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Home > Business > Business Headline > Report

Designer wear segment set to boom

Anusha S & Parvathy Ullatil in Mumbai | July 22, 2003 10:01 IST

The designer-wear segment of the fashion industry is expected to boom as Indian companies rush to invest hugely in it, an ongoing unpublished study by the Fashion Design Council of India and audit firm KPMG says.

According to the study, the Indian fashion design industry is expected to grow to Rs 1,000 crore (Rs 10 billion) from the current Rs 180 crore (Rs 1.80 billion) within the next five to 10 years.

But, the study cautions, the segment will boom only if conscious efforts are made to develop it and initiatives like corporatisation and developing pret or ready to wear clothing are taken.

The total apparel market in India is estimated to be worth around Rs 20,000 crore (Rs 200 billion).

The branded apparel market's size is about a fourth of this or Rs 4,000 crore (Rs 40 billion).

Out the branded apparel market, The designer wear market is just about 0.2 per cent of the branded apparel market.

"There is potential for the designer wear market to grow because essentially people are shifting from unbranded to branded clothes and designers are looking at 'Pret' collections which are more affordable," says Anurag Mehra, associate director, KPMG, who has been involved in the study.

"Designers are currently limited to very small revenues of extremely high priced couture and diffusion line garments. While most have realised that the market potential for more affordable ready to wear is large and are starting to move into this segment to tap the opportunity, they lack the processes, systems, people and financial resources to rapidly scale up their operations," he adds.

Over the next 10 years it is also estimated that key players could witness a compounded annual growth rate of up to 40 per cent.

However, the industry is currently dominated by small players who operate in an unorganised and highly fragmented set-up.

The largest designer in the country is estimated to have a sales turnover of about Rs 25 crore (Rs 250 million) and other well established names are even smaller at Rs 10-15 crore (Rs 100-150 million).

In contrast, established international names such as Armani and Versace enjoy annual revenues of $1,300 million and $450 million, respectively.

Owing to their small size, players in the industry lack the resources, both financial and operational, to grow rapidly and exploit the market's potential.

Designers who are reported to be actively pursuing an interest in the Pret segment include such diverse names as Tarun Tahiliani (who has already launched collections Zero Gravity and Mukaish) and Kiran Uttam Ghose (whose line is called Kimono).

The way for the designers wear to grow in the Indian market is to actively look for strategic tie-ups with large corporates in related industries to provide the necessary financial support and operation management expertise.

Rohit Bal, the fashion designer, has been one of the first to get a company interested in his designer wear. He is now a part of BE -- the Pret range from Raymonds.

" It is not just enough to get elite individual clients to buy your clothes. Designers have to cater to the pret and ready wear market to go global in the true sense," Bal says.

Aniruddha Deshmukh, executive director, BE, a division of Raymonds said, " We currently have 12 designers under the BE label. We are scouting for more new designers."

BE caters to the upper middle class market. Raymonds is now trying to launch these designers in the international market.

Deshmukh says, "We are looking to take these Indian designer labels to international market where there is a huge Indian Diaspora because only Indians know of these designers and therefore we need to get to these NRIs first."

"It would not make any sense to unveil these designer labels directly to an international audience. We already have a BE store in Dubai which is doing well."

Mehra feels that to fully exploit the potential inherent in designer wear, Indian companies need to invest in brand building and in developing efficient supply chains with broad distribution networks for the designers.

The Fashion Design Council of India and KPMG have initiated talks with several Indian companies to define the operational, financial and ownership terms on the basis of which a partnership could work.

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