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Overview of Retail Kids Apparel

market in India

Outline




Domestic Apparel market.
Key Demand drivers :Apparel retail/ Kidswear
Kid‟s Apparel :Market size ,growth and breakup.
Distribution arrangement : Kids Apparel companies
Competition/Major Players in Organized Kidswear
Segment
• Comparable Valuations in Apparel Retail /Kids wear
segment.
• Conclusion

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• 72 per cent of India's total population still resides in rural areas and contributes only 50 per cent to the total RMG industry in value terms.Domestic Apparel market • The exports market is expected to show sluggish growth but the domestic market will continue to provide strong growth opportunities for apparel manufacturers. Source :Crisil research.09 .09 Source :Crisil research.

Key demand drivers • Organized sector Penetration/Untapped market Potential: For overall retail sector penetration is only 4% and for clothing . 2007 Organised penetration in Clothing 12% Source::Ibef Indian retail report 2008 2008 16% 2009 E 22% Source::Ernst and Young Indian retail story 2007 .organised retail penetration is 17%. The levels of penetration in the top 67 cities is expected to leap.

4% of income earned by Indian households is spent on clothing. Source :NCAER report. leading to demand for readymade garments. which includes kidswear.Key demand drivers • Rising income levels and disposable income: the share of expenditure on clothing is decreasing as people spend more on other items like communications.09 .09 Source :Crisil research. but the absolute expenditure on textiles is expected to grow.

• Higher growth in urban population to lead to stable growth for demand in urban readymade garments Source :Crisil research Source :Crisil research .Key demand drivers • Growing preference for ready-to-wear apparel against tailored ones.

Key demand drivers • Age group distribution: At present overall 30% of the population is less than 15 years of age.The decline will be mainly in 0-4 year‟s age because of family planning and growth in urbanization. . The population group <15 years is going to decline slightly by 2016 .

This includes Rs.450 cr uniform segment. .(Source: dhrp in 2008 by Giny and Johny) • The volume of market share of kids apparels in the total apparel market in 2008 at 24. 28. • Industry players predict that the market is set to grow by 12% annually • Estimated market size in 2009 end equals to Rs 35.000 cr Source :rIndia Apparel Report. as against a 15% share in 2005. 2008 Source :Red Herring prospectus .Kid’s Apparel :Market size and growth • The total kidswear market including school uniform in India in 2007 is estimated at Rs.Giny & Johny 2008 .710 cr .9%. 11.

2009 Source :Red Herring prospectus .Details of Kid’s apparel Market • Breakup of Kid‟s apparel market : a) School uniform :39% b) Non uniform-casual wear: 69% .Giny & Johny 2008 . • According to media reports. Source :Crisil research. The school uniform market is highly fragmented with most of the customers requirements being met by the localized unorganized vendors. the share of organised players in the kids apparel market is only about Rs 3000 crore.

Details of Kid’s apparel Market • Category wise volume and value trends in kidswear segment :The growth in value in the total kid‟s segment between 2004-07 is high in almost all ranges CAGR Value 10 Volume Super Premium 32% 14% Premium 28% 12% Medium 19% 9% Economy 13% 7% Low 6% 3% Total 14% 4% School Uniforms 22% 9% Total 17% 5% .

the manufacturer‟s realisations are lower than that through EBO. who in turn. company may own the shop or may have it on rent .the manufacturer sells the apparel to the LFS. sells these apparels to final consumer. sells it to the consumer through its retail outlets. Since two agencies are involved in this mode. the realisations for the company are highest through this mode of distribution . these stores also help establish the brand-image of the company. which in turn. finally sells it to the consumer.Supply and distribution channels: Kids Apparel companies • Exclusive Brand Outlets (EBO): sell merchandise which belong to only one company. sells it to either MBO or SIS. LifeStyle. • Distributors: The apparel manufacturer sells the apparel to the distributor. . who in turn. Since margins of MBO are higher. • Multi Brand Outlets (MBO): These stores house apparels from multiple brands. apparel is directly sold to the final consumer . The apparel manufacturer sells the apparel to the MBO. the manufacturer‟s realisations are lower. Big Bazaar . Typical size of EBO: 800-1000 sq ft • Shop-in-Shops (SIS): stores are located in large format stores (LFS) like Shoppers‟ Stop. the manufacturer‟s realisations are much lower than that earned via other modes. who in turn.the company can get first-hand feedback of the consumers‟ preferences.

• DS Corporation (Ruff Kids). In kidswear market only Rs 3000 crore is in organized sector. • Catmoss • Primus Retail(Weekender Kids).Competition in Organized Kidswear Segment • Like most other retail segments in the country. the major brand in the Indian kidswear segment are : • Gini & Jony Limited. the unorganized sector remains the biggest challenge . the kidswear segment is dominated by the unorganized sector. • According to media reports. Reebok and Puma are entering the kidswear segment. Arrow.branded kidswear market is growing at more than 20% per annum. • In the organized sector. Many international adult apparel brands such as Allen Solly. But. • Liliput Kidswear Private Limited (Liliput). • Raymonds Limited (Zapp) • The competition is tightening in the kidswear segment.

„Gini & Jony‟ 2. 2008 pan-India distribution network is spread over 108 cities comprising of 60 EBO(49 franchised and 11 company operated). 124 SIS and 38 FSO. Premium segment . Super premium segment .„Palm Tree‟ & Red River 4.Levi's Kids which is known world over for 'freedom & self'.‟ 3. manufacturing. accessories and baby products from GJ Baby. rugged and youthful collection of denims from GJ Jeans. Niche segment . Mid-market segment . Distribution System: As on March 31. United Colors of Benetton known for its distinct Italian collection and Puma Kids a sportswear lifestyle brand of apparel and accessories. Products Segment: 1. Gini & Jony plans to raise up to Rs 125 crore through an IPO by October 2010. accessories and footwear.„Gini & Jony Knowledge Wear‟-uniform.„GJ JEANS UNLTD.a range of apparel.Major players in organized Kidswear sector • • • • • • Business activities primarily includes designing. . 28 Distributors. Revenue: It is eyeing a Rs 300 crore revenue in FY10 against Rs 225 crore in FY09. These 28 Distributors sell our products to 706 MBO. Their collections are: Gini & Jony Happy Style . branding and selling of readymade apparels and other lifestyle accessories for kids. across India. valuable wear from Palm Tree. Gini & Jony has also got in three well known international brands under one roof .

Major players in organized Kidswear sector • • • • • • The Lilliput brand was set by the successful garment manufacturing and export enterprise called “Anand International”. Pantaloons etc.It is targeting growth of 40% in the next 2 years. party wear. In 2003. The brand plans to tap the potential of South India and Tier II cities. footwear. The brand caters to middle and premium segment. . Products Segment: Complete wardrobe for 0-12 year old which includes casual wear. Distribution System: The brand sells through 225 exclusive stores (70% company owned and 30% franchise) and 250 points-of-sale in multi-brand outlets in 150 cities across the country. Future Plan: Lilliput said that it plans to launch an IPO by 2010 end.That values the company at about $42 million. Ebony. In November 06. Revenue: Lilliput clocked a turnover of Rs 310 crore last year with export accounting for a third of it. inner wear. swim wear and accessories. Lifestyle.it entered into kid‟s apparel business. night wear. The brand is available in major chains like Shoppes Stop. Inivison PE picked up 24 per cent equity in Lilliput Kidswear for about Rs 45 crore ($10 m). Westside. Market Leader with greater than 10% market share.

Major players in organized Kidswear sector • • • • • Catmoss brand was established in 2004 by Mr. It has the distinction of being the fastest growing kids wear brand in the country and has registered a whopping 78% growth Financial goal include reaching a turnover of Rs 150 crore by the end of 2009-10 along with the launch of 75 new stores. Products Segment: The retail business caters to the middle and premium segments. Catmoss is also venturing beyond the ethnic and party kidswear apparel segment and would soon be introducing kids accessories like shoes.Globus etc Revenue: It has a turnover of Rs 100 crore in FY 09. etc for both boys and girls in the age group of two to 14 years The brand plans to introduce formal wear for young boys as well as an economy range in casual wear. . the brand has gained popularity in a very short span of time. belt. . The brand is also sold through various large format stores like Lifestyle. Distribution System: The brand has 150 EBO all over India (78 company operated and 72 franchised outlets). Invest Rs 400 crore for rolling out 500 stores by 2011.Ashwin Chawla.

night wear. 499-899. 299-699. footwear. GJ Jeans. Sportswear and casual wear bottom-wear: Rs.Major players in organised Kidswear sector Brand Lilliput Product Price Range Range of apparel. LFS: 252.LFS 100 3% In 2007: 55 cr 2% . MBOs: 500+ 225 8% EBOs: 225. 400-2500+ Casual wear. inner wear. 245-945 Catmoss Ethnic and party kidswear apparel Weekender Kids(Primus Retail) kids: upper-wear: Rs. MBOs: 250 (apparel). 180 (footwear) 310 10% EBOs:125 . 25 Gini and Johny Rs 300 -1. 16 Retail Presence Turnover (in Rs cr) Maket Share (Total branded :Rs 3000 cr) EBOs: 245 in more than 79 cities. Rs. swim wear and accessories. EBOs: 36. accessories and footwear for children. baby products Rs. MBOs: for young parents and kids.000 Source :Images Fashion website and general internet search. party wear.

1x 13.2 2.6% 13.6x 1.2x 14.1% 17.2% 19.7x 12.4% Inventory turnover (COGS/Avg inventory) 2.0% NA 14.5% 14.5x 10.9x 8.6x 1. Brandhouse Retails Page Industries Limited P/E 10.2x 0.6x EBIT EBITDA Square feet Margin Margin area 21.0x EV/EBIT 7.2x 7.Comparable Valuations Companies in Apparel Retail in India Kewal Kiran Clothing Koutons Retail Provogue India Zodiac Clothing Co.7x 13.9 Sales per square feet in Rs 7859 8100 NA NA 8286 NA 8082 .6x 5.1x 25.4% 16.1x 15.3x 1.7% NA 7.3x 18.1x 7.5% 666.179 10.3 0.2% 8.1 1.7% 183.4x 3.5x 17.1% 24.0x 18.9% 13.7x 6.2x 1.2% 1.965 19.1% NA 11.3x EV/EBITDA 6.292.575 16.3 1.7 5.7x 5.8x 1.3 1.6x EV/Revenue 1.8% 25.1 2.6x Mean Median 14.8x 8.9x 9.0x 10.0x 6.

7x 10. speciality retailer in teen girls market.5 x .4x 9.9x 1.6 4.2x 7. The deal multiple was EV/EBITDA=5.5x 12% 12% 15% 14% 4. NYSE:CRI) EV/Reven EV/EBITD ue EV/EBIT A EBIT Margin EBITDA Margin Inventory turnover Sales per Comparable (COGS/Avg square store sales inventory) feet (in $) 15.4x 6.1x 1.5x 15% 19% -4% 4.0x 1.7 15.7 434 388 Gymboree Corporation Mean Median -1% 0% Recent M&A in Children apparel market in US : In June 09.2x 7. (Public.1x 9. Inc.6x 9.3x 7.1x 0.5 Business Specialty retailer of children’s apparel and 350 accessories Owns two children brands and market apparel for 388 children Specialty retailer operating stores selling apparel and accessories for children 564 under different brands 17.9x 12% 14% 0% 4.1x 9.2x 7. Dress Barn which operates women‟s apparel specialty stores acquired Tween Brands.Comparable Valuations Companies in Children Apparel Retail in US P/E Children's Place Retail Stores (PLCE) Carter's.4x 7% 11% 2% 4.1x 1.7x 15.7 22.

the dominance of unorganised players. low brand penetration could derail the growth of the industry 19 . essentially depends upon the growth of the economy and organized retailing industry at macro level and personal expenditure and willingness to spend on kidswear at micro level. • Growth opportunities for kidswear retail is very high in Tier II. with the projected annual growth in organised kidswear retail of more than 20%. • Entry of foreign kidswear manufacturers and the entry of major Indian apparel houses indicate the importance of kidswear industry and their intention to cash in on the opportunity. Tier III cities and in school uniform segment. • However.Conclusion • The prospects of kidswear industry. • Indian kidswear industry is one of the most happening industries in India. uneconomic scale of operation by small unorganised players. a sub-sector of apparel and retailing.

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