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Indian Shirts Market[Sept 2009]

Indian Shirts Market[Sept 2009]

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Published by Urooj Ansari

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Published by: Urooj Ansari on Mar 25, 2011
Copyright:Attribution Non-commercial


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Answer the following questions straightway on the basis of the facts stated in the casestudy ‘ABC Textiles’.C 1 What are the
key success factors (KSF)
for being effective in the premium andmid segments of Indian readymade shirt market?
C 2
Should ABC Textiles enter the
premium segment or the mid-price segment
of the men’s branded shirts market?
ABC Textiles, part of an Ahmedabad based Rs.600 crore group, is a major player in theIndian textile industry. The company has two main business divisions: polyester andfabrics. It manufactures PFY, cotton fabric and denim fabric. It supplies fabric to brandslike Marks & Spencer, Levi’s, Gap, Haggers, Louise Philippe, and Van Heusen, besidesIndian brands like Colorplus, Allen Solly, Blackberry, Pepe, Zodiac and Park Avenue.After establishing in the global cotton fabric market, the company started producingbranded fabric for the domestic market. The first fabric basket – Euro Soft Collection –has four different products in 12 shades. The company has three design studios inManchester, New York and Ahmedabad. The Euro Soft Collection, a 100 percent cottonproduct from the company’s Manchester studio, is wrinkle resistant and requires onlyrinse wash.One of the group companies is ranked in the top five dye houses in the world. It isaccredited with the ISO 9001 certificate. The product range includes Denim, yarn-dyedshirting, piece dyed shirting etc. It also has Marks & Spencer accredited laboratory anddesign studio for testing purposes.The group is currently in the process of setting up a garment washing plant atAhmedabad at a cost of Rs.5.25 crore. The plant is a joint venture with ALT group of Germany, the largest multinational garment washing company in the world. The plant willoffer garment finishing including washing, dyeing, sandblasting, coating and wrinkle freefacilities. The company is also planning to come up with another washing plant inBangalore in the next one year. After this, the company wants to set up a third plant inthe north but has not finalized the location as yet.The company now intends to enter the readymade garments business. This is part of thecompany’s plan in moving up the value chain that would enable it to utilise its excellentbrand equity and a fairly strong distribution network built over the years. The companyhas already 85 showrooms and plans to increase its number over the next few years.The company has decided first to enter the men’s branded shirt market and later to other readymade garments.Mr. Nitin Parikh, Managing Director of the company, had been mulling over this entry inmen’s branded shirt market for the past one year 
. He had studied thehistory of the branded shirt market in India and followed closely the strategies of themajor players in this market. He is aware that this market is growing at a healthy rate of 
15 - 20% over the last few years. He is confident that with the retail boom in the offing inIndia the growth of the readymade garments would get a strong boost.According to a study by McKinsey, the domestic clothing market is estimated atRs.87000 crore, of which 22 percent comprises readymade garments. Of the 22 percent,only 20 percent belong to the branded apparel market. This means in a market worthRs.20000 crore, only Rs.4000 crore is catered to by branded apparel. The men’sclothing segment accounts for the largest share, at 70 percent. In the men’s clothingsegment, the maximum share is accounted by readymade branded shirts. The marketfor ready-made branded shirts is estimated at about 60 million pieces worth aboutRs.1900 crore. Though multiple price points exist, yet the market can be demarcated atthree distinct price levels: below Rs.350, Rs.350 up to Rs.550, and the Rs.550 upwardrange. The latter, of course, the premium category and is currently estimated at 5 millionpieces.
How the Market Stacks UpSegment (Retail Price) Volume (No. of pieces) Value (in crore)
Economy(Below Rs.350)34 million 700Medium(Rs.350-Rs.550)21 million 850Premium(Above Rs.550)5 million 350Premium and super-premium shirts priced at over Rs.550 such as Arrow from Arvind;Allan Solly, Louis Philippe and Van Heusen from Madura Garments; Park Avenue fromRaymond; Zodiac: account for a mere 5 million pieces.Mid-priced segment is cluttered with local and regional brands. In this segment Peter England is leading the pack. There are other brands like Raymond’s Parx, Arvind’sEscalibur, Bombay Dyeing’s Vivaldi, Mafatlal’ Trendz, Pantaloon’s John Miller,Cambridge that operate in this price segment.Peter England has scored over other mid-priced shirts by positioning itself as a shirt witha premium look and a style like Van Heusen or a Zodiac but affordable. The other bigadvantage is Madura Garment’s distribution network. Peter England has been able topiggyback on the network of 800 multi-brand outlets for Madura Garments’ Van Heusenand Lois Philippe brands. Currently, the company has 22 distributors and its shirts areavailable in 180 towns through 54 exclusive outlets and over 3300 multi-brand outlets.This is the largest distribution network of its kind in India. Pantaloon’s John Miller isavailable in just 60 company owned outlets throughout the country while BombayDying’s Vivaldi is sold through 550 exclusive outlets.According to ORG-MARG’s estimates, the branded shirt market is growing at 20% ayear with most of the growth coming from the mid-priced and economy segments.Broadly, the corporate hierarchy is split in the 22-28, 28-35 and 35-plus age groups. Thefirst group is a fresh entrant into the corporate hallway and has a high entry-level salaryand no dependants. The individual in the last group holds a senior managerial position,has a family and other obligations but earns a high salary. Roughly, these two groupsare at parity in terms of disposable income levels.

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