Clothing is the most significant fashion essential. People don’t shy away from splurging on trendy wears. Children generally do what they see, taking cue from their dapper dads and yummy mummies. Indulgent parents happily invest in their children’s wardrobes as they are of belief that dressing up nicely adds to their child’s confidence. Branded kidswear market in India was almost non-existent until 20 years ago.
The scenario began to gradually change thereon. Fashion consumption has picked up really well during the last decade or so. Today, cluster of leading International and homebred brands are available in India for the “little fashionistas”. Rising demand for branded apparel is presenting a massive business opportunity for kidswear brands, suppliers and retailers.
Market Comes of Age
The kidswear category caters to children aged between 0 and 14 years. Until 1990s, fashion was yet to become a way of life in India. Not many parents were inclined to dress up their young ones fashionably, while others regarded branded clothing as an extravagance. In 1994, Gini & Jony came into being, ushering an era of development of branded kidswear market. Its huge success allured several others to venture into this space. Over the years, consumers have become more receptive towards fashion and brands. Discerning consumers look out for quality and latest products and shop more frequently now.
Faridabad-based, 40-year old manufacturer and exporter, Akriti Apparels forayed into retail arena by launching own brand ‘Beebay’. The brand’s existing pan India retail network has 26 EBOs and some MBOS. Talking about the key growth drivers of kidswear market in India, Avanish Jain, director, Beebay, says, “The growth of Indian kidswear market can be attributed to factors such as upsurge in demand for branded apparel, enhanced purchasing power, urbanisation and lifestyle changes, and greater consumer awareness.
Nowadays, the gap between purely Indian and International fashion is being bridged. Moreover, increased Internet usage has also led to greater understanding of global fashion and importance of brands.” Eyeing metros and tier I cities, Beebay has plans to add one or two franchised stores every month for the next two years.
Operational since 2010, Bengaluru’s Toonz Retail is a complete kids’ solution retail store catering to age group 0-12 years. Among all other products, Toonz also retails in-house ready-to-wear labels, WowMom and SuperYoung. “With increasing upper middle class population where both parents are earning and having just one or two kids at the most, the ability and inclination towards providing best to their kids has gone up tremendously in last 10 years, which is propelling the growth in kids’ segment,” informs Sharad Venkta, managing director and CEO, Toonz Retail. Presently, Toonz has 45 stores across 33 cities in India. It is targeting tier-II and -III cities to reach 100 outlets via franchise model by the end of March, 2015. It also mulls to sell its in-house brands to other retailers and also create shop-in-shops (SIS).
Advent of retail formats such as chains, EBOs, MBOs and SIS dealing in children’s clothing and related accessories has also contributed to the phenomenon. According to ASSOCHAM, the current size of kidswear market in India is approximately `38,000 crore. Growing at a CAGR of about 20 per cent, it is likely to reach `80,000 crore by 2015.
Market Character
Of total apparel trade in India, kidswear consists of nearly 25 per cent. The market can be categorised, according to age – infants (0-6 months), toddlers (7 months to 2 years), kids (3-8 years), and tweens (9-14 years). It can also be segmented on gender basis – boyswear, girlswear, and unisex; and as clothing categories for specific needs: casual, formal, sportswear, nightwear, school uniforms, etc. Furthermore, according to Technopak Advisors, on the basis of price points, the children’s market is classified into super premium (`2,500+), premium (`1,000-`2,500), mid (`500-`1,000), economy (`250-`500) and lower (up to `250). The firm also estimates that mid segment, which has 31 per cent of the market share, may touch 58 per cent by 2020.
The market is largely unorganised. Branded segment is gradually increasing its share which at present is of about 12 per cent only. However, the stage set by brands like Gini & Jony and Lilliput is already headed towards a much bigger retail play. International brands such as Mothercare, Destination Maternity, GAP Kids, Levis Sykes Jr, UCB Kids, Tommy Hilfiger, Lee Kids, Pollo Kids, Walt Disney, Barbie and Milou, and domestic brands namely Mom & Me, Beebay, Kapkids, Ruff Kids, Indian Clothing League, Deal Jeans, Toonz Retail, Kidology, Finger Chips and many more are in the fray. Apart from Western wear, Biba, Dennis Morton, DotnDitto, Campana, Medhira, Babyhug, Kilkari, SAPS, etc, are filling in ethnic wear space.
Business Nitty Gritty
Chandigarh-based Indian Clothing League makes and sells kidswear under two brands, 612 Ivy League focusses on pre-teen children, while Baby League is a brand for infants and toddlers. The company’s managing director, Manu Indrayan explains the nitty gritty of kidswear manufacturing. According to him, it needs higher number of SKUs especially sizes as compared to men and women apparel. Also, kidswear requires more involved product design and merchandising. Balance between price points and quality should be maintained too. “Boys, girls and infants are individual categories; therefore, a right mix of core and fashion is required in each range.
Moreover, customers expect a single brand to service all needs, thereby resulting in high width of product range. Due to higher width of range and more SKUs, high working capital is required at manufacturing level. Viability can be achieved through strict control on raw material costs and ensuring an efficient process cycle. Branded kidswear is still nascent with a high growth potential. Judicial choice of channel mix will determine the viability at retail level,” opines Indrayan. Launched in 2009, 621 Ivy League is distributed in over 250 stores across 79 cities through retail chains, MBOs and network of exclusive and franchisee outlets.
Chandigarh-based multi-brand retailer Kapsons, in addition to Kapsons family stores, has set up Kapkids stores focussed entirely on children. Discussing key success ingredients of kidswear retailing, Darpan Kapoor, vice chairman, Kapsons Group, shares, “The right brands, right styles and the right price – these three attributes go hand-in-hand. It is also important to understand that every parent has a different look in his mind for his child.
As a multi-brand retailer, we are in a better position to offer the best complete look that a parent would want his kid to support. We offer more options and more variety that helps us earn credibility. Parents might experiment with their own clothes, but for their children, they prefer to buy from retailers they can trust.” Presently, Kapkids has 11 exclusive outlets and another 3 as part of Kapsons family stores. The brand plans to reach a total of 24 stores by 2015 end. It is seeking entry into Gujarat and Northeast by the way of franchising.
Business Innovations
Fashion is ever evolving; hence, constant innovation in designs, products and merchandising is crucial to the apparel business. As per analysts, the market for girls wear is much greater than boys wear around the globe. Boy’s clothing is more basic. In contrast, girls wear is complemented by a vast range of coordinated accessories such as hair bands and clips, stockings, jewellery and bags. Manufacturers are capitalising on the popularity of cartoon characters among children by forging character licensing partnerships.
Lilliput has launched an apparel collection about animated characters such as Oggy & the Cockroaches and Ninja Hattori. Benetton, Reebok, and Pantaloon have introduced kidswear themed on characters such as Pucca, Power Rangers, and Ben10. Eteenz has tied up with Popeye, Spiderman and Doraemon. Green Gold Store sells Chhota Bheem and Friends-themed clothing.
Even as garments made from blended fabrics textured and denim trousers rule the roost, organic clothing is also capturing the fancy of environment-conscious consumers. Agra headquartered Taj Needlecraft has partnered with European kidswear chain Gron Stockholm in 2012. It runs three Gron stores in Delhi and NCR, which house products of all organic clothing brands such as Geggamoja, Mijn and Bamboo Baby. It plans to launch 15 stores within the next one year and further 25 stores in the next year.
Established in 2012, Noida-based Nino Bambino retails organic kids’ apparel and accessories via direct retail, channel partner, online and offline channels. It is mulling to open own branded outlets.
These days, children’s influence in family purchase decisions, and in particular to child-related products, is far more than ever before. Thus, retailers are constantly improving on merchandising to woo these little ‘big’ shoppers. Prive Luxury has established Les Petits, country’s first multi-brand super luxury kids’ apparel and furniture outlet, in Delhi. It also runs Cherubs boutique that houses premium luxury fashion brands in the capital. Swati Saraf, CEO, Prive Luxury, shares, “At Les Petits and Cherubs, the store detailing is apt for young children, encouraging them to spend time in the store along with their mothers deciding what they want. Each brand has a dedicated corner to simplify the joys of shopping for the little ones.”
Noteworthy Trends
The boom in kidswear is as well being propelled by the following key trends:
- Luxury segment: Country’s market hosts a number of renowned luxury brands such as Burberry, Armani Junior, Timberland, Kenneth Cole, Gucci Kids, Stella Mc Cartney and Roberto Cavalli. Well-heeled Indians are increasingly spending on luxury clothing for their childern. Events such as India Kids Fashion Week and LKFS also act as catalyst to fashion forwardness among children. “The luxury clothing segment for men and women is growing at a fast pace. It is also growing in kids’ category. Today’s modern day parents love to pamper themselves as well as their kids.
The global trend of giving kids the best of fashion has hit the Indian consciousness too. Parents are increasingly looking out for newer trends for their children just as they would for themselves,” informs Saraf. The company’s Les Petits store showcases brands such as Baby Dior, Fendi Kids, Miss Blumarine, and Simonetta. It’s Cherubs boutique stocks brands like Harmont & Blaine Junior, Il Gufo, Kissy Kissy, Monnalisa and more.
- E-tailing wave: The apparel sector has found favour in e-tailing as experts believe that in five years, the kidswear online market will be of worth `1,500 crore. Kidswear and related accessories are sold via online shopping sites such as Snapdeal, Jabong, Fashion & You and Myntra; only kids’ products online retailers such as FirstCry, Babyoye, Hopscotch, AllSchoolStuff and M2C; and brands’ own web stores.
Mumbai-based apparel manufacturer Finger Chips makes sports-themed clothes for boys only. Ajay Kathuria, company’s managing director, shares, “Our brand’s categories comprise FCSports, FCBikers, FCCargo, FCGarrage, FCWork and functional club wear range FCClub. We are also launching daily wear ‘FCBasic’, which also comprises our core range.” The brand is well exploiting the e-commerce channel. “Our brand is distributed through over 560 MBOs pan India. We have tied-up with Jabong and talks are on with Flipkart and Myntra. We also plan to start our own online store.”
Beebay too is riding high on the e-commerce wave. The brand sells its merchandise on own e-commerce site ‘beebayonline’ and other leading online shopping sites in India and Internationally. “Online sales contribute almost 30 per cent to our total revenue,” discloses Jain and adds, “We are experiencing an exponential growth in e-tailing segment. It has complemented quite well with our physical stores and for the last two months our online sales have surpassed our offline sales. We at Beebay envision e-commerce to be a very important area of growth for us, along with other sales channels.” The company is also experimenting with online virtual shopping concept in its physical stores.
- Leveraging social media: Before the dawn of digital era, marketing and promotions were done via traditional mass media such as print, radio and television. Internet has entirely revolutionised the way marketing is done today. Internet and social media have helped brands and consumers to connect at a more personal level. To increase their outreach, brands are utilising a sensible mix of all types of media to enhance brand recall and generate brand’s long term value.
Banking on M&A deals
All these years, branded kidswear category has shown enough profit making potential to attract M&A investments. Gini & Jony, Lilliput and Catmoss were the first movers to take PE route. These M&A eventually fell out. Trade pundits suggest that this happened because of harried expansion, poor planning and unrealistic business expectations.
In recent years, e-tailers FirstCry and Babyoye have walked this road. Off late, Hopscotch.com and Indian Clothing League (ICL) have also joined the bandwagon.
ICL’s Indrayan informs, “We have raised `50 crore as first round of funding from ASK Pravi to scale up our manufacturing and retail operations.
The investment will help our brands build a presence throughout the country and develop a strong connect with our customers.” Briefing on how they considered investing in a kidswear business, Jayanta Banerjee, managing partner, ASK Pravi Capital Advisors, says, “We envisage the branded kidswear segment to grow strongly owing to factors such as modern lifestyles, disposable incomes, brand consciousness and media exposure. Large retail formats and e-commerce have rendered additional distribution channels.
Of course, all this is linked to the overall consumption economy and consumer confidence.” As regards to the perception about ‘kidswear being difficult’, Banerjee clarifies, “Each business has its own risks and critical success factors. Kidswear business also needs right parameters in terms of the choice of performance and value parameters. Still, the company’s management ability to capitalise on opportunities and address business challenges is crucial.”
The segment has also seen a couple of VC and merger deals in recent two years. Bengaluru-based online kidswear brand Unamia obtained seed capital for its e-commerce start up in 2012. Babyoye.com affected merger with its rival Hoopos.com in 2013 to turn into a larger company and secure greater market share.
Competition Scenario
Indian fashion industry has become hyper-competitive. There is intense competition among brands just like retailers. Kapoor at Kapsons (Kapkids) feels that for kidswear, consumers prefer style and quality over brand. He quips, “A big name can attract the customers but only product quality can retain them. This is true for buyers across metros and mini metros. As style preferences vary, we have to be very careful about the product mix as it is unique for every city.”
Toonz’s Venkta is of the view that country’s kidswear market is hugely under served. He observes, “Lot of cities and towns in India do not have a proper kids-centric store. We are concentrated in tier-II and -III cities where markets are open and availability is restricted. We sense they offer a vast potential for our concept of varied kids’ product categories including apparel.”
Drawing parallels between local and foreign brands, Indrayan of ICL concludes that home grown brands have an advantage over their international peers as they understand local colour preferences, design sensibilities, and pricing better. The luxury kidswear segment in the country India is still developing, notes Saraf of Prive Luxury. But she expects it to grow at a good pace in the near future.
No doubt, modern retail is catching up but mom-and-pop shops still dominate the market. Also, non-branded and counterfeited products pose a threat to both brands’ and retailers’ margins.
Synergising for Growth
In a challenging environment, complementary brands may join forces or rival retailers can team up for mutual benefit. Such synergies can be achieved through co-branding, co-marketing and by offering proprietary services. Retailers can also work together via SIS model.
US-headquartred Destination Maternity began its journey in Indian market by opening shops within Mahindra Retail’s Mom & Me stores. Later on, Mahindra established Destination Maternity’s exclusive stores as a master franchisee. Arvind Lifestyle Brands has partnered with department store chain Shoppers Stop for the launch of a 600 sq.ft. SIS outlet of British kidswear brand Next in Mumbai. UK’s Mothercare also has SIS format at Shoppers Stop.
Delhi-based Kidology, one of the first brands to launch designer wear for kids in India, currently has seven stores through flagship, franchise model and SIS format. It has also allied with Kimaya Fashions, India’s leading fashion store, across different cities.
What’s in Store?
Experts say that in India, kidswear is the fastest growing segment of all apparel. With fashion finding its way beyond metro-centric urban centres to smaller cities and towns, growing fashion consumption and increased expenditure on clothing and related accessories, opportunities abound for kidswear industry today. Notably, 31 per cent of India’s population is less than 14 years and more than 2 crore plus births every year. These numbers speak for themselves and show how big is the Indian kidswear market with an enormous potential yet to be tapped. So, we can expect greater times ahead for brands and retailers operating in this segment!
