APPAREL PRODUCTION TECHNOLOGY ASSIGNMENT ASSIGNMENT 7/5/2013 SUBMITTED BY : M. ANBU VEL SIZE ,NATURE & COMPETITIVENESS OF APPAREL INDUSTRY INTRODUCTION India ranks among the top target countries for any company sourcing textiles and apparel. The country not only offers a holistic supply chain, from a vast raw materiall suppy to high quality finished products, it also offers labour at low cost. Further, textile industry in India is a highly versatile sector, with smaller firms providing flexibility needed for smaller orders, the larger firms have the capacity to service the world’s biggest buyers.
The Government of India has also undertaken several favourable policy intiatives, which has resulted in the growth of the sector as well. India offers several other unique advantages. Some of these are as follows: * Indian economy registering a growth of more than 6 per cent * Third largest producer of cotton yarn * Second largest producer of cellulosic fabric/yarn * Second largest producer of silk * Fourth largest producer of synthetic fibre/yarn * Cultural comfort with the US * Strong entrepreneurial class Compliant garment manufacturing units NATURE: The textile and apparel industry is undergoing structural changes to sustain itself in a dynamic environment. Till few years back, companies were focusing on organic growth to increase sales but in the face of increased competition, companies have now started to focus on growth through mergers and acquisitions. Inorganic growth enables companies to access new markets, enhance product portfolio, and achieve value chain integration in a shorter span of time.
In developed economies, value retailers, who provide products that represent value for money proposition, have grown in the period 2005-10 at an average CAGR of 17% while brands have barely grown at an average CAGR of 2% in the same period. It is expected that going forward, the trend will grow stronger as consumers will rationalize their spending helping the growth of such value retailers at the expense of brands. A relatively newer trend that has attracted the attention of retailers and brands is multi-channel retailing.
It was earlierperceived that consumers need to touch and feel products before they purchase but of late online retailing has emerged. Few retailers have even developed and invested in online retail to boost overall sales. Thus it is not surprising that apparel is among the top 3 products purchased online in the US and western Europe. India has witnessed an average GDP growth of approximately 7% in the past decade and forms one of the largest emerging economies of the world. The majority stakeholder in this growth is the mass consuming population of the country.
Consumers today are much more evolved and their demands and needs are very different from those of consumers a decade ago. Apart from the demographic and economic changes, there have been many other transformational changes that lead to a growth in the aspirations and wants of an average consumer: • Young population: The median age of the Indian consumer is 26 years with maximum population lying in the age bracket of 15-60 years. It is expected that India will add another 140 million people in this consuming age group by 2020.
This is one of the lowest median ages among the developing countries. This population has more aspiration, is more aware and has a higher spending power and will consume a greater number of categories than their parents Higher disposable income: According to the Indian census report, the number of households with an annual income of USD 7000 or more is going to treble from about 30 million today to 100 million by 2020. There will be approximately 400 million individuals in the middle to high income bracket by 2020. Growing media influence/exposure: The role of technology has changed the way people receive/share information. From social networking sites to electronic channels, information travels at the speed of light. The changing lifestyle and “western” culture has also influenced consumer demands and aspirations. People are willing to consume and develop a lifestyle akin to a developed world’s consumer. • Rising Eve power: With the growing importance given to a girl’s education and financial independence, there has been a rise in the total number of working women.
An estimated 40-50 million working women, in the age groupof 20-40 years, will be part of urban India by 2016. This financial independence leads to higher decision making power in household and personal purchasing matters. There has thus been a surge in women spending in categories such as apparel, grooming, personal care, eating out and electronic gadgets. • Increasing time poverty: People are spending more time at office, commuting to the workplace, on leisure and recreation, vacations, grooming and well-being, socializing etc. leading to limited time available for shopping and other activities.
An increasing emphasis on reducing stress and time for routine activities (household chores, shopping, etc. ) and maximizing time with families and friends has led to them looking out for alternate channels of shopping. Convenience is thus the key for consumers who prefer such shopping destinations as ‘all under one roof ’ and/or non-store retail formats. Indian Apparel Industry Size India’s total textile and apparel industry size (domestic + exports) is estimated to be USD 89 billion in 2011 and is projected to grow at a CAGR of 9. 5% to reach USD 221 billion by 2021.
India ranks among the top target countries for any company sourcing textiles and apparel. Indeed, apart from China, no other country can match the size, spread, depth, and competitiveness of the Indian textile and apparel industry. Moreover, the global elimination of quotas at the end of 2004 has greatly enhanced the opportunities for sourcing from India. India: a growing source India supplies over US$13 bn worth of textiles and apparel to the world’s markets. And exports are growing rapidly as more and more buyers around the world turn to India as an alternative to China.
In 2005 – spurred by the global elimination of quotas – shipments to the EU soared by 30% and those to the USA shot up by 34%. These increases are remarkable, given that EU imports from all sources rose by only 8% while US import growth was just 6%. India’s Competitiveness India is one of the largest producers of textiles and apparel in the world, with a strong production base for a wide range of both natural and man-made fibers (including cotton, jute, silk, wool, polyester, nylon, and acrylic).
It is the world’s largest producer of jute, the second-largest producer of silk, third-largest producer of cotton and fifth-largest producer of synthetic fibers and yarn. India has a strong presence across the textile value chain starting from fiber production to garmenting. No other country except China had this high a degree of integration across the value chain. Infrastructural bottlenecks have long been an issue for Indian exports. However, with increasing government focus on infrastructure building and participation of private players in power, airlines, roads, ports, etc. India’s exports will get a fillip in coming years. The political and economic stability of India makes it a better trade partner compared to its low-cost Asian peers. India has flexibility in production quantity; Indian players can execute orders of various order sizes. India has the capability to produce textiles and apparel of diverse quality and variety while many of its peers are still struggling with poor quality manufacturing and chemical processing.
Abundant availability of skilled and cost-efficient labor is expected to keep the country’s competitiveness buoyant for the next few years. Strong managerial talent pool and entrepreneurial spirit of Indian businessmen are added advantages of the Indian textile and apparel sector. The robust domestic market which is growing at 9% per year, backed by high GDP growth and growth in consumer spending power will provide India’s textile and apparel sector a plethora of opportunities to flourish irrespective of global market conditions.