Price hikes, not volume are driving Indian apparel market growth
25 April 2023, Mumbai
India's apparel market witnessed a 15% expansion during the 2022-23 period, but this growth was entirely driven by price hikes, as volumes of products sold fell by 3% but the demand recovery is expected only during Diwali this year, according to leading industry association CMAI.
While the sales growth has breached pre-COVID levels, smaller retailers and apparel makers in multi-brand outlets in smaller towns are feeling the pressure due to inflation. Most apparel makers and retailers hiked prices by 15-20% due to increase in raw material prices over the past two years, resulting in falling demand for unorganised players.
The shift towards branded apparel has also increased, accounting for 30% of the sector compared to 25% nearly five years ago. The organised sector has clocked higher growth of 18%, as incomes rose and consumers shifted steadily towards organised formats.
E-commerce's share in the apparel sector is one of the highest in India, but it still remains significantly below countries like China and the US.
However, companies in India have been investing behind omni-channel capabilities over the years to gain a foothold in this channel.
