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Market Analysis: Ethnic Wear in India

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The Indian ethnic wear segment is metamorphosing at a breakneck. With increased acceptance and immense innovations by brands in this segment, this market in India is growing by the day. Experts from Technopak Advisors, Ashish Dhir, Associate Vice President, Textile and Apparel Strategy and Shivanshi Bhatia, Associate Consultant, Textiles and Apparel, map the market and the key growth drivers.

The Indian apparel industry is the second largest contributor in the retail industry after food and grocery. The promising growth rate of 8.1 percent makes the Indian fashion industry prominent in the retail sector. Indian domestic apparel market is estimated to be US $54 billion in 2018 and will grow at a CAGR of 8.1 percent in the next decade and is projected to grow to US $118 billion by 2028.

India has the world’s largest youth population, which is becoming fashion conscious owing to mass media and social media penetration. This has opened unprecedented retail market opportunities. With a GDP growth rate of 7.2 percent, India has an edge over developed markets of the US and EU, which are growing at ~2 percent and ~2.5 percent respectively. The developing nations will drive future apparel consumption globally and India is one of the major consuming nations. Favourable trade policies, increased penetration of organized retail, among other factors, contribute in making the Indian fashion industry attractive for investors.

The total share of the Indian ethnic wear market is approximately US $17.18 billion (Rs 112,893 crores) and stands for approximately 32 percent of the total Indian apparel market and is expected to grow in the future. The ethnic wear segment includes men’s ethnic wear, women’s ethnic wear, boys wear and girls wear.

The womenswear segment is the single biggest category in Indian ethnic wear with a share of 81 percent in the total category. The increasing consumer demand of Indian wear segment can be estimated with the increasing scale of brands like , , , , etc. These brands focus on making the shopping experience easy and are coming up with ideas like fusion wear, which is both Indian and easy to carry. Online presence of big ethnic wear brands and acceptance of ethnic wear among youth have also given rise to this sector. Men’s and women’s ethnic wear together contributes around 90 percent to the sector. The increasing acceptability of people towards Indian wear has given rise to the segment.

The kids’ ethnic wear market was approximately US $1.6 billion in 2018 and is expected to grow at a CAGR of approximately 8 percent by 2028. Brands like BIBA and offer a huge variety in kids’ ethnic wear. For Diwali season 2019, promoted its ethnic wear merchandise through a video that was uploaded on their YouTube channel and was also promoted through television. Brands are catering to this segment and see huge growth potential in the sector.

GROWTH DRIVERS:
• INCREASING RENTING BASED MODULE:

Increasing acceptance of ethnic wear has opened new doors for brands like , , , and many more. These brands off er ethnic wear by renowned designers and make them affordable for the normal public.
In recent years, there has been an increase in companies offering the rental service especially in ethnic wear. As the Indian ethnic wear market is expected to grow in the coming years the brands offering rental service are also expected to increase their business.

• RISING E-COMMERCE IS ADDING VALUE TO THE SEGMENT
E-commerce attracted initial sales because of the highly discounted prices, and now consumers prefer buying online because of a number of factors like ease of shopping, availability of a wide variety of options and ease of return. In the past few years, the e-commerce market has seen a boost in terms of sales and acceptance. With the increasing overall sales, the Indian ethnic wear sector has also seen growth, making e-commerce a valuable sector adding value to ethnic wear segment in terms of sales.

• ETHNIC WEAR IS BECOMING PART OF EVERYDAY WEAR
In recent years, ethnic wear is not only occasional wear; it has become part of our everyday wear as well, especially in womenswear. Traditionally, ethnic wear was difficult to carry on a daily basis and with Indians turning towards western wear, the acceptance of ethnic wear declined. Brands came up with the concept of fusion wear and everyday ethnic wear like kurta, pants and leggings, which is also easy to wear.

• ACCEPTANCE OF ETHNIC WEAR AS FORMAL WEAR:
With an upcoming concept of comfortable clothing at the workplace, many companies have started to accept ethnic wear like kurta and Indian dresses as part of Formal wear. Also, in recent years there has been an increase in the number of working women which has impacted the acceptance of ethnic wear at workplaces around the country.

• THE INCLINATION OF YOUTH TOWARDS ETHNIC WEAR:
India has the lowest median age across key developed and emerging countries of the world. 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. There has been a decline in age dependency (the ratio of the dependent population size to the working-age population size). This has led to an increase in the family overall income which in return has led to a rise in disposable income thus increasing the overall buying capacity of Indians.

Increased buying capacity of youth has led to an overall increase in their spending on apparel, thus increasing their spending on ethnic wear. The inclination of Indian youth has increased towards ethnic wear, as it has become comfortable and more fashionable.