Reliance's ambitious push and the evolving landscape of Indian fashion retail

29 October 2024, Mumbai

India's fashion and apparel retail sector is poised for change over the next three to four years. With Reliance Retail, one of the largest players, aiming to double its business, the competitive landscape is set to intensify. With a growing middle class, increasing disposable incomes, and evolving consumer preferences, the sector is ready for disruption and innovation.

As per Blue weave Consulting, the Indian fashion retail market was valued at $58.16 billion in 2023 and projected to grow at a CAGR of 12.65 per cent to reach $125.31 billion by 2030. Various studies have indicated value fashion dominates the market with a 56 per cent share. Mid-premium segment witnessed remarkable growth of 37.9 per cent in FY23. And premium segments: Also experiencing significant growth, with increased brand consciousness and aspirational buying.

Reliance's growth strategy

As the market evolves and grows, Reliance Retail, a subsidiary of Reliance Industries, has emerged as a dominant force. Their fashion and apparel segment has a diverse portfolio of brands, including Trends, Azorte, and Reliance Jewels. The company's aggressive expansion strategy, which has got a boost from their organic growth and acquisitions, is reshaping the industry. Reliance Retail's goal is to double the fashion and apparel business within next three to four years. This growth will be driven by several factors.

Aggressive expansion: Reliance is rapidly expanding its retail footprint, particularly in Tier II and III cities, where rising disposable incomes and growing fashion consciousness are boosting demand. This will bring its brands closer to a wider consumer base.

Brand acquisition and partnerships: Acquiring iconic brands like Campa Cola and forming partnerships with international labels like Gap and Armani Exchange allows Reliance to cater to diverse consumer preferences. Also, its acquiring stake from top labels and designers. Recent examples include the acquisition of a majority stake in designer label Abraham & Thakore and a partnership with Ritu Kumar.

Omnichannel approach: Integrating offline and online channels to provide a seamless shopping experience. This includes leveraging technologies like augmented reality for virtual try-on and personalized recommendations.

Value proposition: Offering a compelling value proposition through a mix of private labels, exclusive brands, and competitive pricing. With Reliance Trends and other value-focused brands its catering to the price-sensitive Indian market, offering a wide range of affordable apparel and accessories.

Taking on competition

While Reliance Retail is a formidable player, the Indian fashion and apparel market is highly competitive. Other major players include Aditya Birla Fashion and Retail, a conglomerate that owns popular brands like Pantaloons, Louis Philippe, Van Heusen, Allen Solly, and Peter England. The Tata Group with its retail arm Trent Ltd, that operates Westside and Zudio, known for their trendy and affordable offerings. Arvind Fashions that has brands like US Polo Assn., Arrow, Flying Machine, and Tommy Hilfiger. Shoppers Stop, the department store chain offering a wide range of apparel, accessories, and beauty products. Reliance Retail's aggressive expansion will undoubtedly disrupt the existing competitive landscape.

Table: Prominent players and their strategy

Company Market share (approx.) Key strategies Reliance Retail 20% Aggressive expansion, brand acquisitions, omnichannel approach Aditya Birla Fashion and Retail 12% Focus on premium brands, expanding into new categories like beauty and innerwear Shoppers Stop 5% Omnichannel strategy, private label development, loyalty programs Trent Ltd. (Westside) 4% Value-oriented private labels, strong focus on design and quality V-Mart Retail 3% Catering to value-conscious consumers in Tier II and III cities Online Players (Myntra, Flipkart, Amazon) Significant share Wide selection, competitive pricing, convenience

Trends shaping Indian retail today

Several factors are shaping the retail industry today. One major factor is increasing disposable incomes, particularly among the middle class that is driving demand for branded apparels. Growing preference for inline shopping is another catalyst as e-commerce is rapidly gaining popularity, especially among younger consumers. Then there is a resurgence of interest in traditional Indian clothing or ethnic wear, with brands offering contemporary interpretations.

However, despite growth, the apparel retail sector is facing several challenges. Since the market is highly competitive, with both domestic and international players vying for market share the going is tough for every player big or small. Also, consumer preferences are evolving rapidly, requiring retailers to be agile and responsive. And the COVID-19 pandemic has highlighted the vulnerability of global supply chains and retailers. Counterfeit products are another bane as the prevalence of dupes is a major concern for brands.

Despite these challenges, Indian fashion and apparel retail market is expected to continue its strong growth in coming years. Reliance Retail's ambitious expansion plans will further intensify competition, pushing other players to raise their game. The market will be characterized by Omnichannel integration as retailers will focus on seamlessly on both online and offline channels. Brands will leverage data and technology to offer personalized shopping experiences. Ethical and sustainable fashion will become increasingly important. And retailers will adopt technologies like AI and machine learning to improve efficiency and customer engagement.

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