Clothing Industry : A bird’s eye view
Recently, I had an opportunity to have a candid discussion with someone who has been into apparel industry since long time. After talking for two straight hours, I was quite amazed at how this entire clothing industry works. We discussed from textile manufacturing to e-commerce and advertising.
I came into this story with few simple questions. What I’ve discovered has forever changed the way I think about the things I wear. So, I’ll list 6 key insights I learnt from conversation:
1. Apparel e-commerce is women centric.
Frankly, I never thought that this would be the case until I thoroughly watched Myntra’s home page myself. Try doing the same on your own in incognito mode and you would notice most of the screen space is occupied by women centric products.
Product Managers at Myntra know very well that women show more of a consumerist behavior and tend to shop more than men do. Women shoppers compare a lot, are very social with their purchases (sending pictures of interesting options to friends and family by WhatsApp, for example) and spend little more lavishly in their purchases.
But this wasn’t the case a decade ago, when smartphones were majorly owned by men. This shift came into place when smartphone penetration increased after 2015 and was accelerated after ‘Jio’ was launched. Let’s take a look at few other important demographics of this business.
Kids — When it comes to buying clothes for kids, Parents are less likely to compromise on quality. Comfort and quality are two key factors for this segment. For kids’ wear people don’t hesitate paying an extra buck , hence this segment can run on healthy profit margins.
Teenagers — ‘Watched it on Instagram? Shop it from our store’ is the selling strategy for the teens. This generation is a keen follower of fashion influencers and celebs due to the rise of Social Media. Although they are fashion aware, they don’t have a much of buying power.
Men- Ecommerce stores give men least importance when it comes to selling clothes online. The e-tailers target less on this segment since men tend buy long lasting clothes and stick to same brands they have been using since years.
Tier 2 cities — Since couple of years ecommerce is experiencing higher demand growth from tier 2 and tier 3 cities than tier 1. The segment which remained unexplored for years, Is now generating higher demand thanks to Jio
2. Fast Fashion is unstoppable.
With the business model built on the notion of ‘Feel the luxury, without paying full price’, The fast fashion is quick, cheap and viral. Leading fast fashion brands like Zara, H & M introduce new designs into market every two weeks where as competitors take more than 4 months to do the same.
Built around the idea that trendy clothes should be available to ‘consumers’ at affordable prices, The industry leading brand Zara has democratized high fashion. Let’s understand what it means.
Imagine at some event, Scarlett Johansson walks down the red carpet wearing an outfit designed by an expensive luxury label. With her pictures all over Instagram, The designers at Zara will quickly copy her design and send it to manufacturing department. Zara, who’s supply chain model is based on ‘Quick Response Manufacturing’ has enough power to launch this replicated outfit by next week across the stores
With this machinery in place, Zara quickly surpassed its competitors in terms of sales and profits. Given the declining market share, Legacy brands like Levi’s are willing to shift to fast fashion business.
3. The Manufacturing Race
The textile industry in China is the largest in the world in both overall production and exports. Efficient supply chain, modern infrastructure and high productivity has propelled china to grab the title position in textile manufacturing. In India, retail giants tend prefer Chinese textile for its quality at a discounted price. Processing equipment like laser machines, tanning machines are quite advanced and affordable when sourced from china.
Bangladesh which is the second largest apparel exporting country in the world owes its success to cheap labor. The country has more than 5000 garment factories and 40 Million workers, 85 % of which are women.
Sadly the country’s garment industry faces the issue of minimum wage. With Fast Fashion putting pressure on factories to produce garments fast and cheap, The garment worker is the only point of the supply chain where the margins are squeezed.
Various humanitarian organizations have raised concerns over minimum wage and working conditions of garment workers. This inspired Safia Minney to initiate ‘PeopleTree’, An organization which has been a catalyst for change in this industry for delivering more social benefit.
“This is about partnering. This is about finding creative solutions, together with them, and listening to what their problems are and finding a way that works, together” Safia says.
4. Consumer Behavior
What you wear says something about you. We communicate who we are to a certain extent through clothing. And this has been happening throughout the history.
The Marketing teams do have a very good sense of this behavior and launch their campaigns accordingly. Thousands of messages that we receive every day from advertisements and movies suggesting that materialism and the pursuit of possessions and owning stuff is what’s going to make us happy. Across all platforms, the basic message is the same: the way to solve the problems of your life is through consumption.
With the rise of fashion influencers across the social media, Buyers fall prey and tend to buy more than they need. Today we purchase over 80 billion pieces of new clothing each year. That’s 400% more than the amount we bought just two decades ago.
5. Environmental Impact
Did you know that, Fashion today is the number two most polluting industry on earth, second only to the oil industry? But how many times have you heard of that? Synthetic fabrics like Polyesters, Nylon, Spandex are actually made from fossil fuels which are mostly non bio degradable.
Globally, an estimated 92 million tonnes of textile waste is created each year and the equivalent to a rubbish truck full of clothes ends up on landfill sites every second. By 2030, we are expected as a whole to be discarding more than 134 million tonnes of textiles a year. Most of this waste is non-biodegradable, Meaning it sits in landfills for 200 years or more.
Watching this environmental impact, Livia Firth has been calling for major change in the fashion industry. One of the fashion industry’s most vocal and public advocates for sustainability, Firth founded ‘Eco Age’ in 2009. She made headlines by starting something called “The Green Carpet Challenge,” urging celebrities and top designers to take part in more mindful forms of fashion.
6. Indian Market Players
Major Indian conglomerates like Tata and Aditya Birla have been into this business for quite long time. Recently, Reliance has been betting big in this sector through platforms like Ajio.
Due to Reliance- Amazon tussle, Future group is seeing a tough road ahead. Landmark group, A leading retailer in middle east owns brands like Max fashion and Lifestyle. Raheja group, A real estate development company holds Shopper’s stop.
With Social media platforms getting integrated with e-commerce stores, The industry is still in growth phase with no signs of saturation in sight.
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