Prada, pavement and everything in between

It is a special date and Aarti Bakshi wants to look especially good. The 19-year-old Mumbai-based college student isn’t exactly flush with cash — “I don’t know where my pocket money goes,” she moans — but that’s not a problem when it comes to clothes shopping; an hour in Bandra should be enough. “Cotton On has this printed halter dress I saw last week and I can pick up a pair of espadrille wedges from Linking Road,” she says confidently. “The total will be under ₹1,000.”

Like most of her generation, Bakshi has her favourite stores — and stalls — for different attire. It’s street markets in Bandra and Colaba for western wear and the latest in footwear and it’s chainstores like Max and Reliance Trends for Indian clothing. There’s a simple explanation: a salwar-kameez suit would cost you ₹800-1,000 and a kurti for about ₹400 if you haggle really well at the Dadar market. There won’t be much variety by way of colour or size, though: perhaps two options in each, if you’re lucky. On the other hand, a couple of hundred metres away is the air-conditioned Max store, where you will get similar clothes at nearly identical prices. No bargaining, of course, but you can pick your size and choose from about three colours in each style.

It’s not just price, though. When it comes to western wear, style is defined by the big, international brands. But as they are expensive, young women especially turn to street stalls where these trends appear first as export surplus stock. In Indian wear, though, it’s Bollywood and the stores themselves that decide what’s hot and, here, retailers are trying to become the trendsetters. “The 18-25 age group accounts for about 30% of our customers,” confirms Vasanth Kumar, executive director, Max. “Ever our styles are tailored to this segment — 60% of our clothes are slim fits; we don’t even do comfort fits.” 

According to a study by retail consultancy Technopak, youngsters in the 16-23 age group in the top 50 cities spend about ₹20,808 crore annually on apparel and fashion and another ₹6,834 crore on footwear. But this study was limited to only the top two socio-economic categories — India has 500 million people under the age of 25 and their collective spends on apparel and fashion are likely to be several times larger.

No more high street?

As the market for cheap yet trendy clothing explodes, value retailers are swiftly expanding operations to keep pace. Reliance Trends opened its first store in October 2007 and less than five years later, has crossed 90 stores. The Dubai-based Landmark Group’s Max came to India a year earlier and it now has close to 70 stores across the country. Compare that with more premium retailers like Shoppers Stop and Lifestyle. It’s taken Shoppers Stop well over 20 years to cross the 50-store mark, while Lifestyle, which is also from the Landmark stable, is only at 33 after 13 years in the country.

Meanwhile, online retailers are also hoping to cash in on the craze for clothes. While sites like Myntra, Jabong, Pepperfry and Fashionandyou are already popular, new fashion websites are being launched almost everyday. And they’re finding customers not just from urban centres but also from smaller towns and cities that may not have access to big-name stores and the latest designs. A study by Assocham says the online retail market will grow to ₹7,000 crore by 2015, from ₹2,000 crore currently. Most retail sites are claiming 15-20% month-on-month growth. The bulk of their clientele is from the under-30 age group: this demographic is completely at ease with the internet and clued in to modern retail practices, including the option of returning products they don’t like or that don’t fit well. 

Will the growth of big chain stores and online shopping mean the end of small, independent apparel store owners? Certainly not, says Arvind Singhal, chairman, Technopak. “There is just too much diversity in terms of geography, ethnicity, seasonality and financial status, for a handful of big retailers to snatch business from thousands of small retailers and street shops. You have a huge number of customers who will shop at every price point.” Besides, of the ₹157,500 crore apparel market, according to Technopak, the organised market is just about 17% of the total market at ₹26,775 crores, and the pavement apparel market is estimated at about ₹26,145 crore, which leaves a large unorganised segment in between.

That explains the presence of numerous stores and stalls lined up at places like Delhi’s Sarojini Nagar and Lajpat Nagar, Linking Road in Mumbai and T Nagar and Pondy Bazaar in Chennai. The allure of high street shopping is all about variety and staying on top of fashion trends that seem to change overnight. And this is where the big chains find it difficult to compete. While big retailers are trying to keep up-to-date on the newest styles — some of them change their inventory upto four times a year — they can’t match the speed of roadside stalls and small stores. Sure, the quality may not be the best, but if you’re a teenager looking to be the first in your group to wear a maxi dress this summer (which is currently the rage in the US and Europe), you won’t worry about how good the cloth is and whether it will last till next year — in any case, you definitely wouldn’t want to be spotted in last season’s fashions.

Vikram Singh has a dress stall on Bandra’s Linking Road. Most of his stock is export surplus he picks up from three garment manufacturers. He’s now looking to add a couple more since “it helps me sell different styles youngsters like”. New clothes and designs are added every month if not earlier, which keeps young customers coming back to check what’s new. And with prices ranging from ₹350 to ₹750, they invariably pick up at least a couple of items each time.

The big spenders

It’s not all rasta and budget shopping, though — not by a long shot. For occasional and higher-value purchases like sunglasses, watches and shoes, most consumers prefer brands, even if they’re pricier. There are also the affluent few who don’t mind dropping big bucks on an ever-changing wardrobe. According to a 2011 study by Assocham of 13-21 year olds, about 35% of youngsters spend upward of ₹5,000 every month on upgrading their wardrobes. They shop in branded stores only as they care more about the brand and less about price. Their labels of choice: Nike, Levi’s, Diesel, Lee, Adidas, Reebok, Pepe and other international brands. And interestingly, the younger they are, the more brand-conscious they become — school children want only branded clothes but the majority of those over 18 bought what fit their budgets. Almost all of them are impulse shoppers and look up to actors and sport stars for fashion trends.

But remember, this is only a third of the population. The average Indian shopper, especially one who’s dependent on pocket money or has just started earning, is neither willing nor able to spend so lavishly. Kumar of Max points out that mid-price fashion (₹200-600) represents a third of the total apparel market and this segment has been growing at a CAGR of 20% for the past six years. Going forward, too, he expects a greater transition of shoppers from budget (below ₹200) to mid-range than from mid-range to premium.

BS Nagesh, the former MD and CEO of Shoppers Stop and a veteran of Indian retailing, points out the defining characteristic of the average young shopper and what it means for marketers. “This segment is not as much brand loyal as it is fad loyal. So it’s critical for a retailer or a brand to get the offering consistently right, so that they keep coming back.” Certainly, large stores have been constantly reinventing themselves to stay relevant to this majority. Consider Marks & Spencer. When it first came to India in 2001 under a franchise agreement with Planet Retail, M&S imported a substantial portion of its inventory and charged accordingly.

Not surprisingly, the British high street retailer was considered premium and, accordingly, young customers stayed away. It wasn’t until 2008 when it switched to a joint venture agreement with Reliance Retail that M&S decided to go local. It increased its local sourcing considerably, which helped it slash prices — and customers can’t get enough of it anymore. Local sourcing also helps the company stretch its seasons according to the store location — so it can start summer wear in Mumbai stores in February-March, although the stores up North will still be stocking woollens. It’s also able to offer more colour options, something younger customers are always seeking. Customers seem to like the new mix: M&S has added 10 new stores in the past four years and plans to open another 25 in the next two years.

French brand Lacoste had a similar experience. It was one of the first high-street brands to enter India, in 1993. But the premium pricing and communication meant less than 5% of the customers were under 25. In the past few years, though, it’s made a conscious attempt to reach out to younger customers, by expanding its product range from sportswear to lifestyle. It’s also introduced designs that appeal to the youth; the premium positioning remains unchanged but the wider range has attracted the customers Lacoste was seeking. “About 40% of our customers are now from younger age brackets,” says Rajesh Jain, MD, Lacoste India.

Others haven’t been as lucky. Proline and Duke, which were favourites with younger customers before the deluge of foreign brands, have all but vanished. Koutons and Cantabil tasted success initially on the back of their deep discounting strategy, but their styles couldn’t keep up with youth fashion even as they expanded too fast and in premium locations. The result: these brands are in deep distress and debt now.

Clearly, then, price or style alone will not work as a successful strategy in the Indian youth apparel and fashion market. Brands and retailers that have picked one over the other have usually lived to regret the decision. In the era where everything is instant, Aarti Bakshi has a simple answer to what brands should do to be successful — “Just keep up,” she says, coolly. Is everyone out there listening?