India’s apparel industry went from $78 billion to $55 billion, a drop of about 30% due to the pandemic. But the better part is that it’s back to $72 billion as of FY22. And FY23 only looks brighter! Here are some crisp insights into India’s apparel industry.
According to Mckinsey & Company, the Indian fashion industry has been shifting from unorganised to organised sector, a trend accelerated by COVID-19 pandemic. The organised market captures nearly 40% of the fashion market and will grow at 12-13%.
Diving into Different Segments
The apparel industry can be classified into sub-segments such as footwear, ethnic wear, athleisure, and Indian wedding and celebration wear, to name a few. The forecasted CAGR for the footwear market between FY22-26 is 14.6%, whereas, for apparel, the same metric stands at 14.4%.
The FY20-25 CAGR for the ethnic wear segment stands at 5.5-6%, where the branded penetration is between 12% and 14%. The Indian wedding and celebration wear segment’s FY20-25 CAGR also stands at 5.5-6%, where the branded penetration is between 18% and 20%.
The growth of the athleisure wear segment will be driven by the fact that consumers have become more health-conscious and are working out more.
Companies in the Limelight
The growth of 10 leading companies in FY20, FY21, and FY22 went from an average of -35% to 55%. According to Metro Brands, its online footwear sales market share of online footwear sales is expected to grow at a CAGR of 26-30% between FY20-25.
What’s in it for Investors?
For those investing in stocks belonging to the apparel industry, there are two major catalysts for growth. One is the growing size of the industry itself. Second is the increase in the share of organised sector players from the unorganised sector players.
However, a critical risk is that spending on apparel is discretionary, and the industry as a whole can suffer during times of crisis.
Note: Companies/ stocks mentioned in the article are for informational purpose.