The fashion industry is currently facing mounting challenges in the form of economic uncertainty, geopolitical disruptions, supply chain management, changing consumer preferences, technological advancements and more. Therefore, we are starting a three-part series to help the industry adapt and survive. The first article of the series unravels pivotal factors driving the future of retail, including customer engagement, brand collaborations, compelling storytelling, personalisation, tech-driven experiences and a steadfast commitment to sustainability.
In our second article, we’ll discuss Sourcing 2.0, focusing on the evolution of procurement through ‘Sourcing as a Service’ (SaaS) using AI and ML. We’ll explore the importance of enhanced collaboration between sales and sourcing teams, the proactive role of manufacturers in fostering innovation, India’s rise as a viable alternative to China and more.
Our final piece will explore the multi-pronged approach needed to mitigate risks in apparel sourcing. It will delve into methods such as balancing customer portfolios, implementing 3D virtual sampling, fostering global manufacturing partnerships, collaborating closely with specific mills to streamline fabric selection, adopting nearshoring and other contemporary approaches to reduce costs and enhance supply chain efficiency.
These insightful articles feature inputs from a diverse range of experts working with retailers, brands, buying and trading houses.
India’s organised apparel retail market, approaching US $ 100 billion mark, has undergone a remarkable evolution, driven by technological advancements, shifts in consumer behaviour, a growing emphasis on sustainability and evolving market dynamics. According to Statista, the Indian apparel market is projected to generate revenues of approximately US $ 96.47 billion in 2023, with an expected annual growth rate of 3.34 per cent (CAGR 2023-27).
Despite the current economic challenges, leaders in the retail industry have a unique opportunity to reassess their approach to production, distribution and marketing. According to McKinsey & Company’s report ‘The State of Fashion 2023: Holding onto Growth as Global Clouds Gather’, the persistent disruptions in supply chains, stemming from the lingering impact of the Covid-19 pandemic, underscore the need to invest in faster and more localised manufacturing systems. While maintaining the focus on direct-to-consumer digital channels remains pivotal, fashion companies must diversify their sales avenues to ensure efficiency and ongoing market relevance. To capture the attention of customers within the crowded digital landscape, brands must also unleash their creativity and develop distinct content that cuts through the noise.
Fashion industry leaders also remain vigilant regarding global developments in the coming year, given the persistent macroeconomic and political uncertainties that impede business operations and heighten reputational risks. The ongoing war in Ukraine is a major source of concern for the industry, as it has already disrupted trade routes and escalated an enduring energy crisis. Furthermore, severe weather events are adversely affecting supply chains and the accessibility of raw materials across Asia.
As we step into 2024, industry experts explore crucial opportunities and drivers that savvy apparel brands and retailers should tap for success in the current and upcoming market space.
Keeping customers at the heart of business
It may sound like a cliche, but plenty of companies will talk the talk and forget to walk the walk.
In today’s interconnected world, shoppers wield more power than ever before. By actively listening to their preferences, needs and concerns, apparel retailers can make informed decisions that resonate with their target audience.
“One of the drivers (for disruption) for me is to actively listen to the consumer. We have to continuously improvise to establish consumer connect – the way our stores look, the kinds of products we offer and prices we drive,” said Harshendra Maheshwari, Vice President and National Head – Visual Merchandising, Phygital and Store Experience, Max Fashion (Landmark Group).
Expanding on this perspective, Tushar Kapoor, MD, Kapsons, opined that engaging in direct brand collaborations to craft exclusive collections customised for retail stores represents an intelligent, strategic approach. Retailers have the opportunity to leverage the unique strengths and identity of brands in order to provide their customers with a carefully curated selection that matches their preferences and style.
This approach enhances retailers’ product offerings and also strengthens their position in the market, fostering customer loyalty and driving growth.
“Colour palette is continuously changing, so we need that for our customers in the stores. That’s one way of getting sales, the other way is working with the brands and getting specialised categories made specifically for retail stores. Last year, one variety of denimwear was very much required, so we tied up with Jack & Jones and launched an entire collection for our stores which did fantastically well,” explained Tushar.
Underlining customer’s role as the change catalyst, Gaurav Sachdeva, Retail Head, Bestseller said, “Covid-19 disrupted our lives, but it also transformed our perspective as customers. Many of us became increasingly drawn to vibrant colours while spending more time in front of screens. Consequently, stores and products featuring brighter colour schemes have gained more appeal amongst people.”
Speaking about what customers really want from retailers, Harshendra argued that consumers, irrespective of their economic stratum, prioritise ‘value’ when making purchasing decisions. “It doesn’t matter if they are from the lower strata or the premium, everybody seeks value. Even Mercedes buyers seek value. What truly matters is how affordably products like denim and fashion can be made without compromising quality and that is what we do,” emphasised Harshendra.
Power of compelling storytelling
In today’s bustling marketplace, where information overload is endemic, the ability to stand out from the noise sets successful brands apart from their competitors. Merely having a high-quality product or service isn’t sufficient; you must also possess the ability to communicate about it in a manner that sets you apart from the competition. This is where storytelling becomes crucial.
Stories are all about forging emotional connections. Once you understand your customers, it’s essential to make them feel like they belong to something meaningful.
Indian retailers have long sold dreams, craftsmanship, experience, design and exceptional service, but they often overlook the power of storytelling. They should believe in the old saying, ‘Tell me a fact and I’ll learn. Tell me the truth and I’ll believe it. But tell me a story and it will live in my heart forever’.
Rather than bombarding your audience with dry facts, cold figures and endless testimonials, concentrate on crafting a narrative that is meaningful, memorable and authentic. Package your message within a story that transports people, simplifies complex information and elicits an emotional response.
Take a moment to reflect: What kind of lasting impression do you want to create? What is the core message you aim to convey to your audience, and what is the one thing you want them to remember forever?
Highlighting the need for compelling storytelling to usher in the next disruption in the retail sector, Gaurav commented, “There are brands and then there are labels. Brands take time to build because they’re not just building a product, they’re building a story and having a conversation around it. The product is undoubtedly crucial, but it’s the narrative or story surrounding the product that enhances the experience.”
Incubation of start-ups within the larger enterprise
Start-ups are often admired for their ‘disrupt or perish’ mentality. They constantly strive to improve and innovate to ensure that products and services meet customer needs. Large corporations can also take a leaf out of their book.
Tushar contends that as a company grows in size and transforms into a structured organisation, it actually creates opportunities for strategic incubation of start-ups within the larger enterprise. This newfound structure allows for the discreet nurturing of start-up initiatives within the business, often not explicitly discussed but represented by small seeds of innovation that can flourish and contribute to the company’s growth.
Tushar views this development of start-ups within larger enterprises as a powerful tool to drive disruption. He stated, “As a family business expands, it evolves into a structured organisation with diverse roles. And building up that structure makes you more flexible because then you have the opportunity to have start-ups inside your business, which are technically not spoken about but there are small seeds you can have in your business and which you can see grow. For example, we will be building around 10 outlet stores in the next year, which is a seed we’ve sowed.”
The importance of personalisation
Personalisation has emerged as an effective marketing strategy, enabling companies to provide their customers with a distinctive and unforgettable experience.
In today’s competitive environment, businesses continually seek ways to distinguish themselves and cultivate lasting customer relationships, with customised merchandise gaining substantial traction.
As per a Deloitte study, the interest in purchasing customised products or services stands at 36 per cent among consumers and a significant 48 per cent are willing to patiently await for their tailor-made items. This underscores the growing appetite for personalisation and the potential it holds for businesses.
For instance, Nike empowers customers to design their own sneakers through the ‘Nike By You’ platform. This service allows individuals to craft truly unique footwear, reflecting their personal style by choosing from an extensive palette of colours, materials and design elements.
According to the study, ‘The Impact of Product Customisation on Customer Satisfaction and Repurchase Intention’, customers who get personalised products are happier and more likely to make repeat purchases from the company.
“Customers are becoming more and more demanding. They are going to want some form of personalisation in their journey. That is what we believe is to evolve along those lines and make the journey more personalised and the challenge is how to do that at scale,” pointed out Chippy Mehta, COO, Bombay Shirt Company, India’s first custom shirt brand.
“We’re making 1000 customised products per day. So you will see companies come in and scale this ‘Just-In-Time’ production. It’s not a disruption but an evolution as the industry ages and the consumer wants to wear fitted clothing, that’s where things will go,” added Chippy.
Growth of tech-driven consumer experience
The concept of tech-driven consumer experience has got everyone’s attention. As the digital realm continues to expand, consumer-focused brands are continuously on the hunt for cutting-edge solutions that enhance their customers’ shopping experiences. Smart trial rooms, grab and go self-checkouts, ChatGPT, Augmented Reality driven consumer/employee experience and 5G driving digitisation are today the key factors redefining customer experiences.
“Today, I think Artificial Intelligence, Virtual Reality and Metaverse will be a part of our daily lives. Though a Metaverse store may not have a Return on Investment now, we have to invest. This is without dismissing the relevance of bricks-and-mortar stores,” said Sanjeev Rao, CEO, Being Human Clothing.
Highlighting the potential of these technologies in transforming the shopping experience, Olga Dogadkina, Co-founder and CEO of virtual store platform Emperia, said that virtual stores serve as a conduit, connecting the functional aspects of online shopping with the ‘personalised shopping experience’ that brands can meticulously create within their physical retail spaces.
Moreover, this technology also allows brands to fine-tune their offerings and marketing strategies by monitoring customer behaviour and preferences in real time.
Thrust on sustainability
In recent years, the Indian fashion industry has experienced a surge in sustainable brands like No Nasties, Okhai, Maati and Nicobar, marking a significant shift towards eco-consciousness. Major brands in India are also embracing eco-friendly technologies and materials.
Leading companies such as Shahi Exports, Pearl Global, Eastman Exports, Aquarelle, Laguna India (part of CIEL Textile Group), Pratibha Syntex, Reliance Retail, Aditya Birla Fashion Retail, Arvind, Vardhman Textiles, Welspun and Trident have taken proactive steps towards promoting sustainability, social welfare and profitability.
Several of these companies have integrated sustainability into their core agendas, releasing detailed sustainability reports annually, outlining their goals, efforts and accomplishments. They have embraced renewable energy sources, prioritised water conservation, worker well-being and community engagement. For instance, Shahi Exports aims to achieve 100 per cent renewable electricity by FY 2026 (currently at 68 percent) and 50 percent carbon-neutral energy by FY 2026 (currently at 35 percent).
Aquarelle and Laguna India, prominent apparel exporters, have earned LEED Platinum certifications for two out of their six factories. Eastman Exports has transitioned 41 per cent of its coal-based energy sources to biomass, reduced fibre wastage by up to 30 percent and utilises Recycled Claim Standard (RCS)-certified recycled cotton.
Arvind Ltd., is committed to reducing plastic packaging weight by 5 per cent by 2025 compared to the 2022 baseline. Afflatus International, based in Gurgaon, has implemented energy saving measures like LED lights, direct driver machines besides reusing steam discharge from boilers. The company specialises in organic fabrics, holding certifications under GOTS, Sedex, Smeta, OCS, ISO 14000, ISO 9001 and Higg Index, championing the cause of ‘conscious fashion’.
Moreover, some manufacturers and brands are exploring alternative fabrics such as hemp, banana and bamboo. Anandhi Texstyles in Tirupur is recognised for utilising recycled natural fibres like banana, aloe vera, Indian hemp and areca. These initiatives signify a collective industry push towards sustainable practices and innovation.
“For us, sustainability is a part of the business. We’ve signed something called the Global Goals 2025 which means we are not just looking at net zero but we’re looking at net positive. We are also doing a lot of product innovation in terms of recycled polyester,” claimed Gaurav.
Consumers are also increasingly urging fashion companies to uphold their social and environmental responsibilities during these challenging times.
According to a McKinsey & Company report, a significant 67 per cent of surveyed consumers view the use of sustainable materials as a crucial factor in their purchasing decisions, while 63 per cent value a brand’s promotion of sustainability equally.
Start-ups are often admired for their ‘disrupt or perish’ mentality. They constantly strive to improve and innovate to ensure that products and services meet customer needs. Large corporations can also take a leaf out of their book.
Furthermore, consumers participating in the survey anticipate that brands should prioritise the well-being of both their employees and workers in Asia. This underscores the continued importance of brands adhering to ethical commitments.
Amidst rising environmental concerns, the popularity of resale and second-hand fashion has also grown. Additionally, rental clothing is fast emerging as an eco-conscious choice. The apparel rental market is set to see a growth of 101.2 per cent to US $ 9.9 billion between 2022 and 2026, as per GlobalData’s latest report, ‘Global Apparel Rental Market and Forecasts to 2026’. The rental process has been streamlined, providing effortless selection, try-on and hassle-free options for collection or doorstep delivery.
It’s no surprise that the demand for sustainable practices has become imperative for many businesses.