It's A Domestic Play

Apparel, Footwear, Fashion

It's A Domestic Play

The domestic garment industry has been passing through a transformation in the last few years. And the whole process has got a distinct momentum in the last three years or so after the industry has shown a dismal performance on the export front following slowdown in the major international markets of the US and EU. While hitherto-export focused Indian apparel sector is struggling to cope up with the headwinds arising in the global market, the apparel makers are realigning their business models afresh.

The Rs 250,000-crore Indian garment industry which exports goods worth $ 17 billion(with flat growth of less than one per cent during FY2015-16) is diverting its attention to the domestic market which has shown an impressive growth in the last decade following expanding base of Indian consumers with changing demographics. In fact, the domestic apparel market is all set to double in size in the next six to seven years in the wake measures being initiated by the government as also the global events that are spanning over the years.

Several garment makers which have been proactively dealing in exports, have earmarked (or are in the process of doing so) a significant part of their business for the domestic market. Experts believe that this will not only help these players to tide over the ongoing challenges on the export front but also pave the way for setting up a right kind of hedging mechanism in the long run. In fact, they are of the view that in the changing market conditions, there is need to develop a judicious mix of domestic and export market. While the Indian garment industry has already started working in this direction, the scenario of the domestic market has witnessed a big change with even smaller players (not exporters) gearing up to explore the opportunities being thrown up.

"The distinction between domestic and export market has diminished to a great extent in the last few years. In fact, the domestic market looks much more promising and stable in the long term than that of export market which going forward appears to be more volatile in nature on account of economic and political events that are shaping up lately," says Rahul Mehta, president of Clothing Manufacturers Association of India (CMAI), which in its recently organised 63rd National Garment Fair in Mumbai received a phenomenal response from the various stakeholder of the domestic garmenting value chain.

Over 800 Indian brands (mostly from small and medium players) spanning across various categories (there were also few newer segments like Lounge; part of women's wear) participated in this three day mega event attracting footfalls of over 40,000 retailers from across the country. As per an estimate, transactions worth over Rs 600 crore were carried out during the show.

"The response has been more than impressive. This is a clear indication of how the domestic industry is placed at present. All the stake holders are trying to gear up to keep up with the market dynamics. We are already seeing the changing strategies of these players," states Ashok Shah, chairman, Fair sub-committee, CMAI.

On one hand, domestic manufacturers have started spending lot of efforts and resources in ramping up their capacities, they are also not shying away from building up their own brands, something that was unheard few years ago. Moreover, these players primarily belonged to the SME sector. On the other hand, retailers are also ramping up their wherewithal in a big way. Here also these retailers are smaller ones from tier II & III cites.

"These events relating to two vital links of the supply chain are a new trend emerging so far as the domestic market is concerned. Buoyed by the booming consumption pattern, both manufacturers and retailers are responding to the market and are trying to be a part of this emerging story.," says Mehta who believes that the influx of new generation has also infused a much-needed element of professionalism and vibrancy into the hitherto lackluster value chain of the domestic garment market. Internet and other online channels have played a big role towards this end on the backdrop of emergence of organized retail.

"Over the last few years, domestic customers have evolved in a big way. Backed by a plethora of information and exposure, they are more demanding today than ever before and hence the supply chain comprising manufactures and retails, is also changing. We are trying to upgrade ourselves to this change," says Sharmila Nadkarni, founder of Rs 60-crore Resource World Exim Pvt Ltd, a company engaged in women's fashion apparel business under the brand 'Desi Belle'. Future Lifestyle Fashions has picked up 27.5 per cent stake in Mumbai-based Resource World which is scaling up its manufacturing capacities in Mumbai. It exports 70 per cent of its production at present.

"The market has undergone a transition which calls for keeping in place a communication platform. This is where branding comes into play to be in constant touch with your customers.

We are investing in this exercise along with upscaling our capacities to meet the market requirement," says Niyam Haria, director of Mumbai-based Blazo Clothing Manufacturing Co (brand -- Blazo) which makes 3,000 pieces of boys (5-14 years) shirts. A second generation Niyam has joined his father's (Kiran Haria) business recently and is looking for bringing about strategic alterations in the existing business model.

According to Raju Shah, director of Indore-based kids wear manufacturer, Spark Creation (brand - Spark), the domestic garment market is attracting lot of attention due the structural and fiscal modifications that it is undergoing. Going forward, we are going to see more diversion of production and resources into the domestic market and that will provide more momentum. "In fact, taking into consideration various aspects of trade and business, the domestic market today present a much lucrative proposition as compared to its export counterpart," adds Shah.