Denim has become a basic western apparel for Indian consumers and this fact has contributed to the sustained growth of the category. The denim market in India stood at Rs 171 million in retail value sales in 2016 and grew at CAGR of 13.6% between 2011-16. Smaller towns and cities are increasingly contributing to the sales of denim, and especially of Indian brands where consumer preferences for western wear have evolved. In addition, branded store expansion in tier II and tier III cities over the last five years has also fuelled the growth of the overall denim category.
Online retail has been another growth driver and has attracted price conscious small town consumers towards the branded market. Affordability is a major factor for consumers in smaller towns and Indian brands offer this to the aspirational consumer segment. Consumers can buy a pair of branded denims in the price range of Rs 700-1,500. While metro consumers spend on denims throughout the year, consumers from smaller towns plan their purchases typically around the festive sale season.
Brands like FBB, Killer, Park Avenue and Pantaloons among others are seizing the first-mover advantage by developing their retail presence and driving promotions in these markets. The main push in smaller towns for Indian brands is from the 14-32 years age group, as older consumers perceive denim to be suitable for the youth and instead opt for cotton trousers. The young demographic is slowly warming up to online retailing. The growth potential for Indian brands in smaller towns lies with the middle income groups and typically teenagers, college students and youngsters entering the workforce.
Simultaneously, there is competition from the unbranded sector. Jeans also has a market amongst lower income groups; typically these consumers are not really brand conscious and want affordable, long-lasting jeans. This segment will take time to graduate to the branded market based on their rising disposable incomes. Indian brands, thus, have an opportunity to capture this market by offering affordable prices.Currently, several local brands do not have offline presence in key towns and cities. It is also increasingly becoming important for local Indian brands to establish a clear brand identity to set themselves apart from rivals. Competition is expected to increase over the next few years from international brands as they look to serve the Indian market away from metros and bigger cities.
The author is senior research analyst, Euromonitor International