Friday 26 April 2024

Exploring the reasons of unprecedented growth of Sportswear category. And it's future.

Sportswear Growth Paradox

Overall Retail Growth vs. Sportswear Surge:

While the overall retail growth in India is below 5%, premium sportswear brands are seeing explosive growth rates of upwards of 50%.

Adidas added 1000 cr. with Growth rate of 65%.

Puma added 900 cr. With the growth rate of 45%

Sketchers added 800 Cr with the growth of 80%

This is a landmark year for Indian Industry.

Why is this growth PARADOX ? Is this sustainable for sportswear Brands?

Lets explore !

Indian Economy : Favouring Premium

Economic 'K' Shape Recovery: Post-COVID, India's economy shows a 'K' shape recovery—meaning wealth increases for some but decreases for others. This impacts how different income groups spend on luxury and essential goods. Premium segment is observing rapid growth, while value segment is becoming even more economical.

Consumer Savings and Spending: Middle-class savings have halved to 5.5% of GDP in 2023, yet sectors like BFSI, travel, and hospitality are booming, with companies like Indigo Airlines doubling their profits. Costs have increased , income has not. Which means that middle class is left with little to spend on discretionary items like apparel and footwear.

High income group has remained unaffected, rather gained from the surging stock prices and gains from it. One would see it as an evidence, that

As of April 2024, the BSE has grown by 22% in a year, driven mainly by Indian retail investors. Wow !

Hence while the retail is not growing fats enough, sportswear premium brands are.

Consumer Sentiments about Sportswear : Massive Shift

Per Nileson, approximately 45% of Indians engage in activities related to health, a record high, which has led to a 15-16% CAGR in sportswear products.

India has embraced athleisure as a fashionable way to appear athletic while remaining comfortable. Kudos!

This trend is being adopted rapidly. All major Indian brands now include athleisure lines, even traditional formal brands like Louis Philippe. Including this, premium sportswear is growing at a rate of over 40%.

India is witnessing an unprecedented opportunity !

Mintel Report: According to a 2023 Mintel report, there has been a significant increase in spending on health and wellness products among Indian parents, especially fathers (43% in 2023 vs 35% in 2022) and mothers (46% in 2023 vs 26% in 2022). This emphasis on preventive health care is indirectly boosting expenditure on items like running shoes and sports equipment.

Decathlon India's revenues surged by 39% last year. Parents, particularly in cities and towns, are increasingly concerned about their children's health and activities, spending generously on their families and themselves.

This trend appears to be both a fear psychosis and a wake-up call as news spreads about India becoming a capital for heart disease, diabetes, and cancer. This is no minor scare, indeed..

Consumer High Brand Awareness

Real brand following is observed in sportswear brands. They lead with huge awareness and buying considerations. Nike is the leader among all.

While a research done by Symbiosis school of sports suggest that there is Indian bias towards quality. I feel the real innovation and the trust about the quality also comes with brand names and price tag. And we must give into the good work on quality management in Vietnam and India.

Brand awareness and presence is interrelated. Hence brands are focusing to open more and more imagery stores. Perhaps, That is why Puma has 29 stores just in city of Bangalore. Which basically means that every 3 km there would be a puma store.

Consumer and Outlet stores culture

Considering the Indian market preference, outlet stores are experiencing robust business.

Factory second stores located outside urban areas are generating revenues of 50-75 rupees per square foot per day, which matches the performance of prominent mall stores.

This indicates that consumers are indeed motivated to travel to these discounted destinations to shop for their families.

Consumer and Rapid Ecommerce Growth

Leading sportswear brands report that 35-50% of their sales come from e-commerce, with a significant portion being discounted.

Marketplace e-commerce platforms are facilitating the entry of first-time buyers and helping existing customers move up to higher price points, with an average selling price of around 3000 Rs. In contrast, brand-specific sites like Nike.com offer new collections at an average selling price of 9000-10000 Rs.

This situation highlights the existence of two distinctly different consumer segments with varied purchasing behaviors. Fortunately, this diversification is expanding the market for sportswear brands.

Novelty : New versions of sportswear :Tech + Fashion

Cutting-edge technology:
High tech imagery

Material Innovation

There's an unprecedented level of innovation in material and design within leading brands, resulting in continuous brand development.

This trend is particularly unique to the sportswear category.

Whether it's advancements in top materials, improvements in sole performance, or creative imagery strategies, these innovations are collectively shaping a significant shift in consumer perception.

This progress is truly remarkable!

Fashionable :

Fashion has been a focal point for the past decade, and it has now pivoted significantly towards athleisure.

This shift is driven by the allure of Korean and Eastern fashion, captivating today's youth who are enthusiastic about street culture.

As a result, existing brands are expanding their offerings to include more lines in this style.

And new brands like Xtep are emerging which are further building brands on ethos of subtle, eastern fashion. Xtep already has couple of stores in India and rest are opening rapidly.

New Business model : Licensing : Reebok, Lotto, More to come

In December 2021, ABFRL acquired the distribution rights for the Reebok brand in India and Southeast Asia for INR 100 crores.

ABFRL currently manages over 175 Reebok stores across India. With ABFRL's robust backing, Reebok is poised to become one of the largest brands in India, aiming to expand to 300 stores soon.

As Indian manufacturing quality improves and political pressures affect Chinese supply chains, many brands are turning to Indian suppliers. For instance, Adidas India now sources over 60% of its merchandise domestically.

Given these developments, it is increasingly viable to introduce well-known brands to the Indian market through licensing agreements. Such arrangements grant comprehensive rights to the Indian partners, making local sourcing a cornerstone for cost-efficiency and pricing strategies.

April 24

Lotto recently entered into an agreement with Agilitas to introduce a new line in India, with a significant portion of this line expected to be manufactured domestically.

Under the leadership of Abhishek Ganguly, the company has already secured funding of 500 crores across two rounds. It will be intriguing to observe whether other brands follow suit and opt for licensing agreements to enter the Indian market.

Major Contributor to growth :Apparel

Apparel now accounts for approximately one-third of sportswear sales, with women's activewear emerging as one of the fastest growing segments.

These products appeal to both highly active individuals and those who want to present a healthy, active lifestyle.

Additionally, a variety of Western wear and athleisure items have recently been incorporated into Indian lines.

Colour is critically important, as Indian consumers prefer vibrant colours over the typical greys and blacks.

This category may soon surpass men's apparel and possibly even footwear in market share.

Skechers initially entered the Indian market with its comfortable walking and running shoes. Now, it is focusing on expanding its presence in both footwear and fashion apparel. The brand is being rejuvenated with the help of Kriti Sanon, whose gym-oriented imagery is helping to attract a younger demographic.

Family Mass value retail : Decathlon

To maximize value, Indian customers frequently combine trips to Decathlon stores with family outings. Decathlon has established itself as the premier, most sensible destination for value-priced, mid-quality, family-oriented activewear.

Last year, the store experienced a growth of about 40% and reached a revenue scale of 4000 crores.

It is likely that more stores of this format will emerge soon, given the extensive market for this price range in India. However, low operating margins present significant entry barriers, which, in my opinion, need to be addressed and overcome.

Increasing women-wear component in sales : One third.

Footwear for women, characterized by vibrant colors and neon accents, now comprises approximately one-third of the men's footwear market. E-commerce has significantly contributed to attracting women to fashionable shoes.

Sneakers, sandals, and running shoes are the most popular categories, often paired with denim, making them a favored option among Indian consumers.

Brilliant marketing : Influencer Driven.

The sportswear category has been exceptionally innovative in its marketing strategies. This includes initiatives such as sub-brand licensing such as One8 or the Rolling Stone, as well as impactful celebrity endorsements like Milind Soman for Puma, Kriti Sanon for Skechers, Malaika Arora for Reebok, and Surya Kumar for Reebok, among others.

Additionally, partnerships like the one between Playstation and Puma, or sponsorships of cricket teams like RCB, have been instrumental in creating strong visibility and brand imagery.

A notable example is Adidas signing a 5-year deal worth 350 crores with BCCI, reminiscent of deals Nike secured a few years ago. The influx of substantial marketing investments in this sector has contributed significantly to the overall growth and enhancement of brand presence and sales.

New emerging category : Yoga

Yoga is evolving into a revered aspect of national pride, a fashionable trend, and a distinct category on its own. As India holds a prominent position as the hub of yoga, dedicated brands are poised to enter this domain.

Alo Yoga has successfully carved out a niche in global markets by combining quality and style in yoga apparel.

Various versions of Yoga brand are accessible through direct-to-consumer e-commerce platforms. It will be intriguing to observe how and when Indian retail fully embraces yoga as a significant category.

New Phenomenon : Focused Brand creation

The rise of Hoka as a leading running brand, Skechers as a walking brand, Puma as a fashion brand, and others has solidified the connection between brands and specific activities.

This natural progression occurs as the market matures and consumers associate brands with their distinct identities and purposes.

In my view, with time brands would have to take their definitive spaces and build further on them. Generic brands would feel the heat.

What next ?

In my opinion, this category will continue to experience growth for several more years due to the reasons mentioned above. New entrants will find the space appealing and will enter with their unique positioning.

Sportswear is advancing rapidly and has become a benchmark for many other categories to learn from and adopt.

Some globally popular brands will also enter the Indian market. Additionally, we should closely observe how a leading global brand like Nike plans its comeback in India. What strategies will they employ locally and what marketing plans will they implement? How will they leverage e-commerce to expand their business?

Nike currently operates at a 1000 crore mark, but it has the potential to become a billion-dollar brand, especially considering Adidas is already halfway there.

Therefore, with both established and emerging brands contributing, this category is expected to maintain a growth rate of over 30% CAGR. Remarkable, isn't it?

Thursday 24 August 2023

WHAT IS SUSTAINABILITY ? AND WHAT IS 4 DIMENSIONAL SUSTAINABILITY ?

As such there is enough fluidity about the word Sustainability. And four dimensional sustainability is further making it complex. So what is sustainability and what is 4D about it ?

Sunday 20 August 2023

SERUMS ! True Beauty Innovation or a Mere Psychological Game ?

Skin care and Serums:
Skin care is about 3b$ category In India. And said to be Growing at a CAGR of 14%.

Of which, Serums is one of the Fastest growing Beauty categories. It's growing nearly double the pace of the rest.
Serums have emerged as the largest category online, in the last couple of quarters in Skincare.

And it's believed that 43% of the global growth of Serums would originate from APAC.
Key penetration of SERUM is in the US, China, Japan, Germany, and India. Largely because of the varying climatic conditions and evolving knowhow.

There are more than 50000 skin care products available on Amazon India....10000 plus are serums... they are accounting for a very large share of business now.
As ecommerce companies invest in the same, there are 100 plus serums which are made only for Amazon as of mid of 23.
On Nykaa, Premium and international brands have more than 2000 + Serums and essences available,

Last decade has seen an over supply of beauty products of all sorts. From lots of existing and new brands. This leads to a trust deficit. Serums address that need.

Serums are one of the Fastest growing Beauty categories. It's growing nearly double the pace of the rest.
Online, Serums have emerged as the largest category in the last couple of quarters in Skincare.

What IS Serum ?

Serums are typically made with a high concentration of active ingredients, which means that they can deliver more benefits to the skin than other beauty products, such as moisturizers and sunscreens. They are also designed to penetrate deep into the skin, where they can work to address specific skin concerns.

Question :

Serums are a success, that is given. And now the most important question, Is it a true Beauty innovation or a mere psychological, marketing gimmick ??

Marketing and Psychological angle.....

What led to the usage of the word Serum. What does it mean to the consumer ?

The word "serum" has a medical connotation. This can make consumers think that serums are more effective than other skin care products.

Serums are often marketed as being "clinically proven" or "dermatologist-tested." and Serums are often packaged in small, expensive bottles. This can make consumers think that serums are more potent and concentrated than other hair care products.

Serums are often used in conjunction with other skin care products, such as shampoos, conditioners, moisturizers, sunscreens. This can give consumers the impression that serums are an essential part of a complete skin care routine.

History of Serums

Last century, plant extract Serums were used by Dermatologists for clinical use. However in early 1900 some of the cosmetic companies started to use the technology and serums reached consumers in small way. After 1970, momentum picked. And further accelerated in last decade.

In 1905, the French cosmetics company Guerlain introduced a serum called "Elixir Vital". This serum was marketed as a way to revitalize the skin and reduce the appearance of wrinkles.
In 1910, the American cosmetics company Elizabeth Arden introduced a serum called "Eight Hour Cream". This serum was marketed as a way to protect the skin from the elements and prevent dryness.
In 1971, the French cosmetics company Lancôme introduced a serum called "Advanced Genifique". This serum was marketed as a way to reduce the appearance of wrinkles and age spots.

Skincare Innovation Getting specific to problem solving.

Constant research has proven that Different skin types need different serums. Dry, Oily, Medium skins need different treatments. And then research has made different , specific, customized, chemical compositions to solve for the common problems like :

1. Dark spots and Pigmentation :

Serums can help to lighten dark spots and uneven skin tone by reducing melanin production.

2. Acne and Blemishes :

Serums can help to control acne by reducing oil production and killing bacteria.

3. Dullness and Dryness :

Serums can help to hydrate the skin by providing it with essential moisture.

5. Anti Ageing :

Serums can help to reduce the appearance of wrinkles and fine lines by stimulating collagen production.

6. Night repair :

Serums exfoliate and repair through the night.

Serums today :

Serums today are led by a couple of chemicals and their intricate combinations. While such complex chemical and biological terms could be overwhelming to the consumer. But that could also be the intent of the brands.

Hyaluronic acid:

Hyaluronic acid is a natural substance that helps to hydrate the skin. It can also help to plump up the skin and reduce the appearance of wrinkles. Couple of best selling ones are ....

Eg. .L'Oreal Paris Revitalift Hydrating Serum With 1.5 % Hyaluronic Acid ; Minimalist 2% Alpha Arbutin Face Serum With Butylresorcinol & Ferulic Acid For Hyperpigmentation

Vitamin C:

Vitamin C is an antioxidant that helps to protect the skin from damage caused by free radicals. It can also help to brighten the skin and reduce the appearance of dark spots. Couple of best selling ones are..

Eg Plum 15% Mandarin & Vitamin C Serum Glow Boost ; Minimalist 10% Vitamin C Serum For Face For Illuminating Skin For Beginners

Retinol:

Retinol is a form of vitamin A that helps to stimulate collagen production and reduce the appearance of wrinkles. Couple of best selling one are…

Eg,Estee Lauder Advanced Night Repair Synchronized Multi-Recovery Complex With Hyaluronic Acid (Serum) ; Minimalist 0.3% Retinol Face Serum For Anti Ageing With Coenzyme Q10

Niacinamide:

Niacinamide is a form of vitamin B3 that helps to brighten the skin and reduce the appearance of uneven skin tone. Couple of best selling ones are…

Eg,Minimalist 10% Niacinamide Face Serum With Matmarine + Zinc ; The Ordinary Niacinamide 10% + Zinc 1% ; Plum 10% Niacinamide Face Serum With Rice Water

Peptides / AHA:

Peptides are small chains of amino acids that help to improve overall health and appearance of the skin by stimulating collagen production and reducing inflammation. Couple of best selling ones are…

Eg, Minimalist 25% AHA + 5% PHA + 2% BHA Peeling Solution For Instant Glow & Soft Skin ; The Derma Co. 15% AHA + 1% BHA Peeling Solution for Beginners

Salicylic Acid :

It Shed off dead skin cells from the top layer, decreases redness, reduces excess oil, and unclogs pores. It also helps treat other skin care issues caused due to adverse environmental conditions like dryness and scaliness. Couple of best selling ones are…

Eg. L'Oreal Paris Revitalift Crystal Micro-Essence With Salicylic Acid ;Minimalist 2% Salicylic Acid Face Serum For Blackheads & Whiteheads ;Garnier Bright Complete 30X Vitamin C Booster Face Serum with 2% Niacinamide + 0.5% Salicylic Acid

Future of Serums:

Increasing use of natural and organic ingredients is another factor supporting the facial serum market growth in the forecast period.
The increased focus on health and wellness around the globe has also left its impression on the beauty and personal care industry. Natural and organic products are emerging as important product segments in the market as consumers are now shopping with a conscience.

Moreover, consumers consider these products safer than regular products, which may contain hydrofluorocarbons, formaldehyde, fragrances, and micro-particles of other ingredients. Moreover, manufacturers are developing natural and organic cosmetics products to cater to the growing number of consumers who are avoiding products with synthetic components.

Organic and Natural ingredients like Vitamin E, A, B1, B2, B6, C, Minerals, carotenes, Antioxidants, essential fatty acids, and organic oils such as Borage seeds, Roseship, Jojoba, Coconut are emerging as fast growing options.
For instance, Maine Chaga Age-Defying Face Serum , uses a unique mushroom formula with high antioxidants and amino acids. The formula also contains melanin and betulin that, generally, vitamin C serums do not contain.

Conclusion :

Positioning the skin care solution as medically derived has helped brands to gain consumer trust. And increasing the margins in the business. However, the rapid rise in the consumption is evidence of serums working for consumers and hence the power and authenticity of the innovation.

Thursday 23 March 2023

Why We Buy What We Do: Exploring the Psychology and Culture of Fashion

Why We Buy What We Do:

Exploring the Psychology and Culture of Fashion

Fashion is much deeper connected to our psychology, culture and Identity.

It may look frivolous and incidental as what we wear..... However, it's deeply connected to the gender, age, nation, time, culture, mood, situation etc....

It's about two decades now that I have been creating, merchandise and Brands... And I am getting more convinced that psychology of buying and fashion is very deep. And not much content is available on the same. Ecommerce has started to pour in some data on consumer and the pattern of buying, which is establishing fuzzy yet interesting psychological rationale.

Breaking the reasons simplistically. While it's much more than that....

Self-Expression:

One of the primary ways in which psychology influences fashion is through the concept of self-expression. People use their clothing and appearance as a way to communicate their values, personality, and identity to others. This can include everything from the colors and patterns they choose to wear, to the types of clothing and accessories they select. For example, someone who dresses in all black may be communicating a sense of sophistication or rebellion, while someone who dresses in bright colors may be trying to convey a sense of playfulness or creativity.

People use their clothing and appearance as a way to communicate their values, personality, and identity to others. This can include everything from the colors and patterns they choose to wear, to the types of clothing and accessories they select.

Social Comparison:

Evident ways in which psychology influences fashion and buying is through the concept of social comparison. People often look to others, particularly those in their social circle, for cues on how to dress and present themselves. This can be seen in the way that certain styles or trends become popular within certain social circles or communities. For example, a group of friends who are all interested in skateboarding may dress in a similar style, with baggy jeans and skate shoes, as a way of signaling their shared interest and belonging to the group.

Perception Manipulation:

Politicians wears white, color of serenity, truth, peace, divine... while they perhaps are most corrupt, anxious, insecure, brutal and materialistic group of people.... How opposite...?! They use garments as perception manipulation. People wear blue in interview, color of truth and reliability, while what is gets exchanged in interviews is seldom completely honest. Perception Manipulation!

People manipulate their own emotions as well. If one feels dull and low, they wish to wear bright colors, body hugging clothes, which manipulates their own subconscious mind into believing that All is well!

Cultural Background :

India has Pagdis ( Head gear) of various color types, length etc... it comes from the cultural background of a person.

Lots of what we wear is influenced by personal values and beliefs as well, beside the affinity towards one's historical past.

In my view, Brands which brings the culture and past together in form of Garment, becomes very desirable. Example being Manyavar, FabIndia, Anokhi, Suvasa, Tasva etc.. these brands have clear story to tell. Playing on Nostalgia and cultural affinity. Like a lady would be willing to spend 30k on a silk sarees, rather than using cheaper options. This irrational behavior is outcome of cultural past.

Overall,

We know that role of psychology in fashion is multifaceted, and it plays a significant role. As in,how people use clothing and appearance to express themselves, connect with others, and manipulate their own and others' perceptions and emotions.

It is also an important area of study for those working in the fashion industry, as it helps to inform the development of marketing and branding strategies that are effective at reaching and appealing to consumers. It perhaps is most important study to be done by Industry. And for sure least invested into.

I hope that soon we would be able to use data and AI to interpret the psychology of Fashion. And culture bias weightage in forecasting, merchandise creation and Brand Building.