Minor Project: Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Research & Compiled by: Akansha Choudhary Bhavik Gandhi Sunil Kerketta M/FMS/08/03 M/FMS/08/10 M/FMS/08/31

Batch: 2008 – 10 Master of Fashion Management
DEPARTMENT OF FASHION MANAGEMENT STUDIES

NATIONAL INSTITUTE OF FASHION TECHNOLOGY MUMBAI

Secondary Data Source

Statistics Tool

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Certificate
CERTIFICATE FROM GUIDE REGARDING COMPLETION OF WORK

This is to certify that the Project entitled “Critical Analysis of Consumer Brand Preference for Apparel & Accessories” submitted towards the partial fulfilled of the Degree in by Akansha Choudhary Bhavik Gandhi Sunil Kerketta (M/FMS/08/03) (M/FMS/08/10) (M/FMS/08/31)

is their original work under my guidance and the results are based on the research done by them.

(_________________________)

Name of Guide/Designed

Date:

Place:

2

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

ACKNOWLEDGEMENT
We are grateful to NIFT for providing us an opportunity to do research work on “Critical Analysis of Consumer Brand Preference for Apparel & Accessories”. We express our whole hearted thanks to our guide Mr. Amit Aggarwal for his encouragement and moral support in organizing my work and giving us valuable tips for making it presentable.

We will be failing in our duty if we do not mention the name of our CC Mr. Sushil Raturi and Ms. Garima Srivastava for their help in our Minor Project.

We are also thankful to Mr. N. Muthu Ganesh for providing us the details of conducting the research and SPSS from its inception.

We are appreciative of Mr. Bandi who allowed me to get access to the library and for motivated us to finish the study on time.

Lastly, we are also obliged to people of Mumbai & Navi Mumbai for providing us their valuable feedback to the questionnaire used to compile our primary data.

NAME:_____________________

ADDRESS:__________________

Master of Fashion Management

Date of submission:

3

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Contents
Certificate....................................................................................................................... 2 ACKNOWLEDGEMENT .............................................................................................. 3 Introduction........................................................................................................................ 5 About Brands and Fashion ......................................................................................... 6 Literature Review ............................................................................................................. 8 Brand .............................................................................................................................. 9 Fashion & its relation with brand.............................................................................. 12 Marketing communication applied to fashion products............................................ 12 The brand image in the marketing communication process ..................................... 13 The store image in marketing communication process............................................. 14 Qualitative research ................................................................................................... 15 Statistics Tools............................................................................................................ 16 Objectives ........................................................................................................................ 17 Consumer confidence and consumer market in India .......................................... 19 Consumer Confidence ............................................................................................... 19 Consumer Markets .................................................................................................... 21 Environment for the apparel and retail sector in India.......................................... 22 ATKearney Report .................................................................................................... 22 Ernst & Young Report .............................................................................................. 25 Understanding buying pattern of consumers in India ........................................... 26 Consumer Preference for apparel brands .............................................................. 28 Primary Data Analysis with help of SPSS .............................................................. 32 Sample Analysis........................................................................................................ 33 Shopping Preference – Time Period & Format of store ........................................... 34 Customer spending & its relation with average frequency of spending ................... 35 Types of Media Influence for Fashion Brands on people ......................................... 36 Influence of Celebrity endorsement for fashion brand ............................................. 37 Relative Preference of consumer while selecting garment & accessories ................ 38 Impulse Buying Vs. Planned Buying, Indian Brands Vs. International Brands ....... 39 Selection of one brand over other ............................................................................. 40 Consumer stand on Emergence of Women & Kid’s wear brand .............................. 41 Conclusion ................................................................................................................... 41 Appendix ........................................................................................................................... 42

4

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Introduction

5

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

About Brands and Fashion

“Consumers are evolving entities. Their aspirations & expectations are continuously changing. Today’s shoppers are more intelligent, discerning & tuned to their individual preference. They are increasingly fashion and brand conscious and select labels which define who they are or who they want to be. The biggest challenge for all the brands is to create loyal consumer who love them.” – Shopper’s Stop Ltd 1

India represents an economic opportunity on a massive scale, both as a global base and as a domestic market. Indian consumer markets are changing fast, with rapid growth in disposable incomes, the development of modern urban lifestyles, and the emergence of the kind of trend-conscious consumers that India has not seen in the past. 3 Apparel and fashion industry in India is in its growth stage. Using consumer sales promotion to differentiate one‟s offer has become an order of the day in matured urban markets. More and more budget is allocated to these activities in order to the lure the consumers. In such a scenario, it is very essential to study how consumers make their choices in Apparel & Fashion category where there are several brands in the consideration set of a consumer. The financial risk being high consumers do switch from one brand to another due to sales promotion offers and personal comfort zone. Hence it would of interest to a marketer to learn about the consumer preferences with respect to sales promotion offer; what schemes do consumer prefer for what kind of brands, which media do they prefer to know about the brand, product, and related schemes, who prefers the branded apparel and fashion products, the price range of the fashion products. These are the questions which consumer considers while choosing a brand. Similarly even a manager has to consider while introducing a product or brand. Brands build customer loyalty by delivering excellent value no matter the price point-high, low, or medium. Value includes styling, durability, quality fabrics, and consistent fit. To the consumer, a brand name represents familiarity, consistency, and confidence in performance. Brand names when linked with lifestyle, selfexpression, and aspirations epitomize intangibles that are desirable to the consumer. Consumers consider fashion as part of an overall budgetary spend, so apparel purchases now compete directly with other choices from the technology, entertainment, beauty and general lifestyle categories for the discretionary rupee.

6

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Today‟s global apparel environment is tougher than ever for brands. There are many reasons for the emergence of this challenging climate;         From a proliferation of brands fierce competition from retailers acting as brands smarter consumers the consolidation of department stores mass retailers redefining themselves luxury designers creating for mass the demand for luxury goods the growth of the discount sector

All of this adds up to one stark fact: those brands that break through the noise and communicate their message to the consumer directly and clearly – in a way that means something to them. Rising costs of living around the world cause consumers to stretch their incomes more thinly, meaning necessities are being weighed against apparel. Fashion must have value and purpose and truly resonate to the consumer. Strong brands with consistent powerful messages can create loyalty and a sense of worth that transcends the burden of choice. 2 Fashion is direct and individual communication. It also nourishes industries with high research requirements due to its present characteristics:    Fast mutation of its specificities It time to market Obsolescence of the product

The understanding of consumer‟s desires, behavior, and of purchase process of fashion products is extremely important to design products collections as well as to placement of these products in market. Considering a marketing approach, a fashion product must satisfy the demand target, so the main idea (message) behind the brand (sender) must reach the consumer (receiver). 4

Notes: 1. 2. 3. 4. Annual report of Shopper‟s Stop Ltd is available on www.shoppersstop.com & page 17 The global branding report – 2007 by Stacy Backer, chapter 1 – Introduction KPMG – Consumer Markets in India – The next big thing – Executive summary Paper - Branding of Fashion product : a communication process, a marketing approach, by Graca Guedes, Universidade Do Minho (Portugal), Paula da Costa Soares, Instituto Politecnico do Porto – ESIEG (Portugal).

7

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Literature Review

8

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

“Building a strong brand requires careful planning and a great deal of long term investment. At the heart of great brand is a great product or service backed by creatively designed and executed marketing” – Kotler & Keller1

Brand
Brand2 according to (American Marketing Association) is „ A name, term, sign, symbol, or design, or combination of them, intended to identify the goods and services of one seller or group sellers and to differentiate them from those of competitors‟. Branding thus is a means to distinguish one product from another and these differences may be functional, rational, or tangible – related to product performance of the brand. Brand equity2 is added value endowed to products and services. This value may be reflected in how consumers think, feel, and act with respect to the brand, as well as the prices, market share, profitability that the brand commands for the firm. Brand equity is an important intangible asset that has psychological and financial value to the firm. Customer based brand equity2 can be defined as the differential effect that brand knowledge has on the consumer response to the marketing of that brand. Positive customer based brand equity is when consumer react more favorably to a product. Brand knowledge2 consists of all the thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand. In particular, brands must create, strong, favorable, and unique brand associations with customers, for example Ruf & Tuf jeans were introduced as youthful and sturdy brand. Brand Equity model – Aaker Model2 – Professor David Aaker views brand equity as a set of five categories of brand assets and liabilities to a brand that add to or subtract from the value provided by a product or service to a firm and/or to that firm‟s customers. These categories of brand assets are: 1. 2. 3. 4. 5. Brand loyalty Brand awareness Perceived quality Brand associations Other proprietary assets such as patents, trademarks, and channel relationships.

Brand Equity model – Brand resonance2 – The brand resonance model also views brand building as an ascending, sequential series from bottom to top:

9

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Brand resonance model
1. Identity - Ensuring identification of the brand with customers and an associations of the brand in customers' mind with a specific product class or customer need

2. Meaning - firmly establishing the totality of brand meaning in the mind of customers by strategically linking a host of tangible and intangible brand associations

3. Response - eliticiting the proper customer responses in terms of brand related judgement and feelings

4. Relationship - converting brand response to create active loyalty relationship between customer and brand.

Brand Salience relates to how often and easily the brand is evoked under various purchase or consumption situations. Brand performance relates to how the product or service meets customers‟ functional needs. Brand imagery deals with the extrinsic properties of the product or service, including the ways in the brand attempts to meet customers‟ psychological or social needs. Brand judgments focus on customers‟ own personal opinions and evaluations.

10

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Brand feelings are customers‟ emotional responses & reactions with respect to the brand. Brand resonance refers to the nature of the relationship that customers have with the brand and the extent to which customers feel that they are “ insync” with the brand.

11

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

“Fashion begins and ends with the customers” – Stephen Frings4

Fashion & its relation with brand
As per Graca Guedes5 ,to the three components of fashion – style, acceptance and styling, announced by authors like Frings, Packard et al and Wolse, a fourth element has been added. Those three components orient this new element the brand, but they are also determined by it. From this new trend, with social and economic implication, emerge 2 different concepts of fashion products: the fashion global product and the market segment fashion product. Marketing communication applied to fashion products Marketing Communication

Advertising

Public Relation

Promotion

Direct Marketing

Special Events Fashion shows
Sales force

Store

Visual merchandising

The market of fashion products is highly competitive market whose main characteristics is the similar positioning of a large number of brands and, in this respect the brand‟s image developed by marketing communications can influence the adoption process of the products. This process, the marketing stimuli, a side with the intention to influence the purchase decisions must transmit similar messages in all communication support. The harmony of this complex process must consider such aspects as the brand awareness and the brand image, both determined by the characteristics of consumers‟ perception. The image is a mental representation of the brand or product attributes and benefit. It is a multi dimensional phenomenon that depends on the perception of those attributes and benefits. In fashion products, both mental representation and its perception are built in a continuous way, and developed through the image of fashion transmitted by each seasonal collection and by all activities of marketing communication. The overall effect of fashion product branding depends on the

12

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

integration of all the components of the marketing communication plan, including visual merchandizing, with the product design. All these three elements have an impact over the adoption process and a similar final goal: to influence the purchase option of fashion products through the satisfaction of a certain fashion image demand. The brand image in the marketing communication process Brand Identity Brand awareness

Idea

Personality
Characteristic

Brand
Brand Image

Product User

Benefits Attributes

This system reinforces the need to develop of the brands‟ image considering the implications over the brand identity and awareness of what confirms the importance of fashion products branding. The brand may benefit from a greater reputation and higher proximity to its buyers if the design of each collection takes in consideration the following aspects:    In order to keep or develop the value of the symbolic speech of the products, the brands‟ image management should be focused in one particular style; The consumer buys or uses fashion products of different types and styles; An effective fashion image developed through the seasonal collections, allows the brand to achieve image coherence and to capitalize on it in the market by building global brand.

The adoption process of fashion products reflects the great influence of the image of fashion that it transmits as well as its inherent identification potential (social, cultural and economic), besides its basic functions – to protect the body. Recognizing this, consumer searches for fashions that more nearly fit his/her own needs and wants, rather than those of the idealized people who in the past have appeared in advertisements and commercials.

13

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

The store image in marketing communication process Image store

Idea Geographic Location Visual Merchandising

Exterior Design

Interior design

other

Architecture LAYOUT

Space design Display & Fixture Windows Lightening & music Signs

Sales assistant Package

The store image development is established through its geographical location, the commercial zone where it occupies & its external design, as well as by the product that it offers and their representation in the internal space of the store. The combination of these factors defines the store atmosphere of look or the personality of the store, which image of itself should match customers impressions of the store.

14

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Qualitative research
It is necessary to assess the strength as well as understand nature of the brand‟s equity relative to competitive brands, and to track it over time. Assessing the strength of brand equity3 according to Richard Elliot & Larry Percy can be done by finding Brand awareness & salience, Brand preference and Brand users. Brand awareness according to Sroll reflects the extent to which people can either remember or recognize a brand. When people think about brands in a product category, those come to mind represent recall brand awareness; they are recalled based only upon a category cue. If someone is shown a list of brand names or pictures of packages, those that can be identified represents recognition brand awareness. Brand salience depends upon awareness, but reflects the relative strength of that awareness in relation to the target market‟s awareness of other brands in the category. This relationship will be reflected in the relative relationship between what is known as „top-of-mind‟ awareness and all the other brands in the category of which someone is aware. Brand preference, like brand salience, can be an indicator of the strength of brand equity. Brands that are preferred are likely to enjoy greater equity than those that are not. Preference for a niche brand may be high in its market segment, but relatively low in the market as a whole. Brand users or category understanding is one of the primary function of quantitative research and specifically users of a brand vs. users of competitive brands. Based upon this, one is able to „profile‟ various user segments.

15

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Statistics Tools
 Tabulation The collected data is arranged in the form of rows and columns that is in the tabulation form. The purpose is to simplify the presentation and to make comparisons.  Percentage analysis The collected data which is present in the form of percentage will help us to get the clear cut picture of the contribution of various responses.  Co-relation analysis Co-relation between two attributes have been computed to understand the relation between each other and how one attribute affects the other. SPSS & Microsoft Office Excel 2007 SPSS – Statistical Package for Social Science is the key software used to prepare complex graph, to do various analysis like correlation, regression, rank correlation etc. which are used in Minor project. Microsoft Office Excel 2007 – The primary data collected was input in excel sheet and with the help of various formula it was easy to do data analysis. Simple bar graph, pie chart, doughnut chart etc are outcome of Microsoft office Excel 2007.

Notes 1. 2. 3. 4. 5. Marketing management – Kevin lane Keller & Phillip Kotler, 12 Edition, Chapter 9 Page No 273 th Marketing management – Kevin lane Keller & Phillip Kotler, 12 Edition, Chapter 9 Page No 274 onwards Strategic brand management – Richard Elliot & Larry Percy, Indian Edition, Chapter 6 Auditing and Measuring Brand equity, Page no. 110 th Fashion – From consumer to concept – Stephen Frings, 6 Edition chapter2 page no.31 Paper - Branding of Fashion product : a communication process, a marketing approach, by Graca Guedes, Universidade Do Minho (Portugal), Paula da Costa Soares, Instituto Politecnico do Porto – ESIEG (Portugal).
th

16

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Objectives

17

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

“The Indian Economy is soaring. I think Indian people love brands. There isn’t another American designer on this soil, may be because they don’t know it, may be because they don’t understand it, may be because they don’t care. I care about it. I am excited about it and I feel very positive that we are going to build a wonderful lifestyle business here.” – Tommy Hilfiger, International fashion icon4

The objectives behind our minor project “Critical analysis of brand preference for apparel and accessories” are:

1. To study the consumer confidence and consumer market in India. 2. To study the environment for the apparel & retail sector in India. 3. To understand the buying pattern of the consumers in India. 4. To find out consumer preferences with respect to brands with the help of secondary data. 5. To find out consumer preferences with respect to brands with the help to primary data and SPSS.

18

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Consumer confidence and consumer market in India
Consumer Confidence - AC Nielsen report1 According to AC Nielsen‟s Consumer Confidence, Concerns, Spending and Attitude to recession, the definitive gauge of consumer sentiment around economic and social concerns across 51 countries After months of speculation and uncertainty around the global economy, it appears the penny has finally dropped for the world‟s consumers. Consumer confidence worldwide has fallen to its lowest level in several years.

46 percent of global consumers claim they put their spare cash into savings, up 4percent in the last six months. The world‟s most avid savers have always hailed from Asia Pacific, where an average of 57 percent of consumers chooses to build their nest eggs. Holidays and vacations continue to be a popular choice, with 34 percent of consumers across the globe planning to spend on a well-earned vacation. One in three (32%) consumers chooses to buy new clothes, up 2 percent from six months ago. (fig on next page)

19

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Bullish Denmark, India and Indonesia lead the charge, with four in five (79%) of consumers optimistic about the size of their wallets.

20

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Consumer Markets – KPMG report2 Indian consumer markets are changing fast, with rapid growth in disposable incomes, the development of modern urban lifestyles. Indian consumers are becoming increasingly sophisticated and knowledgeable about products; media channels that allow companies to communicate with consumers are growing in diversity and reach. Foreign brands remain very powerful in India, especially in clothing and personal care products, but increasingly brands have to be associated with value. India‟s consumer markets are unique. India has more people living in poverty than any other country. Its population is less urbanized than almost every other comparable economy. Literacy rates are lower than in most Asian competitors and income is less well distributed across the whole population than in most Asian competitors. The market is also highly regional. A patchwork of cultures and languages, federal India also has a highly uneven pattern of wealth. Average state incomes in Punjab, Gujarat and Maharashtra are around five times the level in Bihar, for example. Some urban areas continue to be richer on average, while large rural areas of Bihar, Jharkand, Uttar Pradesh and Orissa are officially destitute. According to recent data from India‟s Marketing Whitebook by BusinessworldIndia has around 208 million households. Of these only a little over six million are „affluent‟ – that is, with household income in excess of INR215,000. Another 75 million households are in the category of „well off‟ immediately below the affluent, earning between INR45,000 and INR215,000.

21

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Environment for the apparel and retail sector in India
ATKearney Report According to The 2008 AT Kearney3 Global Retail Development IndexTM - India continues to be among the most attractive countries for global retailers. At 511 billion $ in 2008, its retail market is larger than ever and drawing both global and local retailers. Organized retail which still accounts for less than 5% of the market, is expected to grow at Compound Annual Growth Rate (CAGR) of 40% from 20 Billion $ in 2007 to 107 billion $ by 2013. India‟s overall retail sector is expected to rise to 833 Billion $ by 2013 and to 1.3 trillion $ by 2018, at a CAGR of 10%. Consequently, as a democratic country with a high growth rates, India‟s retail market opportunity is unchallenged. Consumer’s spending has risen sharply as the youth population (more than 33% of the country is below the age of 15) has been a significant increase in its disposable income. In the past 4 years alone consumers spending rose an impressive 75%. But challenges have emerged that could potentially slow the pace of growth for new global entrants – stifling regulations, soaring real estate costs and fiercely competitive domestic retailer groups. In addition, shopping mall projects are running resource constraints that are delaying completions and destructing many retailer entries strategies. Global retailers, hungry to enter this market, continue to frustrate by restrictive government regulation. Under India‟s current laws which the government relaxed somewhat in 2006, single brand retailer can own a 51% majority stake in joint venture with a local partner. Such relaxed regulation does not extend to multi brand retailer such as Wal-Mart, Tesco and Carrefour, which must operate through franchise or cash & carry wholesale format. Accordingly, Wal-Mart recently joined forces with Indian telecom giant Bharti enterprises. Bharti will own retail shop under the Wal-Mart franchise and Wal Mart will operate logistic, procurement and storage activities. In the past couple of years, numerous retailers including the SPAR group, Carrefour, Marks & Spencer and Nautica have entered the market. Earlier entrants, including Wal-Mart and Metro, have plans for a blitz across the country. Tesco and Kroger will feel additional pressure as the situation grows more competitive. Local hypermarket retailers are moving aggressively to get ahead of further loosening of foreign investment regulation. Taking their cue from success of hypermarket in china local retailer such as Pantaloon, the Tata group‟s Trent, RPG enterprises, K Raheja Corporation and Reliance have all taken an early

22

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

lead due to ambitious expansion plans. Season business such as Reliance & Aditya Birla are locking at the upstream value chain (farms, logistics and storage) to better their positions once they begin competing directly with the likes of WalMart. As the retail industry in India matures, companies are pursueing new business models. For example, Reliance restructured and is now pursuing joint venture opportunities with international retailers such as Office Depot, Marks & Spencer and Neiman Marcus. The industry is also beginning to consolidate with Aditya Birla acquiring Trinethra Superretail, the Wadhawan Group acquiring small regional retailers, and Actis investing in the supermarket chain Nilgiris. The real estate costs are prohibitive and the cost to acquire to train and retain workers has increased as more lucrative work opportunities emerged. Although the workforce continues grow rapidly (with more women and farmers entering), it cannot keep up with the growth across all the business sectors in India. Still, large retail outlets hold a strong appeal for customers even though they place India‟s 4 million to 6 million mom-and-pop shops at risk. This is causing concern over the pace of change and could be another speed bump on the road to India‟s 1.2 billion consumers. The Global Retail Apparel Index 2008 Rank 1 2 3 4 5 6 7 8 9 10 Country Brazil China India Turkey Chile Romania Argentina Thailand Russia UAE Absolute market size 45 74 57 29 22 21 21 22 52 31 Growth prospects 33 22 37 37 47 54 44 25 22 42 Consumer affluence 42 36 31 59 44 34 39 57 39 28 Score 48 47 47 46 46 45 41 40 39 38

ATKearney Retail Apparel Index analysis evaluates more than 30 apparel markets to identify the top 10 countries in terms of market size, growth prospects and consumer affluence.   The retail apparel index is comprised of market indicators 55% and growth indicators 45%. Market indicators include total clothing sales and imports, total and youth population & clothing sales per capita.

23

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08  

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Growth indicators include total clothing sales, compound annual growth rate (CAGR) in clothing imports and clothing sales per capita, population growth and CAGR of GDP per capita. Within each metric, a country is assigned points based on its value on the metric against the largest sample.

For example, china has the largest total sales at $ 93.5 billion, so its scores 100 points in the metric, Brazil has $ 76 Billion in total clothing sales, so it scores 81.4 points (76 divided by 93.5 times 100) Apparel is India’s second largest retail category (behind food & grocery), representing 10% of retail market. Projected to reach $ 37 billion for 2008, apparel will be among the highest growth categories, with a CAGR of between 12 to 15%. In 2008, organized retail will represent roughly 10% of the total market. The rapid growth is supported by the burgeoning Indian middle class. Mean Annual disposable income is growing at more than 6% CAGR, consumer spending is expected to increase 8% per year. Other factors supporting these brisk growth rates include     more apparel focused shopping malls continued penetration of credit cards organized apparel retailing in tier 2 and tier 3 cities the popularity of ready-to-wear clothing and western fashion for women.

Still, India’s apparel market is highly fragmented. The top 7 competitors represent less than 10% of total market. Customers tend to be loyal to a specific retailer – Shopper’s Stop, Westside & Pantaloon – instead of any particular apparel brand. This has led to a thriving private label apparel market for ready-to-wear clothes and more competition. However, brands as Benetton, Louis Phillipe, Van Heusen and Esprit are capturing a strong following among Indian consumer. There is a flurry of activity across all price points, with new concepts and brands being launched almost every month. Madura Garment joined Peter England People, a mass market family store modeled after GAP and Old Navy. Discounter Koutons has opened nearly 1000 stores in the past few years. A key challenge for apparel retailer in India is to induce customer to purchase quickly, which means sales promotion tactics are important, including end of season sales, festival promotion and special events. Local firms such as Future Group are having sales of $ 845 million. It has more than 5 million sq feet of retail space in roughly 450 stores across 40 cities. Its principal formats include pantaloon, a departmental store chain & Big Bazaar, a hypermarket chain. Shopper‟s Stop has 5 million sq feet of retail across 88 stores in 12 cities. The group plan 6 million square feet of retail space by 2011.

24

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Ernst & Young Report According to Ernst & Young retail report4 the organized retail in the year 2002 is of 1075 $ million and is expected to grow with CAGR of 16%.

The clothing segment (2005) is positioned for further organized retail penetration due to the high level of branding activities by apparel retailers and merchandising spread across formats such as department stores, hypermarkets, own retail outlets and franchises.

25

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Understanding buying pattern of consumers in India
According to Ernst & Young report4 Indian consumers‟ lifestyle and profile is also evolving rapidly. India has one of the youngest populations in the world with 54% of the population below the age of 25. Discretionary spending has seen a 16% rise for the urban upper and middle classes and the number of high income households has grown by 20% year on year since 1995-96. There is an increasing shift from price consideration to design and quality, as there is a greater focus on looking and feeling good (apparel as well as fitness). At the same time, the new Indian consumer is not beguiled by retailed products which are high on price but commensurately low on value or functionality. There is an easier acceptance of luxury and an increased willingness to experiment with mainstream fashion. This results in an increased tendency towards disposability and casting out -from apparel to cars to mobile phones to consumer durables. The self-employed segment of the population has replaced the employed salaried segment as the mainstream market. 40% of primary wage earners in the top 2-3 social classes in towns with a population of 1 million or more are self employed professionals and businessmen. This has driven growth in consumption of productivity goods, especially mobile phones and two and fourwheelers. Finally, credit friendliness, drop in interest rates and easy availability of finance have changed mindsets. Capital expenditure (jewellery, homes, cars) has shifted to becoming redefined as consumer revenue expenditure, in addition to consumer durables and loan credit purchases. The 4 major organized retail sectors are     Food & Grocery Clothing Consumer Durables Books & Music

In 2003-04, private consumption expenditure in India amounted to Rs 1,690,000 crores (USD 375 billion) of which, retail sales constitute about 61% (USD 230 billion).

26

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Food & Grocery (USD154 billion) contributes about 41% of private consumption expenditure and about 77% of total retail sales. However, this segment is largely controlled by the unorganized small outlet sector -penetration of organized retail is about 1% in this segment. This is one of the primary reasons for India‟s low organized retail penetration rate. The sector is defined by low gross margins, but there is a tremendous growth potential in the organized sector in the form of hypermarkets, supermarkets and hard discount chains. In such a scenario, pricing and network will be the key to success. Clothing is the second largest segment in terms of retail sales.

27

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Consumer Preference for apparel brands
India devotes roughly the same share of their income to apparel as do Chinese and Brazilian. But the countries lower per capita income levels means overall spending on apparels is significantly lower, and the habit of Indian shopper present intriguing challenges for multinationals eyeing the market. For starters, nearly 40% of mass-market Indian shoppers McKinsey5 surveyed said that their most important shopping occasions revolved around special events such as weddings and annual religious festivals – a figure dramatically higher than the one for shoppers in the other emerging markets McKinsey studied. Furthermore, to a greater extent than else were shopping is a family activity in India, nearly 70% of its shopper‟s always go to stores with their family, and 74% - more than twice than average of Brazil, China and Russia view shopping as the best way to spent time with family. The preference for family – oriented shopping is consistent across age groups, income segments, regions and city sizes. As in many markets, in India women are the primary decision makers in apparel purchases for the entire family. But India‟s men also have an important role – indeed, half of McKinsey survey respondent said that their husband had a major influence on which stores they frequented – a proportion far higher than Brazil (3%), China (8%) and Russia (18%). What‟s more, India is unusual in that the market for men‟s apparel is larger than women‟s market, where traditional Indian apparel still dominates. Mass – market apparel retailer must therefore find formats and merchandising approaches that will attract shopper‟s seeking apparel not only for special occasion but also appealing to entire family. According to McKinsey5 survey young Indian aged 18 – 24 years strongly trust brands from their own country but also believe that foreign brands are of higher quality than local brand. In India, rather than using only income bands to define category of consumers, we use the socioeconomic class code established by the Market Research Society of India, high-end or “global” consumers are those in socioeconomic class (SEC A), mass-market consumers are those in SECs B and C, and struggling consumers are represented by SECs D and E. In addition to household income the class code incorporate the levels of education and occupation.

28

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

It is evident from research that in 6 months Indian‟s spent 59 € (Rs. 4838) which is lowest in BRIC countries, but 38% of Indians buy clothes for special events like festivals and weddings. Most of Indians shop with family and friends which is 68% highest among BRIC countries.

29

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Young generation (Youngistan) frequently goes for the shopping of apparels which is average of 4.5 trips per six months and average spending is also much higher than the average spending. This is why the apparel brands are targeting the youth in BRIC countries including India. Age groups of 18 – 24 years and 25 – 34 years would like to spend more on apparel if their income increases instead of saving. Most of the youngster believe that domestic brands can compete with the foreign brands but they would like to purchase foreign brands.

30

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

In India 23% people buy clothes for going out with family and friends, 10% for going to work, 26% for all purpose use, 25% in order to wear at home, and majority of 38% for special occasions. According to Nielsen survey6, Indian‟s are in the list of top 10 countries which disagree that designer brands are of significantly higher than standard brands.

31

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Primary Data Analysis with help of SPSS
Sample Design A sample design is a definite plan for the obtaining a sample from a given population. A majority of patrons in a sample were selectively chosen to make the sample represent the universal population as closely as possible. Sample Unit The sample unit consists of people of age group ranging from 18 years to 55 years & above. The sample consists of students, government employees, employees, doctor, engineers, service category, manager, professors and housewives. Sample Size The sample size of the survey is 116 people. A conscious effort is made to cover each and every type of category of people and to cover almost all the region of Mumbai. Male: Female: 65 51 Students: Salaried: 34 82

Primary Data Collection The primary data is that which is collected for the first time, and thus happen to be original in character. For this study questionnaire method and interview method has been adopted. Clearly and understandably set of questions had been printed and got filled by 116 people for their valuable response. Limitations: The duration of survey and its geographical extent is one of the limitations. For more authentic and relevant results a larger sample size with a greater geographical reach can be considered at later stage.

32

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Sample Analysis

Demographic Classification - SampleAge Groups
60 50 No. of people 40 30 20 10 0 15 - 24 25 - 34 35 - 44 Age in years 45 - 54 55 & more

33

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Shopping Preference – Time Period & Format of store

Shopping Time Period
8% 7%

16%

every week every month 38% every 3 month every 6 month every year

31%

It is evident from the pie chart that 38% of the total population prefers to shop every month.

Retail format preference
70 60

No. of people

50 40 30 20 10 0 EBO No. of People 15 MBO 65 Discount Store 27 Street Shop 7 Internet 0

Multi Brand outlet leads the preference of retail formats followed by discount stores, exclusive brand outlets, and street shop. In India internet shopping is not so popular, out of 116 samples no one preferred internet shopping for garment and accessories.

34

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Customer spending & its relation with average frequency of spending

Customer Average Spending
> Rs. 3000 15% < Rs. 1000 9%

Rs. 2000 - 3000 35%

Rs. 1000 - 2000 41%

41% of the consumer spends between Rs 1000 – 2000 whenever they shop garments and accessories.

SPSS analysis tool (Reports – 123 Summaries) enables us to know the relation between the average spending of the customer and frequency of shopping. It can be concluded that majority of the consumers who spends Rs. 1000 to 2000 shops either every month or every 3 months.

Average spending of customer < Rs. 1000 Rs. 1000 – 2000 Every week 2 2 Frequency Every month 5 19 of Every 3 months 1 18 shopping Every 6 months 2 6 Every year 1 2

Rs 2000-3000 2 17 13 6 3

>Rs. 3000 2 3 4 5 3

35

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Types of Media Influence for Fashion Brands on people

39 40 35 30 25 20 15 10 5 0

Media Preferred for Fashion Brands
28 23 16 7 3

No. of People

Media

Out of 116 people, 39 notice the fashion brands in newspaper followed by 28 people in the magazine. From SPSS Population pyramid graph, the most preferred media for the male is Newspaper and Television and for female is Magazine and Newspaper, internet and movies are not much popular media.

36

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Influence of Celebrity endorsement for fashion brand

Do Celebrity endorsement influence brand selection?
Agree 9% Disagree 28% Somewhat agree 28%

Somewhat disagree 10%

Indifferent 25%

The various fashion brands are being promoted by celebrities such as:  Actors: Shahrukh Khan (Belmonte), Amitabh Bachann (Reid & Taylor), Saif Ali Khan (Provogue), Akshay Kumar (Levis 501), Kangana Ranawat (Levis), Esha Deol (Provogue), Abhishek Bachann (Flying Machine), Hrithik Roshan (John Players) etc. Sport stars: Mahendra Singh Dhoni (Siyaram), Yuvraj Singh (Donear), Maria Sharapova (Nike), Sunil Gavaskar (Dinesh), etc.

 

Models & Designer: Milind Soman (Excaliber), Rohit Bal (Linen Club) etc. Celebrities in Movies: Louis Phillipe (Don – Shahrukh Khan), Van Heusen (Ghajini – Amir Khan), Spykar Jeans (Golmaal), Pantaloon (Na tum Jano na hum), Reebok (Shah Rukh Khan – Main hoon Na), Polo Sport (Shah Rukh Khan – Kuch Kuch Hota Hai) etc.

37

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Relative Preference of consumer while selecting garment & accessories

Store Proximity Store Ambience Price Quality Design Brands 0 0.5 1 1.5 2

1.99 1.81 4.09 4.64 4.46 3.99 2.5 3 3.5 4 4.5 5

More the score, prefered the most (best is 6)

From the chart it is clear that Indian‟s give first priority to Quality while selecting the garment and accessories. Indian‟s are not so brand conscious and brand loyal. Design is the second attribute preferred while selecting the garment and accessories. Indian consumers are price conscious as it ranks third among all the attributes. Unlikely in America and Europe people are brand and fashion conscious but here people need “value for money”, which means the product should be of best quality, latest design and price should be affordable. Brand comes fourth in ranking according to the survey. Attributes of store such as proximity of store and ambience of store comes last in the priority of Indian consumer. Consumers do shopping on an average for every 3 months, so proximity of store does not play important role. Shopping and mall visit is the most preferred pass time for the Indian consumer. Ambience of store does not matter in consumer buying preference directly but it helps in impulse buying and increasing foot falls.

38

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Impulse Buying Vs. Planned Buying, Indian Brands Vs. International Brands

Do consumer plan brand, color, type of merchandise etc before buying?

Impulse Buying Planned Buying

Does Indian Fashion Brands have standards that of International Brands?

International Brands 48%

Indian Brands 52%

39

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Selection of one brand over other

Consumers who purchase the fashion products from Exclusive brand outlet prefer shopping one brand over another only because of the brand image of the particular brand. In multi brand outlet, majority of male select a particular brand over another due to brand image but majority of female purchase a particular brand over another brand due to shopping experience. Overall preference for one brand over another is the shopping experience for a particular brand. Celebrity endorsement is not much considered while choosing one brand over another.

40

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Consumer stand on Emergence of Women & Kid’s wear brand

Emergence of Women & Kids wear in India

Not Possitive Move

Possitive Move

0

20

40

60

80

100

120

Conclusion
In India the branding in the garments and accessories is in the growth phase. Consumers have started identifying and preferring branded products over unbranded products due to growth in retail sector. Another observation is that Indian consumer is quality and price conscious rather than brand conscious which means there are very few brand loyal customers. Thus proper category management and catchment can improve branding and brand loyalty in India.

Notes:
1.Consumer Confidence concerns, Spending and attitude to recession, a global Nielsen report – June 2008. (www.nielsen.com) 2.Conumer Markets in India –the next big thing? – KPMG report – September 2005. (www.kpmg.com) 3.Emerging opportunities for Global Retailers – The 2008 AT Kearney Global Retail Development Index (www.atkearney.com) 4.The Great Indian Retail Story – Ernst & Young Report – 2006 (www.ey.com/india) 5.The Mckinsey Quaterly – How half the world shops: Apparel in Brazil, China, and India. 2007 (www.mckinsey.com)

41

FMS Dept., National Institute of Fashion Technology, Mumbai

Minor Project 08

Critical Analysis of Consumer Brand Preference for Apparel & Accessories

Appendix
Name:_________________________________Age: _____ Gender:_________ Email Id:______________________________ Occupation:_________________
1. Please Tick how often do you shop clothes & accessories? Once in a Once A week month Once in 3 month Once in a year

Once in 6 month

2. How much do you spend on an average for shopping for clothes & accessories? < Rs 1000 Rs 1000 - 2000 Rs 2000 - 3000 > Rs 3000

3. Where do you shop apparels often? (Please tick any one) EXCLUSIVE BRAND OUTLET MULTI BRAND OUTLET DISCOUNT STORES STREET SHOP INTERNET

4. Where do you notice Fashion brands maximum (often)? (Please tick any one) Newspaper Magazine Television Hoardings Movies Internet

5. Does a celebrity endorsement influence your brand selection? Agree Somewhat agree Indifferent Somewhat disagree Disagree

6. Which attribute matters most while selecting apparels? Rank your preference. (1 is most preferred and 6 is least preferred) Brand Price Design Ambience of Store Quality Proximity of Store 7. Do you plan particular brand, color, type of merchandise etc before shopping? yes no

8. Do Indian Fashion Brands have standards (quality, design) that of International Fashion Brands? yes no

9. Is the entry and emergence of women and kids wear brands in India a positive move in India? yes no

10. What will you consider while choosing a particular brand over another brand of similar product quality and price range? Brand image Celebrity Endorsement Shopping Experience

42

FMS Dept., National Institute of Fashion Technology, Mumbai