KIT: The denim wear market in India

Strategic tools for the practising manager Technopak Advisors / New Delhi April 18, 2011, 0:34 IST

The denim wear market is growing rapidly in the country. It is currently estimated at $1 billion and expected to reach $2.1 billion by 2015. The capacity for denim is expected to grow at 12 per cent annually to reach 1,130 million metres by 2015 from the current capacity of 640 metres. The key growth drivers are: The fast growing youth and urban population; denim manufacturing picking up pace with more large and improved units coming up; and more people wearing it to the work place. Denim brands in India see potential in all segments of the market lower medium, medium and semipremium/premium. International brands like Levis, Pepe Jeans and Wrangler have seen steady growth over the years. Others like Mustang, Calvin Klein and Guess are also increasing their footprint. Mango, Zara and Marks & Spencer have introduced denim jeans at the entry level to attract first time consumers. Levis introduced its low-priced Signature brand in India a few years ago and has shown high growth in this segment.

The Indian market for branded products such as jeans, Bermuda, shirts, jackets and other consumer goods is estimated at no less than 40 million consumers. Indian consumers are typically more loyal to their stores than to brands. About three-fourths of the survey respondents reported that they would revisit the stores where they had previously purchased apparel. The survey also revealed that brand is the second most important factor in purchase decisions. In South India, consumers are generally more brand loyal than consumers from the North. Price, however, is the most important factor for the consumers in East India. Home/TV shopping or mail orders are not yet popular in India, though consumers are aware of these distribution channels. Indian consumers like to touch and feel the product before they buy it2.The National Council of Applied Economic Research (NCAER) projects that the consuming classes with an annual income of US$980 or more has included 80 percent of population by 2009-10. Added to this, the demographics of Indian consumers are changing fast and so also their propensity to consume, the knowledge about the fashion trends and product availability has provided additional impetus for increased consumption levels of the denim jeans. The jeans use no doubt is more popular among the young masses for its choice as a fashion statement and also its sturdiness in use for long time. The faded jeans, sand washed jeans, acid washed or enzyme washed jeans or cut jeans have all of them provide a

status to the user. The use of jeans by the film fraternity provides a new dimension to this modern day clothing. The brands of jeans which are ruling the Indian markets are Newport, Addidas, Crocodile, Diesel, Duke, Flying machine, Intigriti, Killer, Lee Cooper, Levi Strauss, Pepe, Ruf and Tuff, Spyker, Trigger and many more.

In India, the demand for the denim jeans has increased manifold and has increased by 129 percent in an 11 year period between 1998 to 2008.There has been a significant demand surge for jeans from the rural India than the urban India. While the rural demand for jeans was below 29 percent in 1998, has been leveraged to 56.30 percent in 2008. Conversely the urban Indias demand share has been significantly reduced to 43.70 percent in 2008 from a demand share of over 71 percent in 1998. Though the rural Indias denim consumption is surging ahead, the cities have their share of strength in the consumption story. The 15 most important cities, in terms of their population post a consumption demand of around 12 percent of the total denim jeans consumption in India. However, the demand for jeans of these cities in the last three years reveals a decline by 4.3 million pieces. Age, sex and cultural integration of the Indian population have a strong bearing on the consumption profile as well as the extent of consumption