It is critical to maintain the delicate equilibrium between affordability and quality to meet consumer demand and stay competitive
Retail businesses face the unending challenge of harmonizing affordability with quality in their clothing offerings to meet consumer demand and stay competitive. Identifying consumer preferences, leveraging tier 2 and tier 3 markets, investigating in-house production alternatives, and the entry of international brands are key factors that control this delicate equilibrium.
Poised for substantial growth, with an estimated Compound Annual Growth Rate (CAGR) of 18.83 % projected between 2022 and 2027, the Indian online fashion retail market is expected to increase by an impressive US $ 28,935.66 million, as per Technavio. These statistics underscore the vast potential the sector holds for investors and businesses alike.
Factors to consider
Several factors impact pricing. Those seeking to offer quality products at affordable prices must consider:
Consumer Preferences: When it comes to affordable and quality clothing, considering consumer preferences is key. Market research and consumer fashion assessment are vital in recognizing what shoppers are eyeballing in their clothing purchases. Aspects affecting consumer decisions, such as price, material, brand reputation, and sustainability, all contribute to determining their choices.
Tier 2 and Tier 3 Markets: Markets beyond the metros hold tight potential for retail, but they come with their set of challenges. Retailers understand the unique characteristics of these markets to effectively customise their products. Strategies for entering and succeeding in developing markets comprise localization, understanding local preferences, and building strong relationships with customers.
In-house production: As per statistics, clothing sales doubled from 100 to 200 billion units a year, while the average number of times an item was worn decreased by 36% overall. Encouraged by this retailers are increasingly opting for in-house production.
In-house production can be a game-changer for retailers eyeing to keep up with quality standards and control over their supply chain. By manufacturing their clothing, retailers can guarantee higher quality control and potentially lower costs. However, setting up in-house production facilities comes with challenges such as investment costs, operational complexities, and scalability considerations. Adding to the challenges and the market competition, existing players in the Indian landscape fear the entry of international brands into the domain.
International competition: The entry of international brands into the marketplace results in both competition and opportunities for retailers. Doing a competition analysis and creating strategies for distinction is critical for retailers to carve out their place in a congested marketplace. Familiarizing with changing market dynamics with the entry of international brands requires agility, innovation, and a deep understanding of consumer preferences.
Strategies to strike a balance
Finding the sweet spot between affordability and quality is a must for retail businesses. One method is to focus on cost-effective sourcing and fabrication practices. By restructuring operations, negotiating better deals with suppliers, and optimizing logistics, retailers can keep costs down without compromising on quality.
Cost-effective sourcing and production: Embracing tier 2 and tier 3 suppliers can be a good strategy for retailers. These suppliers often offer economical pricing while providing decent quality. By expanding sourcing options and building strong relationships with these suppliers, retailers can confirm a stable supply of reasonably priced yet quality products.
Quality Control: Quality control is non-negotiable for sustaining customer trust. Retailers can capitalize on in-house production conveniences to closely monitor the production process and certify that quality standards are met. Applying strict quality control measures while keeping a close eye on costs is key to offering affordable yet reliable products.
The revenue in the Apparel market in India is projected to reach US$105.50bn in 2024. In addition, it is anticipated to grow annually by 3.81% (CAGR 2024-2028). To make the most of the opportunities it offers, it is important to find the right balance between affordability and quality. By understanding consumer preferences, embracing emerging markets, considering in-house production, and adapting to the influx of international brands, retailers can position themselves for success. With strategic planning and a commitment to meeting consumer needs, businesses can create a winning formula that resonates with customers and drives long-term growth in the ever-evolving retail landscape.
Akash Agarwal is a whole-time director with V2 Retail, an apparel retailer that has 113 stores in 17 states.
