Indian Apparel Market:

Current Status and Future Outlook

Harminder Sahni, Founder & Managing Director

Wazir Advisors, India

Indian Textile Summit, Mumbai

27th September , 2012
Agenda

Domestic Apparel Market: Current and Projected Market Size

Global Apparel Market: Current and Projected Market Size

Indian Market vis-à-vis Other Major Markets

Key Market Influencers

Future Outlook

2
India : Fastest growing economy by 2020

2011 2020 CAGR from

GDP (USD) GDP (USD) 2011 to 2020

4.6%
EU 27 17,578 United States 22,661
United 1.8%
15,094 EU 27 20,714
States
China 7,298 China 16,798 9.7%

Japan 5,869 Japan 7,165 2.2%

Brazil 2,493 Russia 4,018 9.0%

Russia 1,850 India 3,902 9.8%

Canada 1,737 Brazil 3,885 5.1%

India 1,676 Canada 2,372 3.5%

Australia 1,488 Australia 2,175 4.3%

Others 14,577 Others 14,917 0.3%

3
Indian apparel market is large going to be enormous

Currently valued at USD 40 billion

Projected to grow at a CAGR of 13% (fairly reasonable)

Estimated to increase to USD 124 billion, by 2020

Indian Domestic Apparel Consumption

Values in USD Bn
124

+13%

35 40
27 31
25

2007 2008 2009 2010 2011 2020(P)

4 Source: Wazir Advisors

Women’s apparel and brands across will dominate by 2020

2011, USD Bn 2020(P), USD Bn

Category % share in % share in

Total Apparel Branded Unbranded Total Apparel Branded Unbranded
Market Market

Men 40% 5 11 39% 18 30

Women 35% 4 10 42% 20 31

Kids 25% 1 9 19% 5 20

Total
Apparel
Market
100% 10 30 100%
43 81

5 Source: Wazir Advisors

Indian apparel market fastest growing at 13% CAGR
Values in USD Bn
Relative Apparel Market Size of Major Economies
2% CAGR from
X% 2011 to 2020
411
10%

366 4%
350
316
Global Apparel Market
2011 USD 1,075 Bn
225
2020(E) USD 1,670 Bn
13%
150 2%
127
4%
124 10%
110
6% 100
87
75 5% 73
3%
40 37 45
25 34 31
20

EU 27 China United States Japan India Russia Brazil Canada Australia Others

2020 25% 22% 19% 8% 7% 5% 4% 2% 2% 6%

2011 33% 14% 21% 10% 4% 3% 4% 2% 2% 7%
* Percentages represent the market share of each country in the total global apparel market
6
Indian spending on apparel is relatively still very low

2011

Per Capita Apparel Consumption Market Size

Country Name
(USD) (USD)

UK 1,015 64

US 988 310

France 762 50

Japan 746 95

China 65 88

India 33 40

7
Developed markets are dominated by large retailers

Retailer Origin No. of Stores No. of Countries Revenue 2011

Sweden 2,000+ 35+ 18.3bn

Spain 3,000+ 80+ 17.7bn

USA 3,000+ 30+ 14.5bn

8
Developed markets are dominated by large retailers

No. of
Retailer Origin No. of Stores Revenue 2011
Countries

USA 380+ 42 6.85bn

Germany 1,600+ 80 2.7bn

Italy 560+ 23 2.3bn

Mainly Japan &

Uniqlo Japan 1,000
Asia
13bn

9
China already has few billion plus apparel retailers

Retailer No. of Stores Revenue 2011

10,000 1.3bn

1,500 770mn

8,000 1.3bn

3,700 1.0bn

10
Indian fashion houses growing rapidly but long way to go

Turnover
(in USD Mn)
Company Name
2011

Madura Fashion & Lifestyle 400+

Raymond Ltd. 200+

Arvind Ltd. 200+

11
Consumer Trends Influencing Indian market

Increasing Consumerism
- Increasing income level
- Increasing discretionary spend
- Increasing urbanization

Preference for Readymade

- Convenience
- Exquisite designs and wide variety
- Mismatch between desired and actual product

Preference for Branded Products

- Growth in organized retail
- Increasing online retail
- Increasing presence of international brands

12
Major Influencers of Indian Apparel Market

Increasing
Consuming
Population
Increasing presence Increasing
of International Discretionary
Brands Spend

Apparel
Market

Increasing Online Increasing

Retail Disposable Income

Growing Organized
Retail

13
Growing consuming population in age group of 15 – 44 years

Population Segmentation
1600
~1,347
1400 ~48% of population
~1,200
129 is between 15-44
1200
96 213 years
1000 170
194
800 160
210
in Mn

190
600
220 238
400
200 350 363
0
2011 2020 (P)
0-14 15-24 25-34 35-44 45-59 60+

Median Age in India increasing from 23 years (2000) to ~27 years in (2020)

India has youngest population base with more than 60% of the population
between 15-59 years and 49% of population less than 25 years

14
Consumption shifting from necessities to discretionary spending

2011 2020
5%
2% 8% 11%
7% 29%
38% 4%
18%
20%
9% 5%
11%
12% 10%
4% 4%
3%
Food, beverage, tobacco Apparel Housing & Utilities
Household Products Personal Products & Services Transportation
Communication Education & Recreation Healthcare

The share of disposable income spend on apparel is expected to increase from 4% in

2011 to 5% in 2020 owing to

Greater number of households entering higher income bracket

Increasing income levels fuelling greater consumption

15
Organized retail estimated to grow 5 times to 150bn by 2020

2011 2020(E)
USD 30 Bn, USD
USD 1 Bn,
6% USD 6Bn, 150Bn,
0.2%
1% 17%

USD 469 Bn, USD Organised Retail

94% 744Bn, Unorganised Retail
83%
Online Retail

Indian Retail Market Size

2011 ~USD 500 Bn
2020 ~USD 900 Bn

16 Source: International Monetary Fund, Wazir Analysis

 Apparel dominates organized retail, with ~35% share

Share of Various Segments in the Retail Industry (%)

Total Retail Organised Retail

0.9
1.7 0.3
3.1 3.5
12.5
1.1 3.2 2.8 2.4 9.2
2.4

0.1 4.7 4.3

0.9 0.3 2.9
4.1
0.4 5.9

7.3 34.9
7.7
67.6

0.5
9.3
2.5 2.9
0.7

Food & Grocery Apparel & Clothing Accessories

Footwear Jewellery Timewear
Eyewear Catering and Food Services Home & Interiors
Leisure Mobile/Telecom Pharmacy
Consumer Electronics Personal care & Fitness Entertainment & Gaming

17 Apparel and Clothing

Online Retail: Growing fast and tapping the true potential

12% Value, Online retail market in

Computer software 17% India, in USD million
17%
6180
Consumer Electronics 6000
14%
4000 CAGR: 37%
17%
Computer hardware
12% 2000
360
22%
Comparison Shopping 0
10%
2011 2020(E)
9%
Books
7%
Flowers/ Gifts/ 4%
• Worldwide share of Online
Greetings 6%
apparel retail is 18% compared to
4%
Retail - Movies only 4% in India
4%
Luxury Goods/ 4%
Accessories • With online retail market
4%
expected to grow at 37% CAGR
18%
Apparel there is huge potential for
4%
Apparel online retail to grow
Worldwide India substantially

18
Online Fashion Retailers

Indian Year of Reach Penetration Range Revenues

Establishment (in Mn) (cities) (brands) (in USD Mn)

2004 1.2 1,100 150 20

2007 3 1,200 350 100

2010 3.6 1,200 500 11

2011 0.5 500 - 30

2012 1.5 500 500 150

International
2007 10 54 - 300

2000 8 190 1,000 500

19
India Apparel Market 2020 will be………..

USD 120 billion plus

In Top 5 markets in the world (7% market share)

Women’s wear (42%) would deservingly be bigger than men’s wear (39%)

Branded market (43bn) will be bigger than total market today (40bn)

All major global brands will report India as a major contributor to sales

Will have few many billion dollar brands and retailers

Few fashion houses will have more than 20 brands’ portfolio

Couple of retailers will have 5,000 plus stores

An online retailer would have crossed billion plus mark

An online retailer may be the largest retailer

20
Question is …………………

There will be market

There will be consumers

There will be retailers

There will be brands

What role can your company play in this?

21
Thank You for your time and attention!

Harminder Sahni, Founder & Managing Director

Wazir Advisors, India