25 November 2023, Mumbai

The Men's Underwear Index (MUI), a barometer of the country's economic health, is charting a downward trajectory.

Page Industries, the proprietor of the Jockey and Speedo brands in India, witnessed a revenue and volume decline of 8.4% and 8.8%, respectively, in the September quarter.

Trade dynamics

To manage excess inventory, many brands are resorting to unsustainable business practices.

The market, valued at $6.3 billion and accounting for 9% of India's overall fashion retail segment, remains largely disorganized and fragmented.

The demand slowdown is attributed to a high base, particularly in the athleisure wear segment.

Additional points

Consumers have curtailed spending on non-essential apparel items since Diwali last year, owing to factors such as inflation, rising interest rates, job losses in sectors like startups and IT, and an overall economic deceleration.

Sluggish consumer demand and bloated inventories continue to be a great concern.

The market is also facing stiff competition from digital-first brands like XYXX, Damensch Almo, Bummer, and Freecultr, which entice consumers with attractive pricing.

Five key insights :

1. MUI down: The Men's Underwear Index (MUI) is declining, reflecting economic weakness.

2. Page Industries' decline: Page Industries, a major underwear brand, saw revenue and volume drop.

3. Unsustainable practices: Brands are resorting to unsustainable practices to manage excess inventory.

4. Fragmented market: The men's underwear market is largely unorganized and fragmented.

5. Demand slowdown: Demand is slowing down, particularly in athleisure wear.

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21 November 2023, Mumbai

The Indian textile industry, once struggling due to the pandemic and global economic downturn, has experienced a remarkable resurgence, reflected in the upward trend in stock market performance. 

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Major industry players have demonstrated strong financial results, attracting significant investor interest. This positive sentiment stems from several favorable factors:

1. FTA-Driven Duty Benefits: India's forthcoming free trade agreements (FTAs) are poised to grant duty concessions to local textile exports, enhancing their competitiveness in global markets.
2. Reduced Cotton Prices: The recent decline in domestic cotton prices has led to a substantial reduction in overall production costs, boosting profitability for textile manufacturers.
3. Surging Demand for Home Textiles: The growing prevalence of hybrid work arrangements and increased emphasis on home improvement have fueled a surge in demand for home textiles, particularly cotton sheets and terry towels. This has driven up orders from US importers.
4. Global Retailers' Inventory Optimization: Global retailers' efforts to streamline inventory levels have created opportunities for larger order placements from Indian textile exporters.
5. Investor Optimism and Stock Market Surge: Anticipating favorable market conditions in the second half of the year, Indian textile exporters are optimistic about the future. This optimism is reflected in the recent rise of textile-related stocks, with companies like Raymond, Vardhman Textiles, Arvind, Trident, Gokaldas Exports, Welspun, KPR Mills, and Himatsingka Seide witnessing gains of 4 to 12 percent. Additionally, Fidelity Investments India's acquisition of a 1 percent stake in KPR Mill in August 2023 further underscores investor confidence in the sector's growth prospects.

These converging factors have propelled the Indian textile industry towards continued growth and prosperity, demonstrating its resilience, adaptability, and significant potential to contribute to India's economic resurgence.

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17 November 2023, Mumbai

An iconic retailer of 'British Quality Goods'

Marks & Spencer (M&S), a British multinational retailer founded in 1884, has been on a growth trajectory in India since its foray in 2008. 

The company plans to continue opening new stores and ramp up existing ones in India, with a focus on strengthening the home segment. 

M&S India has been on a growth spurt with operating revenue rising 53% and net profit growing rapidly. 

Lingerie and winterwear have always been the best-sellers for M&S globally and account for a large part of its India revenue as well. 

The company is positioned in the mid-to-premium segment and is the second-largest international operation for M&S outside the UK.

Expanding Presence in India

M&S India currently has over 100 stores in the country and plans to continue opening new stores and ramping up existing ones. 

This expansion is taking place at a time when M&S is closing numerous outlets in its home market of the UK. India is a key growth market for M&S, and the company is committed to expanding its presence here.

Strengthening the Home Segment

One of the key focuses of M&S India's expansion plans is strengthening the home segment. This includes expanding the range of kitchen, bathroom, bedding, and home accessories products. 

Lingerie body care and cosmetics products are also selling well in India, and M&S India is expanding its offerings in these categories as well.

Driving Growth through Online Sales

In addition to expanding its physical store presence, M&S India is also driving growth through online sales. The company sells its products through various online channels, including its website and third-party marketplaces. 

Online sales account for a quarter of M&S India's total sales, and this proportion is expected to grow in the future.

Positioning in the Mid-to-Premium Segment

M&S India is positioned in the mid-to-premium segment of the Indian retail market. This positioning is consistent with M&S's global brand positioning and has been well-received by Indian consumers.

Second-Largest International Operation for M&S Outside the UK

M&S India is the second-largest international operation for M&S outside of the UK. This is a testament to the company's success in the Indian market.

Overall, Marks & Spencer India is a success story in retail. The company has a strong track record of growth and is well-positioned for continued success in the future.

Interesting Points:

• M&S India has been on a growth spurt, with operating revenue rising 53% in 2022 and net profit growing rapidly.
• Lingerie and winterwear are the best-sellers for M&S India.
• M&S India has around 6,000 styles in its versatile product portfolio.
• The company has a strong focus on brand recall and customer awareness.
• M&S India is positioned in the mid-to-premium segment of the Indian retail market.

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24 November 2023, Mumbai

The Value Fashion Market in Small-Town India

The value fashion market in small-town India is booming, fueled by rising incomes and consumer expectations. Zudio, the flagship brand of Trent, is a prime example of this trend, facing stiff competition from other prominent retailers.

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Zudio's Rapid Growth and Strategy

NZudio has experienced rapid growth since its launch in FY'17, expanding to over 350 standalone stores and generating revenues of Rs 3,540 crore. 

The brand's franchise-owned company-operated model has been instrumental in reducing inventory costs, attracting the attention of national retailers like Yousta (Reliance Retail), Style-Up (ABFRL), and InTune (Shoppers Stop) who have adopted a similar strategy.

Market Analysts' Forecast

Market analysts from Motilal Oswal Financial Services predict a steady 6 percent CAGR growth for the value fashion segment from 2020 to 2026. 

However, with rising disposable incomes and favorable demographic trends, the growth rate is expected to surge to a remarkable 23 percent CAGR.

Unorganized Dominance and Regional Retailers' Lag

Despite the segment's growth potential, unorganized retailers still hold a dominant position, accounting for nearly 57 percent of the market. 

Regional retailers have yet to make a significant mark in this domain.

5 key insights :

1. Booming Market: Rising incomes and consumer expectations drive growth.
2. Zudio's Success: Rapid growth, 350+ stores, Rs 3,540 crore revenue.
3. Franchise Model: Inventory cost reduction, national retailer adoption.
4. Market Forecast: 6% CAGR growth, potential for 23% CAGR.
5. Unorganized Dominance: Regional retailers' presence limited.

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20 November 2023, Mumbai

WHY India

A Global Textile Powerhouse with a Complete Manufacturing Value Chain

India stands as a prominent force in the global textile industry, boasting a comprehensive manufacturing value chain encompassing every stage from fiber production to apparel manufacturing.

This backward integration grants India a unique advantage in the global marketplace.

The country's commitment to attracting foreign investment is evident in its liberal investment policies, which allow 100% FDI through the automatic route for the textile and apparel sector.

A Heritage of Textile Expertise

India's textile heritage is deeply rooted in its rich history and diverse cultural tapestry.

The country produces a wide spectrum of textiles, from intricate handloom creations and handicrafts to capital-intensive mill products. 

This legacy of textile craftsmanship is preserved with pride and serves as a testament to India's enduring textile expertise.

Navigating Transformation: Innovation, Market Shifts, and Sustainable Practices

The Indian textile and apparel industry is undergoing a transformative journey, driven by radical innovation, dynamic market shifts, and an evolving supply chain landscape.

This transformation is marked by a growing emphasis on responsible and sustainable manufacturing practices, reflecting a global shift towards environmentally conscious production.

Unveiling Growth Potential: Doubling Global Trade Share

As the world's second-largest textile industry, India possesses the potential to double its current five percent share in global trade within the next five years. This growth potential is fueled by India's strengths in traditional textiles and natural fibers, as it stands as the world's largest producer of cotton and the second-largest producer of polyester and silk.

A Catalyst for Change: Employment Generation and Economic Empowerment

The textile industry in India catalyzes change, generating employment opportunities at an unprecedented scale.

For every INR 1 crore ($132,426) invested, the textile industry creates 70 jobs, far exceeding the average of 12 jobs generated by other industries. 

This remarkable employment potential highlights the industry's role in fostering economic empowerment and social progress.

Unlocking Growth Strategies: A Roadmap for Success

This report delves into the current dynamics of the textiles and apparel industry in India, providing insights into the strategies that can effectively harness the sector's growth potential.

By embracing innovation, adapting to market shifts, and prioritizing sustainable practices, India's textile industry can continue to flourish and solidify its position as a global leader.

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16 November 2023, Mumbai

WHY India

The Confederation of All India Traders (CAIT) is projecting a bright future for India's retail sector, anticipating continued robust growth. 

This positive outlook is fueled by several factors, including the upcoming festive season and a growing preference for domestically produced goods.

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Festive Cheer to Boost Trade

India is gearing up for a series of upcoming festivals, including Goverdhan Pooja, Bhaiya Dooj, Chhath Pooja, and Tulsi Vivah. These occasions are traditionally associated with heightened consumer spending, and the CAIT expects this year's celebrations to generate an additional ₹50,000 crore in trade volume.

This surge in spending is likely to be driven by increased demand for traditional attire, home décor items, and sweets and delicacies. 

Retailers are already preparing for the festive rush by stocking up on inventory and implementing attractive promotional offers.

Vocal for Local: A Trend Gaining Momentum

The "Vocal for Local" and "Make in India" campaigns have gained significant traction in recent years, encouraging consumers to prioritize domestically produced goods. 

This trend was particularly evident during the 2023 Diwali sales, when Indian products dominated the market.

The CAIT attributes this shift in consumer behavior to a growing appreciation for the quality and craftsmanship of Indian-made goods. 

Additionally, the rise of e-commerce platforms has made it easier for consumers to discover and purchase locally produced items.

Looking Ahead: A Promising Future

The CAIT's optimistic outlook for India's retail sector is supported by several key factors, including:

• Rising disposable incomes: India's middle class is expanding rapidly, leading to an increase in disposable incomes. This, in turn, is driving demand for a wider range of consumer goods.
• Urbanization: With more people migrating to urban areas, the demand for organized retail is on the rise. This trend is creating opportunities for large-format retail stores and shopping malls.
• Technological advancements: E-commerce and mobile shopping are rapidly gaining popularity in India, providing consumers with greater convenience and access to a wider variety of products.
• Government initiatives: The Indian government has implemented various policies to promote the growth of the retail sector, such as providing tax benefits and encouraging investments in infrastructure.

In conclusion

The CAIT's optimistic outlook for India's retail sector is well-founded. The upcoming festive season, the growing preference for locally produced goods, and a supportive policy environment are all contributing factors to the sector's continued growth. 

As India's economy continues to expand, the retail sector is poised to play an increasingly significant role in driving economic growth and creating employment opportunities.

GIST

1. Festive Boost:

   • India's upcoming festivals drive trade.
   • Expecting ₹50,000 crore surge.

2. Diverse Demand:

   • Traditional attire, home décor, sweets.
   • Anticipating varied consumer spending.

3. Vocal for Local:

   • "Make in India" gains momentum.
   • Diwali 2023: Indian products dominate.

4. E-commerce Impact:

   • Rise of online platforms.
   • Facilitating local product discovery.

5. Promising Factors Ahead:

   • Rising middle-class incomes.
   • Urbanization fuels organized retail demand.
   • Technology's role: E-commerce popularity.
   • Government support: Policies, tax benefits.

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21 November 2023, Mumbai

Diwali, the festival of lights, is traditionally a time for increased spending in India, with sales across various categories, including garments, receiving a boost. However, the 2023 Diwali season, which concluded on November 12, has left representatives of the garment sector feeling disappointed with the lackluster sales performance.

Garment Sales Fail to Shine

Rahul Mehta, Chief Mentor of the Clothing Manufacturers Association of India (CMAI), expressed his disappointment with the overall performance of the garment retail sector during Diwali 2023. He noted that this year's sales were the weakest since the COVID-19 pandemic began.

Mehta questioned why garment sales did not experience the same growth as other categories, such as FMCG products, domestic appliances, automobiles, and personal devices. 

He hypothesized that consumers might have prioritized social and religious aspects of the festivities, leading to increased spending on home upgrades, gold and silver purchases, and entertainment.

Another possibility, according to Mehta, is that impulsive garment purchases throughout the year have resulted in well-stocked wardrobes, eliminating the need for new clothing during Diwali.

Bhivandi Powerloom Industry Takes a Break

The Bhivandi powerloom industry, which caters to the domestic garment market, is taking a 20-day holiday this month due to the sluggish demand that has affected the entire textile value chain, including cotton farmers, ginners, and spinning mills.

In contrast to 2022, when Diwali clothes and footwear sales surged by almost 97% compared to 2021, the 2023 Diwali season saw sales in the single digits.

Inflation Dampens Spending

India's rising inflation, currently at 5.4%, is expected to continue throughout the fiscal year 2023-24. This represents a 0.3% increase from the previous year.

A YouGov India survey revealed that only 31% of urban Indians planned to increase their spending during Diwali 2023, down from 36% in 2022. Among those who intended to spend more, 68% indicated that they would allocate their increased spending towards new clothes. However, post-Diwali figures suggest that these intentions did not translate into actual purchases.

Deepa Bhatia, General Manager of YouGov India, attributed the subdued spending behavior to the rising cost of living. She emphasized that discretionary spending, including garments, is likely to be adversely affected by inflation.

CAIT's Conflicting Narrative

The Confederation of All India Traders (CAIT) presents a different perspective on the Diwali 2023 market performance. In a statement, CAIT claimed that retail markets across India registered record sales of Rs 3.75 lakh crore during the entire festive season, encompassing Navratri, Durga Puja, and Diwali. 

They further projected an additional Rs 50,000 crore in sales from upcoming festivals like Govardhan Pooja, Bhaiya Dooj, Chhath Pooja, and Tulsi Vivah.

CAIT Secretary General Praveen Khandelwal also highlighted the significant reduction in sales of Chinese goods during the Diwali season, estimating a loss of over Rs 1 lakh crore. This decline is attributed to a preference for Indian-made festive products.

Epilogue

While the overall festive season witnessed record sales across various sectors, the garment retail industry experienced a mixed bag of results. 

Despite intentions to increase spending, garment sales failed to meet expectations, raising concerns among industry representatives.

5 key insights :

1. Garment sales fall during Diwali 2023.

2. Social spending prioritizes over new clothes.

3. Inflation dampens discretionary spending.

4. CAIT reports record festive season sales.

5. Indian-made products gain preference.

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18 November 2023, Mumbai

China’s once-unmatched dominance in the global export market for consumer goods has been steadily diminishing since 2016, marked by a shrinking market share.

A major factor contributing to this decline The rising labor costs in China are prompting Western importers to seek more cost-effective alternatives in other countries, particularly for products like clothing and textiles.

• China’s position as the world’s primary source of low-cost goods has eroded, leading many businesses to consider relocating their production facilities elsewhere.
• China’s loss of edge in key consumer sectors

In a fast-changing landscape; China has lost its competitive edge in several key consumer sectors, including apparel and accessories, footwear, furniture, and luggage. 

Exports of other items, such as minerals, hardware, and office equipment, have also experienced a decline.

However, the primary cause for these changes is the escalating political tension that has created a rift between the United States and its Western allies on one side and China on the other.

The situation was further exacerbated by the supply chain disruptions caused by the stringent lockdown measures imposed by the Chinese government to curb the COVID-19 pandemic.

The Ripple Effect of Political Tensions and Supply Chain Disruptions

The political conflict between the West and China has had a significant impact on the global trade landscape. 

The imposition of tariffs and trade restrictions has made it more difficult and expensive for Chinese companies to export their goods to Western markets.

Additional points

Additionally, the pandemic-induced supply chain disruptions have caused delays and shortages, further hindering China’s ability to maintain its export dominance.

The Search for Alternative Production Hubs

As labor costs in China continue to rise and political tensions persist, Western importers are increasingly looking for alternative production hubs in other countries.

Diversification; Southeast Asian nations, such as Vietnam, Indonesia, and Bangladesh, have emerged as attractive destinations due to their lower labor costs and favorable trade policies.

These countries are rapidly gaining a foothold in the global consumer goods market, challenging China’s traditional dominance.

China’s Adaptation to the Changing Landscape

China is aware of the challenges it faces in retaining its position as a leading exporter of consumer goods.

The government has implemented various measures, including industrial subsidies and tax incentives, to encourage businesses to upgrade their technology and move into higher-value-added manufacturing segments. 

Mitigate; Additionally, China is investing heavily in infrastructure development, including transportation and logistics networks, to improve its competitiveness in the global market.

The Future of China’s Consumer Goods Exports

The future of China’s consumer goods exports remains uncertain. 

While the country’s dominance is waning, it still possesses a significant manufacturing base and a vast domestic market.

Way forward: The country’s ability to adapt to changing market dynamics and address the challenges it faces will determine its future trajectory in the global consumer goods export market.

5 key insights :

1. China's export dominance declines since 2016.
2. Rising labor costs lead to relocation of production.
3. China loses edge in key consumer sectors.
4. Political tensions and supply chain disruptions hinder exports.
5. Southeast Asia emerges as alternative production hub.

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16 November 2023, Mumbai

Muted Apparel Demand During Festive Season
Festive-season sales slump for the Indian clothing industry, unlike other sectors. Factors include:
What's What: Inflationary trends and Challenges in Macroeconomics worrying consumers, softening discretionary spending
Changing consumer spending habits are leading people to spend more on other categories, such as electronics and travel.
The industry's competitive and fragmented nature makes it difficult for companies to differentiate themselves and stand out.
Some consumers may be less inclined to keep up with the latest fashion trends, which are constantly changing.
The sluggish clothing sales are having a ripple effect throughout the textile industry, with cotton farmers, ginners, and spinning mills facing challenges due to the reduced demand.
To address these challenges, the apparel and garment industry could consider the following recommendations:
Focus on value-for-money products: Consumers are more likely to spend money on clothes if they feel they are getting a good deal. Companies can offer high-quality, durable, and affordable products to meet this need.
Adapt to sustainable practices: consumers are increasingly becoming more socially and environmentally conscious. Companies can adopt sustainable practices, such as using recycled materials and ethical manufacturing practices, to appeal to these consumers.
Invest in digital marketing: The internet is where many consumers are now spending their time and money. Companies can invest in digital marketing to reach these consumers where they are.
Differentiability: Companies can differentiate themselves by offering unique products or services or by building a strong brand identity. This will help them stand out from the crowd and attract more customers.
Other potential explanations for the decline in clothing sales include increased consumer awareness of their spending habits and the rise of e-commerce.
Recos: However, the suggestions above should help the clothing and garment industry overcome its current challenges and continue to grow in the future.

5 key insights :

1. Economic concerns dampening apparel demand: Inflation and macroeconomic challenges affect discretionary spending.

2. Shifting consumer preferences: Consumers prioritizing electronics and travel over apparel.

3. Intense competition and lack of differentiation: Challenging market landscape for apparel companies.

4. Waning interest in fashion trends: Consumers less inclined to keep up with fleeting styles.

5. Ripple effect on textile industry: Slowdown in apparel sales impacting cotton farmers, ginners, and spinning mills.

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