Challenges and Opportunities of the Indian Apparel Industry in the Wake of E-Retail
Opportunities and challenges for the apparel industry in light of the rapidly growing online retail market
Online retail is a game changer for the retail industry. The ease of shopping from the comfort of your home, free home delivery and the power to compare more options has attracted more and more consumers towards online retail. Let us focus on the Apparel e-tailing in particular. Apparel market in India is estimated at US$ 35 Bn in 2011 and is expected to grow to US$ 50 Bn by 2016, @ CAGR of 7.5%. Further, the organized Apparel retail market is estimated at US$ 5.5 Bn in 2011 and is expected to grow to US$ 8 Bn by 2016, @CAGR of 8.5%
$60.00 $50.00 $40.00 $35.00 $25.00 Total Market Organised Market $50.00
$US Billion
$30.00
$20.00 $10.00 $0.00
$3.50
$5.50
$8.00
2006
2011
2016
As per an Assocham 2011 report, the domestic online retail industry is expected to touch $1.3 by 2015, @CAGR of 35% and apparels segment enjoys a major chunk of this pie. The growth in apparel segment would primarily be driven by surge in demand for readymade apparel in rural areas, rising income levels, youth population and increasing preference for branded apparel. Thus, online apparel retail space with its market penetration and appeal to youth has abundant opportunity of growth.
Analysis of Margins & Negotiating power of the retailer Factor Market entry cost Analysis Retailers incur high entry cost, which means less competition thus translating into high negotiating power. On the contrary getting into the online retail market is far easier for i.e. more competition or lower negotiating power. Value add Retailers add value to the product in terms of offering retail space, customer experience and so they command high negotiating power. Online retailers add value in terms of portal interface and the ease of shopping from the comforts of your home. But, as this segment is fiercely competitive the negotiating power of online retailers is fairly limited.
Online retail is a game changer for the retail industry. The ease of shopping from the comfort of your home, free home delivery and the power to compare more options has attracted more and more consumers towards online retail. Let us focus on the Apparel e-tailing in particular. Apparel market in India is estimated at US$ 35 Bn in 2011 and is expected to grow to US$ 50 Bn by 2016, @ CAGR of 7.5%. Further, the organized Apparel retail market is estimated at US$ 5.5 Bn in 2011 and is expected to grow to US$ 8 Bn by 2016, @CAGR of 8.5%
$60.00 $50.00 $40.00 $35.00 $25.00 Total Market Organised Market $50.00
$US Billion
$30.00
$20.00 $10.00 $0.00
$3.50
$5.50
$8.00
2006
2011
2016
As per an Assocham 2011 report, the domestic online retail industry is expected to touch $1.3 by 2015, @CAGR of 35% and apparels segment enjoys a major chunk of this pie. The growth in apparel segment would primarily be driven by surge in demand for readymade apparel in rural areas, rising income levels, youth population and increasing preference for branded apparel. Thus, online apparel retail space with its market penetration and appeal to youth has abundant opportunity of growth.
Analysis of Margins & Negotiating power of the retailer Factor Market entry cost Analysis Retailers incur high entry cost, which means less competition thus translating into high negotiating power. On the contrary getting into the online retail market is far easier for i.e. more competition or lower negotiating power. Value add Retailers add value to the product in terms of offering retail space, customer experience and so they command high negotiating power. Online retailers add value in terms of portal interface and the ease of shopping from the comforts of your home. But, as this segment is fiercely competitive the negotiating power of online retailers is fairly limited.