to create own

styles. For instance, denim wear with kurtas. They also patronize global designs / colours / prints on Indian

silhouettes for contemporary global prints on Kurtas.


Heterogeneous wardrobe:

Relevant segment of Indian women have a diverse wardrobe that comprises a mix of ethnic fashion

(sarees, kurtas, leggings) and western fashion (T-shirts, denims, dresses etc.). This wardrobe is not only

diverse but it is used interchangeably for similar use for instance – dress for work can both comprise.

Movement from RTS/Tailoring to Ready to Wear options:

But it is a challenge for global fashion brands to respond to this opportunity in Indian ethnic fashion as

the overall size of Indian ethnic fashion is neither big enough not broad enough (appeal outside of India)

for the global supply chain of western wear to align itself on raw materials, sourcing and merchandising

approach for ethnic wear. Raw materials and sourcing for Indian ethnic fashion is a mix of artisanal skills

& machines and handlooms & power looms. This poses challenge for the scale of global fashion brands.

Also, the global design response that interprets trends into products for global brands requires

interpretation of Indian ethos, fabric, colours into products.

As ethnic wear to evolving into engagement with organized formats with consumers driven primarily by

Ready-to-Stitch, it is also witnessing what is termed as the circle of fashion. Consumers seek offering that

is exclusive, customized and unique. This has given rise the trend of accessible designer wear. Designer

wear is blending into avatars of becoming more available and hence mainstay. This is true, especially for

Ethnic wear owing to the celebration of the Indian ethos. This is being propelled by both demand and

supply levers, giving popular and upcoming designers to leverage this platform. Concepts such as Jaypore

that celebrate Indian fashion, fabrics, weaves, designers across are a key example of leveraging this

trend. The premium ceremonial ethnic wear is catered to by key designer boutiques such as JJ Valaya,

Shantanu & Nikhil, Sabyasachi. Jaypore and Shantanu & Nikhil operate in the premium and luxury part in

the ethnic wear.

3.3 Consumer Segments

Exhibit 3.16: Men’s Apparel Market


27.7

45.3

Total Market Size

(USD

Bn

) 14.3

6.8

1.9 0.93.8

21.6

13.2

3.1 1.75.7

Formal Casual Innerwear Activewear Others

FY 2020E FY 2025P

10.3% CAGR 8.6% 14.2% 10.3% 13.6% 8.4%


Exhibit 3.17: Women’s Apparel Market


Men’s Wear

The men’s apparel is estimated to have contributed close to 42 percent (USD 28 bn) to the overall apparel

market in FY 2020 and is expected to grow at ~10.3 percent and reach USD 45 bn by FY 2025.

Exhibit 3.18: Overall Men’s Wear


In men’s western wear category, the market is expected to grow at 10.36 percent from USD 25.9 bn in FY

2020 to USD 42.4 bn by FY 2025. Shirts and trousers are the two biggest components contributing nearly

50 percent of the overall category. Denim and activewear are the fastest growing categories, growing at

near 15 percent between FY 2020 and FY 2025.

24.9

39.0

Total Market Size

(USD

Bn

) 16.9

4.41.0 0.9 1.7

24.4

8.5

1.8 1.9 2.4

Ethnic Innerwear Formal Casual Others

FY 2020E FY 2025P

17 23

28

45

FY 2015 FY 2018 FY 2020E FY 2025P

~10.5%

9.4% CAGR 7.6% 14.1% 12.5% 16.1% 7.1%


Exhibit 3.19: Men’s Western Wear (including Innerwear) – FY 2020 & FY 2025 (USD bn & %)


Men’s Innerwear Men’s innerwear is a relatively small part of overall western wear category, contributing 8 percent to the

overall in FY 2020 (USD 1.9 bn) and is expected to grow at 10.3 percent to contribute nearly USD 3.1 bn in

FY 2025. In the men’s innerwear segment, mass segment players enjoy lower brand loyalty as compared

to premium players, however no brand witnesses as much loyalty from consumers as Jockey. Consumers

in tier I and II cities are aspirational about brands and will pay a premium for it. Basic range for briefs and

vests is mostly sold in packs of 2s and 3s by the premium and super premium segment, while the more

expensive fashion range is not.

Exhibit 3.20: Men’s Inner wear (USD bn)


Men’s Ethnic Wear

For men ethnic wear it currently restricted to occasion wear viz. weddings and festivals and is represented

by Nehru Jackets, Indo Western, Sherwani and Kurta Sets. Kurta accounts for major share of the men’s

ethnic wear followed by Sherwani and items such as Dhoti.

7.3, 28%

6.0, 23%

1.0, 4%

1.6, 6%

2.1, 8%

4.7, 18%

0.9, 3%

0.4, 2% 1.9, 8%

FY 2020E

11.0, 26%

9.3, 22%

1.3, 3%2.3, 6%

3.9, 9%

9.3, 22%

1.7, 4%

0.5, 1% 3.1, 7%

FY 2025P

Shirts

Trousers

Suits/Coats/safari suits

Winterwear

T-Shirts

Denim

Activewear

Others

Innerwear

1.9

3.1

FY 2020E FY 2025P

~10%


Exhibit 3.21: Men’s Ethnic wear (USD bn)


Women’s Wear

Women’s apparel market contributes 37 percent to the overall apparel market and it is expected to grow

from USD 25 bn in FY 2020 to touch USD 39 bn by FY 2025. The growth in women’s wear market will be

driven owing to an increase in the number of working women, a shift towards aspiration rather than need

based buying and design innovations that appeal to Indian sensibilities.

Exhibit 3.22: Overall Women’s Wear


The overall women’s western wear category in FY 2020 is estimated to be around USD 8 bn and is expected

to grow at a CAGR of 13 percent over the next 5-year period to reach USD 14.7 bn by FY 2025. In the

women’s western wear category, innerwear has the biggest share with share of more than 55 percent in

FY 2020 and is expected to increase its share to 58 percent by FY 2025. Categories like tops, denim,

sleepwear and winterwear contributed 8-9 percent each in the overall women’s western wear segment

in FY 2020 and these segments are expected to continue their strong growth trajectory over the next 5-

year period as well.

1.2 1.5

1.8

2.9

FY 2015 FY 2018 FY 2020E FY 2025P

~9%

1621

25

39

FY 2015 FY 2018 FY 2020E FY 2025P

~9%


Exhibit 3.23: Women’s Western Wear (including Innerwear) – FY 2020 & FY 2025 (USD bn & %)


Women’s Innerwear

Women’s innerwear category is currently estimated to be around USD 4.4 bn and is expected to grow at

a CAGR of 14 percent and nearly double by FY 2025 (USD 8.5 bn).

Exhibit 3.24: Women’s Inner wear (USD bn)


Although this women’s innerwear market is complicated as compared to men’s with multiple width

(types) and depth (sizes, colours, styles) combinations but increase in the width & depth of online offerings

is expected to drive this segment. This segment is also expected to be driven by changing consumers

preference from ‘Foundation’ to ‘function plus fashion plus comfort’. Rising popularity of the fashion

range is also expected to drive the growth of this segment.

Women’s Ethnic Wear

The women’s ethnic wear market contributes nearly 70 percent of the overall women’s apparel category.

The market is expected to grow at a CAGR of 7.6 percent and grow from USD 16.8 bn in FY 2020 to USD

0.6 , 8%

0.3 , 4%

0.6 , 8%

0.1 , 2%

0.7 , 8%

0.3 , 3%

0.7 , 9%

0.3 , 3%

4.4 , 55%

FY 2020E

1.1 , 8%0.6 , 4%

1.3 , 9%

0.2 , 1%

1.0 , 7%

0.5 , 3%

1.0 , 7%

0.4 , 3%

8.5 , 58%

FY 2025PTops/shirts

T-Shirts

Denim

Formal Jackets

Sleepwear

Trousers/skirts

Winterwear

Others

Innerwear

4.4

8.5

FY 2020E FY 2025P

~14%


24.3 bn in FY 2025. The salwar kameez/kurti is the biggest segment within women’s ethnic wear category

contributing nearly 50 percent of the market.

The disproportionate size of ethnic wear in women’s wear is an outcome of the distinct positioning of

ethnic wear for women compared to that of men in India. For Indian women, ethnic fashion is a

mainstream need for daily wear use (in addition to strong occasion wear) whereas for men it currently

restricted to occasion wear.

Exhibit 3.25: Women’s Ethnic Wear Breakup


Kids Wear Breakup

The kids wear market in India is currently about USD 14 bn (FY 2020) and is expected to grow at a CAGR

of 10.5 percent and grow to nearly USD 23 bn by FY 2025. Uniforms, t-shirts/shirts and bottom wear are

the three biggest categories contributing at 37 percent, 24 percent and 18 percent of the overall kids wear

market as on FY 2020. Kids denims is the showing the fastest growth rate of 13 percent among all the

other product categories (FY 2020 - FY 2025).

Exhibit 3.26: Kid’s Wear Breakup


5.5 6.5 7.1 9.05.4

7.0 8.6

13.9

0.91.1

1.2

1.5

FY 2015 FY 2018 FY 2020E FY 2025P

Saree Salwar Kameez /Kurti Blouse/petticoat

1.8 2.6 3.35.8

0.20.3

0.3

0.6

1.52.1

2.5

4.1

0.81.0

1.2

1.8

3.0

4.1

5.1

8.4

1.0

1.3

1.5

2.1

FY 2015 FY 2018 FY 2020 FY 2025

Tee/Shirts Denim Bottomwear Winterwear Uniforms Others


3.4 Format & Channel

Exhibit 3.27: Channel Mix


Traditional Retail Formats

While, the traditional retail expected to continue its domination in the apparel segment, but its

contribution is expected to come down from 67 percent in FY 2020 to 59 percent in FY 2025. This segment

is expected to grow the slowest between FY 2020 and FY 2025 (~7.2 percent) and reach USD 63 bn in FY

2025 from USD 45 bn in FY 2020.

Brick & Mortar Organised Formats

Organised retail trade has been growing steadily since the 1990’s and has steadily expanded its footprint

across the country. It started with manufacturers opening their own outlets and soon pure play retailers

realizing the potential got into this space. In the next phase international players got into the market, but

the reach of organised retail was still limited to metros and tier I cities. In the period after 2010, more

speciality formats entered the market and finally 2017 onwards, brands and retailers have been driving

to serve the customer in a seamless way across multiple channels, by adopting the omnichannel concept.

72% 70% 67% 59%

26% 27% 29%30%

2% 3% 4% 11%

FY 2015 FY 2018 FY 2020E FY 2025P

(Mar

ket

Shar

e)

Traditional Retail Organized B&M Online


Exhibit 3.28: Evolution of Brick & Mortar Fashion Retail


Apparel & footwear have been the harbinger of organized retail in India. Brands such as Aditya Birla,

Arvind, Bata, Raymond and Vimal introduced the concept of exclusive brand retailing (EBO) to India and

until 1995, organized retail was synonymous with the EBO format. The organised brick & mortar was led

by and continues to be dominated by the lifestyle retail brands backed by large retail houses of India.

These lifestyle retail brands have succeeded in building a country wide footprint, and among these brands

Aditya Birla Fashion has one of the widest distribution network of apparel stores across the country.

Shoppers Stop started the first large format store (LFS) multi-brand outlet in mid-nineties triggering the

phase and expansion of multi-brand lifestyle retailing. A few years hence, Westside and Lifestyle also

started their private label led large format stores. This phase also witnessed,

▪ retail expansion by key brands: Arrow, Van Heusen, Raymond, Louis Philippe

▪ entry and footprint increase by international popular fashion brands: UCB, Levi’s, Nike, Adidas

The decade of ’00 to’10 was marked by the evolution of fashion into sharp segments of,

• category specificity across formal, casual, ethnic, activewear, footwear

• emergence of fashion brands and retailers, and hence private labels

• multi-format play across EBO centric, LFS category specialist, LFS multi-brand formats.

The above phase was owing to increased focus and competitive intensity of the India fashion space with

the,

• entry of large conglomerates into fashion retail with multi-category, multi-format play,


• fashion brands increasing focus on supply chain and category offering as well as

• leading international brands foraying into India

• development of brand aggregator models as Arvind Lifestyle, Genesis Lifestyle

All the above factors combined to propel the current decade (’11 to ’20) wherein organized retail is the key enabler for growth of branded play within fashion. Today, organized apparel retail in India reflects a journey of more than two decades that has allowed it to build product design, sourcing, merchandising and retailing capabilities.

Leading retailers developed and invested in key functional elements accredited to retailing: design institutionalization, assortment planning, retail foray, city penetration, skill training

The country has seen the entry of foreign brands in the country in last few years and more brands will continue to enter in the few years and more brands will continue to enter in the country with 100% FDI in single brand retail.

Indian lifestyle brands, however, leverage deep understanding of consumer trends, uniqueness of India fashion market, enjoy consumer loyalty in addition to understanding of the geographical and regional diversity of the country.

Domestic lifestyle apparel brands, Fabindia, Louis Philippe, Van Heusen, Raymond, Arrow, W, BIBA, AND, Zara and Large Format Stores like Shoppers Stop, Lifestyle, Pantaloons will continue to adopt aggressive penetration and foray into Tier I and II Indian cities in order to tap the potential. Pantaloons which is a leading large format fashion retailer as well as a leading player in the value fashion segment, is engaged in retailing of apparel and accessories.

Organised brick & mortar segment will see a steady growth rate of ~11.7 percent between FY 2015 and FY 2025 and grow to about USD 32.6 bn by FY 2025.

Online Formats

The share of online is currently ~4.5 percent of the overall apparel market. The share of online in the

overall apparel market is expected to increase in future but it won’t affect the share of brick & mortar

retail and both the channels will continue to co-exist.

The online market has grown manifold in recent years and witnessed the emergence of strong vertical

players with widespread geographical reach. However, the large retail houses will also be able to translate

the legacy and trust enjoyed by these brands when they move toward offline to online models.


Exhibit 3.29: Evolution of Online Retailing in India


With respect to the online space within the fashion and lifestyle retailers broadly fall under 5 key segments

based on their merchandize offering and business model,

• Horizontal Marketplace: player who having a wide spectrum of offering and multi-brand offering

• Vertical Aggregators: they have a relatively narrower category focus, e.g., apparel and lifestyle

and offer multiple brands within their segments

• Western Private Label Led: These players offer lesser categories, but along with multi-brand

offering they also have a focus on private labels

• Ethnic Fashion Led: they are ethnic only focussed players. While they have a sizeable category

offering in the form of apparel and lifestyle, their products are principally based around ethnic

taste

• Online Extensions of B&M Retailers: many B&M centric players have forayed in to online retailing.

This trend is observed with retailers like Shoppers Stop as well as apparel and lifestyle brands like

W, BIBA, Fabindia


Exhibit 3.30: Business Models for fashion e-commerce


The online apparel retail market in FY 2020 was USD 2.9 bn. Men (50 percent) and women (44 percent)

segment contribute to bulk of online apparel market with kids contributing only ~6 percent of the market.

High share of men’s segment in online apparel market is driven by high penetration of casual wear

categories.

Myntra is the leader in online apparel market driven by wide collection of brands across price points

catering to wider set of consumers. High market share of Myntra in online apparel market is driven by

wide collection of brands across price segments; increasing focus on private label to bridge the price gap

offering in the market.

Online apparel market is dominated by western wear contributing to ~60 percent of share of the market.

High share of western wear in online apparel market is driven by high penetration of international and

casual wear brands on online platform. Also, online fashion portals have focused on private label in the

casual wear category further driving the penetration of casual wear category. These online fashion portals

started with catering largely to the younger age audience, but it is increasingly finding accelerated and is

expected to be adopted by consumer cohorts across all age groups.

Online western wear market is dominated by men which is similar to the trend witnessed in overall fashion

category.


Exhibit 3.31: Online Apparel Market Mix – Overall & Player Wise FY 2020


Men contribute 60 percent of share in online western wear market compared to 50 percent of share in

overall online apparel market.

Exhibit 3.32: Online Western Wear Mix – Overall & Player Wise FY 2020


Omnichannel Play

In order to provide seamless experience to customers across channels, coupled with the need of enhanced

digital customer behaviour, brick & mortar retailers and ecommerce players are adopting omni-channel

retailing approach to provide,

• enhanced customer experience

• personalized marketing & promotion

• higher brand loyalty

60% 59% 61% 70%60%

39%

7% 7% 8% 9%

2%

33% 34% 31% 30% 31%

59%

Overall Industry Am Fp Aj My LR

Western Wear Innerwear Ethnic WearHorizontal Marketplace Vertical Aggregators

60% 67% 70%50% 52%

70%

35% 28% 27%

40% 41%25%

5% 5% 3% 10% 7% 5%

Overall Industry Am Fp Aj My LR

Mens Womens KidsHorizontal Marketplace Vertical Aggregators


3.5 COVID-19’s Impact The COVID 19 epidemic has had a major impact on overall business and consumer sentiment in the

country. With the strict lockdown enforced by the government, the retail industry has been greatly

impacted and has seen a massive dip in sales in the short term.

The consumer sentiment is cautious at present and it is expected that the consumers are expected to tone

down their discretionary spends as compared to essentials, which is likely to impact the apparel category

in the short term and thus a skewed demand towards impulse & casual wear. Consumers are expected to

engage more with the basket of casual categories such as t-shirts, tops, casual shirts and active wear.

While the consumers are eager to get back to the retail environment, in the new scenario we expect that

they will seek more value in everything they purchase. Value attributes tend to extend beyond just price

for the consumer, such as consumer would now expect that clothes and that serve dual purposes of work

from home and occasional trips to office. Consumers will actively seek enhanced value attributes in formal

wear and work wear. Also, one of the points that many reports have been highlighting is that while there

is decrease in footfall, there has been increase in probability of purchase and increase in ticket size.

The sudden lockdown not only impacted their sales but also disrupted the supply chain at the backend.

However, as India comes out of this strong lockdown there are already initiatives by retailers to restore

the supply chain. In light of the supply and demand constrictions, brands and retailers are working

together to put in place an integrated demand supply planning framework. Additionally, brands are

expected to experiment with newer strategies to reach out to customers such as mobile commerce as

well as direct to consumer model to boost their business. Given that the customers are expected to prefer

online channel in the short term, this event could also fasten the adoption of omnichannel strategy among

many brick & mortar retailers. On the other end, the retailers are also gearing up to grab the post

lockdown opportunity when the market opens up to a new normal by working towards making the store

environment safe & hygiene for customers. In the post COVID scenario, organized retailers will emerge

stronger as safety and hence trust emerges a strong currency. The ability of leading organized players to

lead and define standard policies, procedures and process for store re-opening and continued operations

will be a significant advantage. We believe given the initiatives taken by retailer and stakeholders in the

supply chain as well as customer’s willingness to come return to the retail environment, we believe that

this situation is a blip and the expect the normalcy to return back to over time.

In the post COVID era, where the customers are expected to seek more convenience and experience, the

rate of adoption of omnichannel strategy among the lifestyle fashion players is expected to increase.

Brands will, over time, adopt the hyperlocal model to optimise last mile fulfilment metrics of cost, time,

inventory turns and logistics. In the initial phases of adoption, fulfilment is expected to happen from

marketplaces, online as well as offline. Whilst the immediate access and availability issue will be solved

through horizontal marketplaces, legacy lifestyle brands will capitalize on trust, salience, exclusive brand

(EBO) store format, wide penetrated network over the mid and long term. Consumers strongly attribute

trust, experience and service with organized formats, especially exclusive brand formats and large

format. These formats have not ceded preference even in post COVID times as consumers are eager to

re-engage with these formats.


Another strategy that is expected to see increased adoption is social commerce, wherein brands engage

directly with consumers to sell their products. Some of the benefits that this approach presents is it allows

brands to directly engage with the customers which can further be leveraged for category launch, curated

assortment, SKU variants, promotions and trials. It also aids in shopper analytics and targeted marketing

to customer. In the COVID scenario especially during the lockdown where the traditional channels were

completely disrupted, this channel helped brands connect faster with their customers. Select brands such

as Bata, Fossil, Wildcraft are already leveraging this model and directly engaging with customers.


Competition Benchmarking

4


4 Competition Benchmarking

4.1 General Information Exhibit 4.1: Year of Launch of Key Apparel Brands in India

# Company Brand Year of Launch

1 Future Lifestyle Central 2004

Brand Factory 2006

2 Arvind Lifestyle

Arrow 1993

USPA 2011

CK 2008

GAP 2015

3 Raymond (Branded Apparel)

Colourplus 1993

Park Avenue 1986

Parx 2007

4 Indian Terrain Fashions Indian Terrain 2000

5 Monte Carlo Fashions Limited Monte Carlo 1984

6 Credo Brands Mufti 1998

7 Fabindia Overseas Fabindia 1976

8 Biba Apparels BIBA 2004

9 House of Anita Dongre AND 1999

Global Desi 2007

10 TCNS Clothing W 2002

Aurelia 2011

11 Benetton India United Colours of Benetton 1982

12 Sports & Leisure Apparel Lacoste 1993

13 Kewal Kiran Clothing Limited Kewal Kiran 1989

14 Page Industries Jockey 1996

Speedo 2011

15 Inditex Trent Retail India Pvt. Ltd. Zara India 2010

16 Trent Ltd. Westside 1998

17 V-Mart Retail V-Mart 2002

19 Shoppers Stop Shoppers Stop 1991

20 Reliance Trends Reliance Trends 2008

Source: Annual Reports, Secondary Research, Wazir Analysis


4.2 Store Related Information Exhibit 4.2: Total Number of Stores (EBOs) - Public Companies

# Company Brand As of March, 2020

1 Future Lifestyle Central 40

Brand Factory 107

2 Arvind Lifestyle

Arrow 290

USPA 368

CK 67

GAP 15

3 Raymond (Branded Apparel)

The Raymond Shop 872

Made to Measure 75

Branded EBOs 403

4 Indian Terrain Fashions Indian Terrain 161

5 Monte Carlo Fashions Limited Monte Carlo 230

6 Kewal Kiran Clothing Limited

K-Lounge 203

Killer

126 Lawman Pg3

Integriti

Lawman Pg3+ Integriti

7 Page Industries Jockey 620

Speedo 42

8 V-Mart V-Mart 218

9 Shoppers Stop Shoppers Stop 90

10 Trent Westside 147

11 Reliance Trends Reliance Trends 557

Source: Annual Reports, Secondary Research

Exhibit 4.3: Total Number of Stores (EBOs) – Private Companies

# Company Brand As of March, 2020

1 Credo Brands Mufti 300

2 Fabindia Overseas Fabindia 298

3 Biba Apparels BIBA 278

4 House of Anita Dongre Global Desi 142

5 TCNS Clothing W 304

6 Benetton India United Colors of Benetton 106

7 Inditex Trent Retail Zara India 21

8 H&M India H&M 40

Source: Company Website, Secondary Research


Exhibit 4.4: Store Distribution by city type for Western Wear Brands (as of March 2020)

Source: Wazir Advisors

17%

4%

9%

17%

23%

9%

27%

43%

30%

18%

10%

24%

32%

18%

4%

28%

23%

13%

20%

47%

29%

40%

22%

17%

24%

20%

21%

29%

24%

27%

22%

16%

7%

10%

10%

28%

24%

30%

31%

20%

31%

21%

25%

29%

32%

20%

19%

20%

21%

25%

19%

13%

24%

32%

18%

8%

25%

22%

11%

23%

3%

4%

Levis

Kewal Kiran Brands

Jockey

Indian Terrain

Spykar

Pepe

GAP

ZARA

H&M

Jack & Jones

ABFRL

Arvind Brands

Raymond

Top 2 Cities Top 6 cities Tier 1 Tier 2 Tier 3

40

21

15

237

263

161

620

529

393

1350

1523

94

2253


Exhibit 4.5: Store Distribution by City Type for Large Format Stores (as of May 2020)


20%

17%

14%

24%

20%

15%

10%

10%

1%

34%

31%

25%

29%

38%

23%

33%

23%

2%

19%

22%

21%

27%

23%

18%

16%

26%

20%

26%

27%

20%

13%

18%

25%

28%

30%

19%

1%

3%

20%

7%

3%

19%

13%

11%

58%

Shoppers Stop

Lifestyle

Pantaloons

FBB

Central

Westside

Max

Reliance Trends

V-Mart


77

61

40

147

264

557

218

90

357


Exhibit 4.6: Store Distribution by City Type for Ethnic Wear Brands (Private Companies) (as of March 2020)


19%

19%

28%

25%

23%

24%

26%

27%

18%

19%

17%

12%

25%

27%

18%

20%

15%

12%

11%

16%

W

BIBA

Global Desi

Fab India


142

278

304

292


4.3 Revenue Benchmarking Exhibit 4.7: Revenue of Players – Public Companies (INR Cr)

# Name of Player

Revenue

(INR Cr)

FY 12

Revenue

(INR Cr)

FY 15

Revenue

(INR Cr)

FY 17

Revenue

(INR Cr)

FY 19

Growth

(FY 12-FY

17)

Growth

(FY 17-FY

19)

1 Future Lifestyle

Fashions NA 3,134 3,877 5,728 - 21.5%

2 Arvind Lifestyle

(Arvind Fashion Ltd) 1,314 2,361 2,898 4,644 17.10% 26.6%

3 Aditya Birla Fashion

Retail Limited - - - 8,118 - -

4 Raymond Limited

(Branded Apparel) 759 1,011 1,270 1,706 10.80% 15.9%

5 Indian Terrain

Fashions Limited 141 290 403 422 23.40% 2.4%

6 Monte Carlo Fashions

Limited 372 583 584 656 9.40% 6.0%

7 Page Industries

Limited 683 1,543 2,132 2,852 25.60% 15.7%

8 V-Mart Retail Limited 282 722 1,005 1,434 28.90% 19.5%

9 Shoppers Stop Limited 1,948 3,042 3,678 3,481 13.60% -2.7%

10 Trent Limited

(Westside) 819 1,358 1,738 2,532 16.20% 20.7%

11 Reliance Trends 489 1,940 3,714 - 50.00% -

Source: Annual Reports, Secondary Research, Wazir Analysis

Exhibit 4.8: Revenue of Players – Private Companies (INR Cr)

# Name of Player

Revenue

(INR Cr)

FY 12

Revenue

(INR Cr)

FY 15

Revenue

(INR Cr)

FY 17

Revenue

(INR Cr)

FY 19

Growth

(FY 12-FY

17)

Growth

(FY 17-FY

19)

1

Credo Brands

Marketing Pvt Ltd

(Mufti)

235 329 370 395 9.50% 3.2%

2 Fabindia Overseas

Private Limited 485 757 1,038 1,121 16.40% 3.9%

3 BIBA Apparels Private

Limited 173 378 457 - 21.40% -

4 House of Anita Dongre

(AND & Global Desi) 119 324 441 - 30.0% -

5 TCNS Clothing (W &

Aurelia) 127 329 713 - 41.3% -

6 Benetton India Private

Ltd (UCB) 430 719 699 - 10.2% -

7

Sports and Leisure

Apparel Ltd (Lacoste) 47 96 101 - 16.7% -

8 Zara India 260 721 1,023 - 31.5% -

Source: MCA Reports, Secondary Research, Wazir Analysis


Pakhi Saxena Retail & CPG: Business Director & Head

+91 9971666404 [email protected]

Wazir Advisors Pvt. Ltd 3rd Floor, Building #115, Sector 44, Gurgaon - 122 002 Haryana, India Tel: +91 124 4590 300

Registered & Corporate Office: Wazir Advisors Private Limited, 3rd Floor, Building 115, Sector-44, Institutional Area, Gurgaon-122002, National Capital Region, India: +91 124 4590300 I F: +91 1244590333 I www.wazir.in,

Corporate Identity Number: U67190HR2008PTC080898

Date: 15/06/2020 To The Board of Directors Aditya Birla Fashion and Retail Limited Piramal Agastya Corporate Park Building ‘A’, 4th and 5th Floor, Unit No. 401, 403, 501, 502 L.B.S. Road, Kurla, Mumbai - 400 070 Dear Ma’am/Sir Re: Proposed rights issue of equity shares (“Equity Shares”) by Aditya Birla Fashion and Retail Limited (“Company”, and such issuance, the “Issue”). With reference to the captioned matter, we Wazir Advisors Private Limited, 3rd Floor, Building 115, Sector 40, Gurugram-122002, Haryana,hereby accord our no-objection and our consent to our name, our report India Fashion Market dated 14/06/2020 (the “Report”) and its contents , in whole or in part or any extract thereof, being included in any documents issued by the Company in connection with the Issue, including the Letter of Offer and Abridged Letter of Offer intended to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) and the stock exchanges where the Equity Shares of the Company are listed (the “Stock Exchanges”), and in any publicity or other materials, presentations or press releases or media releases prepared by the Company or its advisers (“Issue Documents”). This letter does not impose any obligation on the Company or the Lead Managers or advisers to include in any Issue Documents all or any part of the information with respect to which consent for disclosure is being granted pursuant to this letter. We further confirm that we have, wherever required, obtained requisite consent that may be required from any governmental authority or other person in relation to any information used by us in our report India Fashion Market published on 14/06/2020. We also authorize you to deliver this letter of consent to SEBI, the stock exchanges or any other governmental or statutory or regulatory authority as may be required. As per our records and information submitted by the Company, we confirm that we are not related to the Company, its directors or promoters, or the Lead Manager(s) as stated in Annexure 1, in any manner. Further, we authorize you to include the Report as a “Material Contract and Document for Inspection” in the Issue Documents, as required and make the Report available for inspection in accordance with applicable law and have no objection with you sharing the report with any regulatory or judicial authority as required by law or regulation in relation to the offer or pursuant to a request/order passed by any authority. We further confirm that the above information in relation to us is true, correct, adequate and not misleading in any material respect and without omission of any matter that is likely to mislead, and adequate to enable investors to make a well informed decision.



We further confirm that as on the date of this letter, neither the Company, its directors nor its promoters are related parties of Wazir Advisors Private Limited. We represent that our execution, delivery and performance of this consent have been duly authorised by all necessary actions (corporate or otherwise). We agree to keep the information regarding the Issue strictly confidential. This letter can be relied on by you, the lead manager appointed in relation to the Issue and the legal advisor to the Issue. We authorise you to deliver this letter of consent to SEBI, the Stock Exchange(s) and any other regulatory or statutory authority as required. Yours faithfully, For and on behalf of Wazir Advisors Private Limited Authorised Signatory Name: Harminder Sahni, Managing Director, Wazir Advisors Private Limited Date: June 13, 2020 Cc: ICICI Securities Limited ICICI Centre H.T. Parekh Marg, Churchgate Mumbai - 400 020. SBI Capital Markets Limited 202, Maker Tower ‘E’, Cuffe Parade, Mumbai 400 005 Maharashtra, India Axis Capital Limited 1st Floor, Axis House, C-2 Wadia International Centre, P. B. Marg, Worli, Mumbai 400 025 BNP Paribas BNP Paribas House, 1-North Avenue Maker Maxity, Bandra Kurla Complex Bandra (E), Mumbai 400 051 CLSA India Private Limited 8/F Dalamal House



Nariman Point Mumbai 400 021 Khaitan & Co One Indiabulls Centre 10th and 13th Floor, Tower 1 841, Senapati Bapat Marg Mumbai 400 013 Cyril Amarchand Mangaldas 5th Floor, Peninsula Chambers Peninsula Corporate Park Ganpatrao Kadam Marg Lower Parel Mumbai 400 013 Encl: Annexure 1

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