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Sportswear Market – India (Part I)

April 2011
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 Executive Summary
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Sportswear is considered as a niche segment of the retail industry

The Indian sportswear market is estimated to be around INR 50 bn and is expected to grow at a
Market CAGR of 9% and reach INR 120 bn in the next 10 years

Branded sportswear market is dominated by international brands like Reebok, Adidas, Puma, etc

Drivers: Challenges:

Increased spending power
Low sports participation rate

Increase in number of Sports events
Competition from unorganized
Drivers &

Growing health & fitness awareness players
Challenges

Unsaturated market
Poor sports infrastructure

Increasing organized retail space
Imposition of excise duty

Players sponsoring major sports teams and events

Trends
Tie-ups with renowned Indian designers

Players roping in celebrities for brand endorsements

Indian sportswear market has most of the major international brands like Reebok, Adidas, Nike,
Puma, Fila, etc
Competition

Indian players include Woodland, Liberty Shoes, Bata and Planet Sports

SPORTSWEAR MARKET IN INDIA 2011.PPT 2

 3
•Drivers & Challenges

•Key Developments
•Market Overview

SPORTSWEAR MARKET IN INDIA 2011.PPT

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•Competition
•Trends
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 Sportswear Industry is a growing segment dominated by
major international players
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Market Overview Market Size and Growth
• Sportswear is one of the niche sections of the retail INR bn
industry and is witnessing steady growth
150
• In India, sports is mostly treated as a recreational +9% 120
activity 100
• Organized sportswear industry is dominated by
50
major international players like Reebok, Adidas, Nike 50
and Puma

These players have outsourced a considerable part of their 0
production to Indian manufacturers 2010e 2020e
• Sportswear includes sports apparel, footwear and
accessories Apparel Market Segmentation

Sports shoes account for ~60% of the total sports products
market 5%
Casuals
• The Union Budget 2011 has made it mandatory for 15%
branded apparels to collect 10% excise duty, a move Sports
which will make all branded apparel including Formal
sportswear dearer 53% Ethnic
27%

Source: The Clothing Manufacturers Association of India “Dress up sportingly”, Feb 2011; Italian Trade Commission Report: “Market Research Report: Sports in India”;
indiaretailing.com

SPORTSWEAR MARKET IN INDIA 2011.PPT 4

 Imports & exports in the sportswear industry
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Imports - Value Imports - Volume
INR mn ‘000
Footwear
500 443.2 10,000
Gloves, Mittens & mitts 8,179.0
400 376.9 8,000 7,034.7
319.6
300 260.9 6,000 5,499.2
4,595.4
200 4,000
100 2,000
7.3 15.3 13.2 3.7 21.5 49.4 45.3 6.5
0 0
2008 2009 2010 2011* 2008 2009 2010 2011*

Exports - Value Exports - Volume

INR mn ‘000
Footwear
2,000 5,000
Gloves, mittens & mitts 4,255.2
1,600.1
4,000
1,500
953.5 3,000
1,000 772.5 1,997.9
555.5 570.3 2,000 1,615.5
445.0
500 1,000 514.7 620.6 527.0
148.4 206.2 412.5
126.4
0 0
2008 2009 2010 2011* 2008 2009 2010 2011*
*Figures for Apr-Jun 2010
Note: HS Codes for Footwear -640219, 64031910 & 640411; Gloves, Mittens & Mitts-420321
Source: Dept. of Commerce, Export Import Data Bank Note: All figures for respective financial year ending 31st March

SPORTSWEAR MARKET IN INDIA 2011.PPT 5

 6
•Drivers & Challenges

•Key Developments

SPORTSWEAR MARKET IN INDIA 2011.PPT

•Market Overview

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•Competition
•Trends
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 Drivers & Challenges
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Challenges

Drivers Low sports participation rate

Growing health & fitness awareness Competition from unorganized players

Increased spending power Poor sports infrastructure

Increase in number of Sports events Imposition of excise duty

Unsaturated market

Increasing organized retail space

SPORTSWEAR MARKET IN INDIA 2011.PPT 7

 Fitness and health-conscious consumers provide a huge
opportunity for players to grow
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Growing health & fitness awareness Impact
• There has been a paradigm shift regarding consumer attitude towards health and fitness. Rapid
urbanization and changing lifestyle is making Indians health and fitness conscious

1.5% of the urban population regularly do workout
• Young Indians, who are usually the target group for most sportswear brands are likely to push
up the demand for sportswear and fitness-related sports merchandise

Annual Spending on Recreational Items Fitness Equipment Market Size & Growth

INR bn Urban INR bn

300 Rural 276 100
250 16%
200 63.3
+50%
150 119 50 42.2
54 56 50 84% 28.1
100
46% 38% 36% 74% 18.8
50 8.3 12.5
63% 64% 5.6
54% 26%
0 0
1985 1995 2005 2015e 2025e 2006 2007 2008 2009 2010 2011 2012

Source: Italian Trade Commission Report: “Market Research Report: Sports in India”; Financial Chronicle “Fitness industry hopes to double size”, Mar 2009

SPORTSWEAR MARKET IN INDIA 2011.PPT 8

 Growing disposable income coupled with lifestyle changes is
driving the demand for sportswear
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Increased spending power Impact
• The increase in disposable income allows consumers to seek quality products which do not fall
under the category of necessities and are gradually becoming extremely affordable
• Major sportswear brands have positioned their brands as sports-cum-lifestyle or luxury
products

Although, lately they are leaning towards affordability to tap the massive middle class market
• With more income in hand, many people are indulging in sports as a leisurely activity which
leads to higher spending on sportswear
Aggregate Annual Disposable
Total No. of Household (mn) Income (INR tn)
Per household annual
income (INR ‘000) Core target
90
281 consumer
244 3%
12% groups 24%
207 2% 1% Globals >1000
1% 23%
5% 1% 34% Strivers 500-1000 23%
44
44% Seekers 200-500 15%
43% 9%
24 34%
33% Aspirers 90-200 34%
7% 13% 9%
49% Deprived <90 49% 33% 15%
30% 18% 23% 9% 3%

2005 2015e 2025e 2005 2015e 2025e

Expenditure
Expenditure pattern
pattern isis shifting
shifting from
from necessities
necessities to
to lifestyle
lifestyle goods
goods and
and apparels
apparels that
that includes
includes sportswear
sportswear

Source: McKinsey Global Institute “Rise of India’s consumer market”; Nielson Upper Middle and Rich (UMAR) Survey 2009; Businessworld Marketing “Whitebook: 2010-11”

SPORTSWEAR MARKET IN INDIA 2011.PPT 9

 India hosting major international & national sports events
and unsaturated market provide scope for expansion
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Increase in number of sports events Impact
• India playing host to a number of international sports events has helped in considerably
increasing the level of sports awareness
• The recently concluded Commonwealth Games 2010 was a great way to increase popularity of
sports other than cricket. India played host to the Hockey World Cup 2010 as well
• India is co-hosting the Cricket World Cup 2011. The Indian Premier League (IPL) for cricket has
further commercialized the sport, with various franchisees having their own branded
merchandise
• The sport awareness generated as a result of heightened sport activity is likely to translate into
sales for all major sportswear players

Unsaturated market Impact

• Most major sportswear brands have significant presence only in the metros
• Apart from that, a lot of sportswear players that do not have a retail presence in India have
sourced their manufacturing to Indian manufactures
• Thus, the relatively unsaturated state of the Indian market provides a huge opportunity for the
players to expand and capitalize on the tier II and tier III cities

Source: ibnlive.in “Major sporting events to look out for in 2010”, Jan 2010; Italian Trade Commission Report: “Market Research Report: Sports in India”

SPORTSWEAR MARKET IN INDIA 2011.PPT 10

 Increasing supply of quality retail space has helped in the
expansion of sportswear outlets
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Increasing organized retail space Impact
• India is witnessing exceptional growth in organized retail with rising number of shopping malls
and departmental stores
• Increased supply of organized retail mall space has benefited the retail market considerably by
providing greater visibility
• Numerous sportswear outlets are being opened in malls and also expanding their base to other
cities

Region-wise Mall Space Mall Projections Across India

0 5 10 15 20 25 30 35 40 45 50 0 50 100 150
mn sq. ft.
North 25 North 79
49 150

East 4 2009 East 16 2009

6 37
Q12011e 2011e
West 16 West 56
22 87

South 7 South 21
18 72

Source: Malls in India 2009, IMAGES F&R research study

SPORTSWEAR MARKET IN INDIA 2011.PPT 11

 Lack of sports culture and competition from unorganized players
is a major concern
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Low sports participation rate Impact
• There is a marked lack of sports culture in India, as the Indian society tends to be more education-
oriented treating sports as a source of distraction or recreational activity
• Only 1% of the population indulges in sporting activities
• In the absence of proper ‘sports culture’, the overall awareness regarding sports is also very low in
India

For example, very few people are aware of the difference between running shoes and football shoes

Competition from unorganized players Impact

• Players face major competition from unorganized players that make up ~70% of the sportswear
market
• Unorganized players have significant advantage over their organized counterparts towards
price-conscious consumer as they save on advertising, taxation, etc
• With increasing brand-consciousness and quality-preference among consumers, the threat from
unorganized players may not be so important in the future
Market Segmentation

30%

Organized
70%
Unorganized

Source: Italian Trade Commission Report: “Market Research Report: Sports in India”

SPORTSWEAR MARKET IN INDIA 2011.PPT 12

 Poor state of sports infrastructure is taking a toll on the
overall sports industry
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Poor sports infrastructure Impact
• The condition of sports infrastructure in India leaves a lot to be desired. The government budget
outlay for sports was only ~1% of the total national budget
• Only half of the primary schools in the country have any playing fields
• Very few cities have access to proper stadiums and playing courts
• Sports persons do not have a smooth sail as there is dearth of good coaching facilities as well as
overall awareness about the right kind of food and nutrition is very low
• However with recent sports achievements and events , government is taking more initiative to
uplift the dismal sports scenario in the country

Imposition of excise duty Impact

• In the Union Budget 2011, the government revised the optional excise duty regime for ready-
made garments & made-up textiles and levied 10% mandatory excise duty on all branded
apparel manufacturers
• As a result, all branded apparel which include sportswear apparel is likely to witness increase in
prices by 5-10%

Source: The Views Paper “State of Sports Infrastructure in India”, Aug 2009; Economic Times “Union Budget 2011: Branded garments, textiles to cost upto 15% more on
excise duty”, Feb 2011; fashionunited.in “Excise duty on branded apparels, major concern for industry”, Mar 2011

SPORTSWEAR MARKET IN INDIA 2011.PPT 13

 Thank you for the attention
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Sportswear Market - India report is a part of Research on India’s Consumer Goods’ Industry
Series.
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