It’s not teeny-weeny anymore! Expected to grow at a compound annual growth rate (CAGR) of 10.5 percent, branded kidswear is one of the most propitious markets in India. Poised to reach US$ 22.4 billion by 2023, from US$ 8.3 billion in 2013. The sector is rife with growth opportunities for players across the value chain, viz. brand owners, producers, suppliers, distributors as well as retailers.
Over the last 20-25 years, kids’ dressing habits in India have undergone a sea change. Before that, fashion wears were the privilege of only the grown ups whilst the young ones mostly wore simple, functional outfits. However today, fashion has become a part and parcel of everyday living. Now-a-days, even children are quite style-conscious.
No more a dull “Jack” or a plain “Jill”, these little style buffs are self-assured, de rigueur and brand savvy. The new-age moms and dads also seem to have lapped up the idea of “trendy kids”, and they don’t hesitate to spend for their child’s fashion escapades. Notably, the demand for children’s fashion products has picked up significantly since the turn of the new millennium. In consequence, the market has seen the influx of several homegrown as well as imported kidswear brands. Also, the emergence of different modern retail formats has spurred organised retailing in the category that is spiraling up further due to the rise of e-commerce.
Market Overview
According to Technopak study, India’s branded apparel market is expected to grow at a compound annual growth rate (CAGR) of 9 percent, from US$ 41 billion in 2013 to US$ 102 billion in 2023. In 2013, the kidswear segment, at US$ 8.3 billion, alone contributed 20 percent of India’s entire apparel market. However, given its higher growth rate, this share is expected to increase to 22 percent by 2023. Considering that until a decade or two ago, there weren’t many children’s wear brands; kids-focused fashion chains, exclusive outlets yet to take off in the country – it’s no mean feat. So, what’s bolstering its boom?
As per Sharad Venkta, MD and CEO, Toonz Retail, “The Indian consumer has evolved from a “sew & stitch” concept to readymade garment that helped the industry to extend its presence to a wider customer base including kids. The last 10 years, in particular, have registered robust growth in kidswear mainly because the upper-middle-class has grown multifold.
Dual incomes households with one or two kids at the most, are capable and inclined to pamper their children.” Set up in 2010 in Bengaluru, Toonz is kids’ specialty retail chain. Its stores offer casual range from own brands SuperYoung and WowMom along with handpicked SKUs of premium brands.
Faridabad-based Akriti Apparels came in 1967. It is an apparel maker and exporter and is a leading supplier to H&M. The brand also works with Cubus, Joe Fresh, JojoMamanBebe. The company diversified into retailing in 2000 by launching own children’s wear brand Beebay. Avanish Jain, Director, Beebay, states, “For the past couple of years, kids’ apparel wear market in India has grown phenomenally. Organised retail segment is playing a major role in its development with more and more consumers wanting branded merchandise.”
Chandigarh-based Indian Clothing (ICPL) manufactures and retails apparel and accessories. It owns two apparel brands, 612 League (formerly 612 Ivy League) and Baby League. The company’s co-founder and CEO, Manu Indrayan notifies, “Mothers are now spending enormous amounts on clothing for their kids for they believe that the way a child is dressed is often a reflection of the parents’ sense of style”.
“No doubt, people are brandconscious. Every parent wishes giving their kids the best; it’s the only guilt-free shopping experience, opines Darpan Kapoor, Vice Chairman, Kapsons Group. “Though while buying kidswear, they are more anxious about the style and the quality”, he points out. Known as the fashion powerhouse of North, Kapsons is a multi-brand retailer from Chandigarh. It runs Kapsons family stores and Kapkids, a kids-focused store concept.
Agrees, Vinod Boob, Founder and CEO, Doodle, “The customers acknowledge that the quality comes at a price, and they are ready to pay for it.” For a successful kidswear collection, designs on international lines are a necessity now, he says. Doodle makes girls wear with party wear and casual lines and is based out of Bengaluru.
Players to Watch
Indian consumers today can select from a bevy of apparel brands in kids segment across price-points. To top it, they have access to multiple sales points. Global brands have always been rage in India. In western wear, international brands UCB, Allen Solly, Levi’s, Nike SB, Next, Elle, Barbie, Jordan Firetrap, Angry Birds, Mothercare, Nautica, Tommy Hilfiger, Cherokee, etc. have strong presence.
Some of the well-liked homebred labels in the sub-segment include Gini & Jony, Beebay, Ruff, WowMom and SuperYoung (Toonz Retail), 612 League and Baby League (ICPL), Nauti Nati, Vitamins, Cutecumber, Wilkins & Tuscany, Doodle, Tippy, Petals, Joy N Jolly, Little Kangroos and more. In ethnic wear, Biba, Fab India, Neeru Junior, Kilkari, Babyhug, Lil’ Posh, Lipsa, DotnDito, Bhartiya Paridhan, K&U, Campana, Raja Sahab, etc., rule the roost. Interestingly, many brands began as manufacturers but eventually diversifi ed into retailing. Contrary to this trend, retailers such as Toonz Retail, Mom & Me, Shoppers Stop and Mothercare have come up with own private brands as well.
Market Wars
To increase their market share in the burgeoning kidswear trade, the brands and retailers are doing everything to spearhead their presence and increase customer base. ICPL-owned 612 Ivy League and Baby League are aimed at kids aged 3-12 years and infants (0-2 years) respectively. The company’s production capacity is of 135,000 garments per month. Entire designing and production is done in-house, however, for making specialised products, it has a dedicated vendors base. Covering over 107 Indian cities, ICPL has a total of 324 point of sales, a mix of 287 SIS (in LFS), 20 EBOs, 9 MBOs and 8 online partners.
Nauti Nati is a retail venture by Omega Designs (established in 1995), an apparel producer and exporter that makes children’s as well as women’s wear for western markets. Shantanu Dugar, Director at Nauti Nati tells more, “Enabled by our avant-garde design and production capabilities, we decided to enter into kids apparel retailing in 2009 and introduced Nauti Nati. Aimed at upper middle class, the brand caters to kids aged 6 months to 10 years. In 2013, we expanded into other product categories to include shoes, accessories and extensive party line.”
The brand is stocked in nearly all Shoppers Stop stores and Central outlets pan India. Dugar discloses, “Starting spring summer 2015, the brand will be available in almost 50 Reliance Trends stores.” Additionally, the brand has a strong online presence via own and other major e-commerce portals, besides six exclusive stores. “We make smart and casual Indo-western look quality merchandise in 0-12 years category with specific focus on 2-8 years age group. With consumer segment split of 60 percent (girls) and 40 percent (boys), the brand presents 250-300 styles per season”, elucidates Jain of Beebay. He shares that the company plans to add two more production units to existing three manufacturing units in the coming future with an aim to double its production capacity to 8 million pieces, a month. “We have grown swiftly through company owned stores, franchisees and online channels. Our overseas presence extends to the US, UK, Australia, Europe, etc. As of now, Beebay has 26 stores in India.” The firm has its own office in the US through its subsidiary – Beebay International.
Present nationwide, Toonz has 57 stores across 44 cities. Bulk of its stores can be found in southern states. It mainly operates via the franchise route. With apparel (own plus other brands) as key revenue grosser, Toonz offers various other products, including baby basic, nursery, toys and games etc. In-house brands are also available in select Central outlets and all key online shopping sites. Catering to the age bracket of 0-14 years, girls wear brand Doodle has shop-in-shop tie-ups in southern region with several large format retailers like Central, Megamart, Brand Factory and Total. With current one company-owned store in home city, the brand supplies to a number of multi-brand outlets. Furthermore, it sells through online shopping sites. Kids-centric multi-brand store Kapkids currently has 16 doors comprising 12 exclusive outlets and 4 locations under SIS model within Kapsons Family stores. It also has own web store.
Slow- but- sure
In comparison to affordable brands, designer labels and luxury brands in kidswear space have been “slow movers” in India. It’s only recently that a lot of upscale, high-end brands have turned their focus on the country’s market. Slowly but surely, international brands like Gucci Kids, Armani Junior, Kenneth Cole, Burberry, Stella Mc Cartney, Roberto Cavalli have begun to make their presence felt. Armani Junior has its exclusive store in Delhi. Les Petits, also from Delhi, prides itself as India’s first multi-brand luxury store for children’s apparel and furniture store offering renowned worldwide labels like Fendi Kids, Miss Blumarine, Simonetta, Pinco Pallino and Baby Dior.
Known for its high quality ready-to-wear kids’ fashion clothing and accessories, Kidology is co-creation of the trio Neha Sachar, Ankur Mittal and Karina Rajpal. “We are a highend multi-designer apparel brand meant for niche market. Our concept is unique as far as Indian market is concerned. We launched the label in 2010 with a fl agship store at DLF Promenade Mall in Vasant Kunj, New Delhi. Being first mover was challenging, since until then, none of the Indian retailers had really experimented with designer clothes for children in retail nor had our price points existed,” apprises Karina Rajpal, Joint Managing Director at Kidology.
Vertically integrated, the company produces as well as distributes. With battery of well-known India-bred fashion designers: Gaurav Gupta, Gauri & Nainika, Malini Ramani, Nandita Basu and Siddharth Tytler, and in-house designer Maya Nocon from Germany designing the collections, the brand targets age group of 0-10 yrs and offers customised options for teenagers. The label also offers accessories range. Apart from flagship store, domestically, Kidology is retailed from multi-designer outlets in Mumbai, Hyderabad, Chennai and Kolkata. The brand is available online too, via own web store and various other e-shopping portals. Overseas, it is sold in multi-designer stores in Dubai, Singapore, Sydney, London and New York.
Elements & Intricacies
Indrayan [ICPL] feels that kidswear is comparatively more engaging and complex product category from the manufacturing perspective. He also underscores the fact that the product range is fairly wide. Also that a kidswear store stocks higher SKUs leading to higher shelf space requirement. In the past, Indian apparel maker would bring in globallyinspired merchandise an year or so after it was launched. But this doesn’t work any more! Cautions Boob from Doodle.
“Consumers are conversant with latest fashion trends from around the world and desire to incorporate them in their dressing as soon as they arrive. Manufacturers need to be in-sync with what’s new at all times lest they loose their customers. But thanks to brands like Zara and UCB, new trends are introduced almost immediately. Referring to the consumer attitude, Nauti Nati’s Dugar says, “Upper middle class is our target group. The customers in this segment are not only utilitarian but also demand appealing product offering at value prices. This mindset is unlikely to change anytime and thus, it presents a daunting challenge for brands that are constantly looking to increase their
market presence solely on the basis of product differentiation.”
Venkta from Toonz too shares his observations regarding consumer outlook. He underlines the infl uence of media and fashion, “The fallout of enhanced media exposure, especially that of TV, is that young kids have become self-opinionated and they want to make own choices regarding clothes. These days even parents like to experiment with latest fashion for their children. International fashion exposure has created a demand for more mature detailing and silhouettes even in kids brands.”
Challenges
Kidswear is perceived as a difficult in retail. Talking about the challenges, Kapoor from Kapsons remarks, “Right brands, right styles and right price – is the key to success in this segment. The style preferences vary from market to market. As such, retailers should be mindful about the product-mix as it is unique to every market. Besides, big names can entice buyers but only quality keeps hold on them.”
Even as kids are encouraged to express their choice, still buying decision is parent’s call. That provides a marketing challenge to the brands that whether the marketing campaign should be consumer-centric or and customer-focused, says Venkta. Elucidating the real estate woes, Kidology’s Karina Rajpal states, “Like every other segment, upscale brands are also challenged by soaring real estate prices. We are focusing on developing smaller format (300-500 sq.ft.) stores to maximize per square feet profitability. Our other key concern is that there are not many designers in India doing premium kidswear.”
As per her, the brand follows low pricing strategy compared to international designer brands to cater to wider audiences. According to Dugar, the country’s kidswear market is not as evolved in taste as perhaps many western markets. So, it’s difficult to bring in new product categories and styling.” To deal with this scenario, Nauti Nati makes region-specific collections with controlled percentage of new merchandise in each collection.
E-commerce Impact
Jain from Beebay is of the view that online retail in kidswear has vast potential for retailers who can deliver quality and fashion unfailingly. “Online space compliments our physical stores and helps us to reach areas where we lack physical presence. We are available through our own official store online portal and also via leading online shopping sites. E-commerce already comprises close to 20 percent of our top line.”
But he cautions that volumes are critical, only then online retailers can offer competitive pricing and face big international e-tailers already present in the county or planning to enter. E-commerce is here to stay. The channel has widened reach and is facilitating access to markets where a retailer is not mulling to open a store. “But the deep discount culture in online retail should be done away with because it is hurting offline retailers”, asserts Boob.
Pointing out a key hurdle, Nauti Nati’s Dugar says, "Our general conjecture is that given the many sizes in the children’s category, brands will continue to face challenges in selling custom/tight fit garments as it is impossible to accurately address the fit for such garments by simply viewing fl at images online. Sensing the direction, the apparel retail industry is heading towards, Expert view is that omni-channel strategy is the future, and brands and retailers need to find the right balance between different sales channels to maximize profitability.
Expanding Vistas
With market burgeoning fast, expansion is on cards for many. Beebay is targeting to expand its national footprint to over stores 100 by 2015, shares Jain.
Toonz expects to take its network to 75 stores by end of March 2015 and then double its store count to 150 stores by Mar 2016. Venkta unveils, “We at Toonz are planning expansion of our kidswear range by launching party wear collection under brands “Super Young Celebrations” and “WowMom Celebrations” which will be an extension of our existing brand offering.” Besides this, the company plans soon to launch fashion accessories in the brand Super Young.
From a regional chain, Kapkids is all ready to evolve into a nationwide chain. From present 16, it would like to reach a total of 24 outlets. The priority new markets where Kapkids is looking to gain footing are Gujrat and North East. The proposed expansion will be mainly via franchising. As per Rajpal, “Kidology plans to expand its presence in key cities in India and globally via own stores and shop-in-shops.” The brand would continue to enhance overseas reach through its e-commerce site.
There’s a lot in store for ICPL. “We are re-launching the brand 612 Ivy League with a new identity as “612 League” (effective SS15 season). Re-launch of its e-com enabled website is also underway. The brand’s product range will be expanded by introducing party wear, innerwear and utility wear by AW15”, confirms Indrayan. The brand is looking to have 50 EBOs by the end of next year, besides strengthening presence in organised retail and MBOs. Also, Baby Leagues’ presence will be increased across sales points. All in All, the company is aiming for 500 sale points by 2016 across retail formats. Nauti Nati plans to add more EBOs and play across varied distribution channels including online. Over the next two quarters, the brand aims to have around 20 EBOs. Presently, it runs six EBOs.
The Future
As per analysts, kidswear is one of the fastest growing markets in India. Growing at the rate of 10.5 percent annually, the branded segment is likely to be worth US$ 22.4 billion by 2023, says the Technopak. Although the unorganized segment has a dominant share even today, the Indian kidswear sector is steadily getting organised, with new players entering at every step of the value chain. It goes without mentioning that the brands, manufacturers, retailers and other market participants can expect the joyride to continue for many years to come.
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