According to a report by Boston Consulting Group (BCG) and Confederation of Indian Industry (CII), apparel constitutes six percent of India’s consumption expenditure today. One of the fastest growing categories, it is expected to grow 4 times over the next decade, with an estimated consumption expenditure of US$ 225 billion in 2020. This growth will be driven not only by favourable demographics, but also socio–cultural and attitudinal shifts that are taking place in India.
Not surprisingly, spend on apparel increases with rising income levels. Apparel constitutes 10 per cent of the consumption basket of affluent consumers, compared to five percent for small town Next Billion category of people. In absolute terms, affluent consumers spend 2.5x more than small town Next Billion on apparel.
We spoke to over 3,500 consumers across segments to understand their buying preferences and how they shop for apparel. We identified five key themes which are likely to have far reaching implications for apparel companies and retailers. Some of these are in line with conventional wisdom, while others indicate potential shifts in buying behaviour.
• Apparel shopping is driven by occasion, rather than functional need
• Fabric quality and brand image are key criteria in driving consumer choice
• Large opportunity for private / store labels
• Stores need to tailor value proposition to focus on specific consumer segments
Apparel Shopping is Driven by Occasion, Rather than Functional Need
Consumers, across segments, shop for apparel most during occasions such as festivals, weddings and birthdays. In fact, over eight out of ten consumers purchase apparel during festivals. Function driven apparel purchases are less frequent. These are closely linked to income levels, with higher income segments more likely to shop for apparel during a sale and for specifically replacing a worn garment.
We also found that the tendency to buy apparel due to emotional reasons or changing fashion seasons varies significantly across consumer segments. The Professional Affluent, Urban Aspirers and small town Next Billion segments have greater propensity to buy apparel due to these reasons.
Fabric Quality and Brand Image are Key Criteria in Driving Consumer Choice
Across consumer segments, for both men and women, quality of fabric and brand are amongst the most important criteria in apparel selection. Other factors such as durability and fit are also considered, with varying levels of importance. Professional affluent, aspirers and small town Next Billion segments show similar preferences and consider fit as an important criterion in selection.
In contrast, Traditional Affluent and Large Town Next Billion segments give greater importance to durability. Not surprisingly, lower income segments are more price conscious. These consumers rated comfort to be relatively less important in the purchase decision. These preferences are corroborated by the higher penetration of more expensive, branded, ready–made apparel in higher income consumer segments.
Large Opportunity for Private / Store Labels
It is interesting to note that while brand is an important criterion in apparel selection, many consumers do not shop for apparel with a pre decided brand in mind. Six out of ten women and five out of ten men stated that they are undecided on brand when they visit stores to purchase apparel. This behaviour is similar across different types of apparel — workwear, casualwear, Indian and Western wear.
Also, consumer awareness of private labels is comparable to most other apparel brands. Unlike other consumption categories, consumers also actively consider private label brands in their purchase set. This behaviour is different from other categories, where private labels are not considered as comparable alternatives.
Therefore, apparel is a level playing field — there is an opportunity for private labels / store brands to capture the consumer’s mindspace and increase share of wallet in the apparel spend basket.
Stores Need to Tailor Value Proposition to Focus on Specific Consumer Segments
We found that majority of consumers shop for apparel every two or three months. It is interesting to note that consumers tend to visit all store formats with similar frequency while shopping for apparel. This behaviour is largely consistent across segments, with minor differences.
Key Imperatives in the Indian Apparel Market
The apparel market, expected to quadruple in size over the next decade, offers both opportunities and challenges for apparel companies and retailers.
Key questions apparel companies need to address are:
• How can companies create more occasions for consumers to shop for apparel?
• What will it take to build / strengthen brand loyalty?
• How can stores drive consumers to purchase their private labels? How can apparel brands manage this challenge?
• Which specific consumer segments should retailers target at their stores? What approach is required to better orient the offering and shopping experience around these consumers?
(Source: A report by Boston Consulting Group (BCG) and Confederation of Indian Industry (CII) in India Retail Report 2013)