The myth that only the big and mighty manufacturers fetch majority of the apparel orders is broken, as smaller companies break free from the shackles of old beliefs… Now the small but efficient and productive units that of course are following social and environmental norms are defined as preferred suppliers by the buyers’ choice, and not because they are easily accessible!
This eye-opening reality is highlighted strongly as fashion retail is picking up, both offline and online and apparel manufacturers in small hubs are reporting increase in buyer engagement and order placement. All market indicators clearly show that the Indian apparel retail market is finally seeing gains, after nearly two years of dull sales. A recent forecast suggests that the apparel retail market will grow annually by 10.84 per cent (CAGR 2021-2026) on increased wave of consumerism that many are terming as vengeance buying.
In this scenario, retailers are now searching for competent factories that match to their requirements to get products on to the shelves as quickly as possible. While earlier most organised retailers, and most certainly the national ones preferred bigger factories, the market is now seeing a rise of the smaller factories in both traditional and emerging hubs that are aligned with domestic retail needs for smaller runs, faster deliveries and more competitive prices.
These factories are quick to adopt systems required for domestic retail and specific to different retailers, and even the Indian retailers at the regional and national level are more comfortable working with such factories. The overheads are lower than those of big factories and it is easy for retailers to monitor production and deliveries in such factories. Even the terms of payment are more relaxed and flexible.
This is not to say that bigger companies, mostly into exports are not working with Indian retail, they are, but mostly with the bigger names like Arvind, Aditya Birla or Bestseller, that are similarly aligned as international retailers, and prefer to work with organised players. Most of the bigger exporters, including Shahi have dedicated lines for such retailers, but the fact remains is that the focus for such companies is on international retail, as that has been their core strength for decades.
Today, in the changing dynamics of the business, even these big retailers with international connect have product lines that are regional in nature and they prefer to manufacture in the same region or at a location nearer to the selling point to save on transport cost and also for logistic reasons like warehousing and ease of distribution. The smaller manufacturers score in these areas and even a big retailer like Reliance is aggressively looking to collaborate with such local players who can meet quick runs in small quantities.
A brand like Maxx, a part of the Dubai-based Landmark group, has always shown keen interest in working with small unorganised clusters to maintain price points with quality teams monitoring the factories to ensure that the desired AQLs are met. Now more and more retailers working in the domestic market are following this successful business model.
Another major reason as to why these so-called small players are gaining attention of the retailers is because now the children or the next generation of such companies are increasingly taking the lead, ready to collaborate, rebuild and invest to grow. The same is seen especially in Mumbai and Gujarat. Industry shares that the generation next in these areas is very proactive and is now working to upscale and upskill its employees with in-house training.
Today, we find 50 to 100 machine factories which are producing best of the bras, sportswear, as also factories equipped to do multi-products with equal productivity. This was never the case before. What is even more encouraging is that both these types of factories are working with the best and biggest of the retailers. And this has been made possible by a combination of the right attitude, skilled manpower and investment in the best of technology that gives good quality and allows for efficient manufacturing processes.