Recently I went to a super-fancy mall GAP Inc retail store here in US and bought a couple of shirts (priced above Rs. 2000 easily). I came back and noticed the tag on the inner side of the shirt said “Made in India”. It may not be an unusual sight for many of you but it got me thinking an article about our apparel market in India.
Here are some of the facts (courtesy: Mckinsey) in one of the reports I read long back:-
- Different attires for different occasions: 13% of Indians say that they wear similar clothing at work, social occasions etc compared to 40% of Chinese consumers.
- A family activity: 70% of us go shopping with family, and 74%, more than twice the average of China, say that shopping is the best way to spend time with family.
- Relatively high spending per person: Correspondents say that they spent around Rs. 8000 last year, which is comparatively high by Indian standards I would imagine.
- Quality Test: 50% of Indian consumers they can access the quality of the garment without knowing taking its cost into account.
- Foreign Brands: More than 50% of Indian said that foreign brands are of superior quality and value than local brands.
Let’s build on that last fact a bit more because I think it’s worth noticing that vis-à-vis what I see in United States. Most of us think that foreign brands (Levis, Benetton etc) are of high quality and are ready to shell out a premium for it. Interestingly companies like GAP and its subsidiaries make huge profits selling apparels made in India in most international locations and control only the managerial aspects of their business.
The day isn’t far when we will buy GAP’s Made in India apparels and will be more than happy to pay a premium for it!
What are some of the outcomes of this trend?
First, it opens up the market and gives opportunities to Indian retail giants like Future Group etc. These retailers sell their relatively decent quality apparels at a lower price and tap the growing middle class, which is increasingly becoming brand conscious. Not to mention foreign brands also trying to capture a chunk of this market, Levis Signature anyone?
Second, many will believe that we are becoming more globalized and fashion conscious. So I don a Benetton jacket in my group of international friends and feel “cool” about it.
Third and most important point is the overall effect on our SMEs who have been in the business since years. Going one layer deeper the impact on the weavers, laborers, and similar workforce has been rather dismal.
Consider the independent weavers in cotton and silk industries. For them the bulk of sales came from “Mandis” and direct selling to consumers. These days the machine made cloth and specially “high quality” brands have made them totally obsolete. A typical Banarsi Saree cost is almost half these days because the weavers don’t get enough customers. Any analysis on these weavers will easily reflect their plight and in-fact many of them have families starving for days.
Another issue is the export of cotton to foreign brands. There is a massive demand for cotton in the country. If under such these conditions yarn is exported out of the country then finished garment manufacturers will come under tremendous stress.
Consider this, fabric prices have only gone up by 5-10% whereas cotton has gone up by 30% in last few years.
Where are we heading towards?
I don’t know it’s a critical question that I do not have a specific answer but what I do know is that government, SMEs, and other institutions have to find a solution for this situation. Otherwise, my grandchildren will be surprised to know when I tell them that the shirt they are wearing could be hand-made by our weavers.
DISCLAIMER: These are just my opinions and reflect nothing on GAP, Levis and other companies or person mentioned in the article.