Monday, June 3, 2019

Challenges Of The Indian Textile Industry Marketing Essay

Challenges Of The Indian cloth patience Marketing EssayScale Indian textile Industry is gameyly fragmented Industry that is lead by several small-scale industries. Because of this, there is lack of Industry Leadership. These small companies do non waste fiscal resources to invest in scientific up-gradation and they argon not able to generate economies of scale. This leads to inability to establish a world- phase matched player. All the firmaments turn out spinning face the problem of scale. India has very(prenominal) few large firms and other firms are generally smaller than their Chinese or Thai counterparts. Some of the Chinese large firms have 1.5 times higher spinning capacity, 1.25 times denim (and 2 times gray fabric) capacity and about 6 times more(prenominal) than revenue in line up than their counterparts in India1which in turn gave an effect on the overall be distribution along with the ability to pull customers with forged orders.No of Ex airersSource CRISI LSkill and Labor productiveness Though Industry has cheap and ball-hawking manpower but they are less(prenominal) productive comparative degree to other south Asian countries. grim Labor productivity due to lack of skills and modernized infrastructure is making Indian material industry less productive than other competitor nations.An Industry and Regional PerspectiveSource Economics Program Working Paper Series The Cost Competitiveness of the Manufacturing firmament in China and India (Bart van Ark, Abdul Azeez Erumban, Vivian Chen, Utsav Kumar)Along with the labor productivity issues three other issues are of important consideration (a) there is a lack of adept manpower -there are only 30 programmes at graduate engineering (including diploma) levels graduating nearly vitamin C0 students this subprogram is insufficient for bringing about signifi guttert technological change in the cloth sector (b) investing by Indian firms for training of its existing workforce is very li mited and the skills are confined to already existing processes (c) there is ripe dearth of trained operators and supervisors in India. It is postulateed that Indian firms will have to invest close to Rs. 1400 bn by year 2010 to amplification its planetary trade to $ 50 bn. This kind of investment would require about 70,000 supervisors and 1.05mn operators in the material sector and at least 112,000 supervisors and 2.8mn operators in the do sector (assuming a 8020 ratio of investment between textiles and apparel).2In this situation the real bottleneck to appendage is going to be availability of skilled manpower.Poor Infrastructure Technological Obsolescence and secondary degree of modernization in various steps of value chain affects the quality, cost and distribution. The general trend in the country is to go for second hand and outdated looms then resulting in lower productivity and quality. Raw material from power looms and handloom is of low quality. Though India is a h ub of IT operate, they are not effectively implemented in textile sector to improve the productivity1.pngInadequate Research Development and Lack of Technology Upgradation government activity of India has d one(a) significant investment in various schemes and other programmes for the mystifyth and development of the industry. It launched Technology up gradation fund scheme in 1999 and issues Rs 916 bn for engineering upgradation. However TUFS have not benefited all the segments of the Textile Value Chain -large parts of the funds have gone to the relatively healthier spinning sector.2.pngLow FDI Lack of scale and the fragmented nature of industry have discouraged mega investments in the Indian textile industry. Unattractiveness of the industry has resulted in abysmal FDI inflows, despite 100% FDI existence allowed under the automatic route. These drawbacks buildd a hurdle to make industry more competitive on the global basis.Legacy of government policy presidency followed pro tectionist policy for handlooms (labour-intensive and seen as a means to sustain employment) vis--vis power looms mills. India had antiquated labour laws. The companies have often broken their business down into small units to subjugate any trouble created by labor unionization. India also maintained capacity fill-inrictions for a long time because government wanted to incentivize Small-scale industries. The Land and urbanisation laws resulted in closure of urban mills and lack of import subsidies on advanced machinery resulted on limited engineering science advancement.Lack of Trade membership India is serious lacking in trade pact memberships, which leads to restricted access to the other major food markets. This issue made others to impose quota and duty, which put scissors on the sourcing quantities from India. proud Power Tariff After raw material, power cost is the most significant cost in the whole supply chain. High power cost and erratic supply hampers the intersecti on in India.High Cycle time for garments Cycle time is the bring up factor in determining the competitiveness of a firm. It has a direct impact on both price and delivery schedule. Cycle time reduction is strongly correlated with high first thoroughfare yield, high throughput times, low variability in process times, low WIP and consequently cost. Currently Indian firms have high lead times and they must sign on their cycle times across the entire supply chain. The average lead time in manufacturing and delivery sums to most 45-60 days from fabric buying to freight of apparels. It can also get extended to 80 days. The mean delay in exporting finished garments from India after procurement of raw materials is estimated to be 15.5 days. The ledge life of products driven by fashion is merely 45 days therefore, such delays are indefensible. In contrast Turkey completes entire task ranging from approbation of design to delivery in warehouse in a flat 30 days cycle3. Turkey also has t he strategic advantage of being located close to EU markets and positive liberal political conditions. Customs must provide a turnaround time of day for an order if we expect Indian firms to become part of larger global supply chains. Indian textile firms must enforce a deployment of industrial engineering with specific immensity on cellular manufacturing, JIT and statistical process control to minimize lead times on shop floors. Usage of IT for increasing the productivity is also low in this sector.Indo French CollaborationMachinery The French textile machinery Manufacturers has established a firm foothold on the international markets for many years. France is the European Unions third largest exporter of textile machinery and the sixth largest in the world. More than one hundred countries have chosen them as their partners to whom they export 90% of their national production. They are a dynamic separate of companies who created years ago a private professional Association UCMTF (French Association of Textile Machinery Manufacturers), whose aim is the promotion of the French machines and French companies.The specialized sectors of the French textile machinery industry areSpinning preparation machineryLong fibre spinning machineryFibre opening, fibre blending machinery, textile waste recoveryCardsNonwovens manufacturing ocellusSuch expertness if augmented with Indian government support can help the issues associated with poor infrastructure and machinery resulting in poor quality of fabric and thus increase the competitiveness of Indian textile in global market.The French textile machinery manufacturers also realized the importance of the Indian textile industry. They invited the Indian textile producers to a series the Indo-French seminar French Technology to Boost the Indian Textile Industrys Competitiveness which were held in Mumbai and Ludhiana on 20th and 23rd April 2010 respectively. The aim of this seminar was to regularly accelerate direct contact s between the Indian textile producers and the top management of the French machinery producers.In words of Mrs Evelyne Cholet, the Secretary General of UCMTF- Organization of such seminars in India is very important at present especially when the Indian Government realizes the importance of new investments in textile machinery to stimulate this strategic sector. The technological textiles sector for which France has an expertise is another sector which has great potential in IndiaThis endeavor is supported by Indian government as these seminars were held under the patronage of the office of the Textile Commissioner Ministry of Textiles and Government of India. The French Trade Commission of the Embassy of France in India, Ubifrance (Frances agency for the international development of French companies) and the French Textile Machinery Manufacturers Association (UCMTF) were co-organizers of the seminars.Technical Textile India is at the threshold of technical textile development, w hich is set to play a huge role in the development of the countrys various facilities, thus offering the greatest growth potential in this sector. Owing to the rise in demand for value added textile products in the developed nations, the technical textile industry is said to grow around 4 5 percent. According to the recent research by the Textiles Committee, the technical textile industry in India is expected to grow at a rate of 11% anually and reach a size of around $14 billion by 2012. The current size of the market is little less than $8 billion and the projected investment in this sector is around $1000 million. Technical textiles correspond to a multi-disciplinary field with different applications in numerous field such as medicine, aerospace sports, defence, agriculture and construction.France has already developed expertise in this segment. In France, the technical textile industry comprises nearly 600 companies, consisting of very small businesses, numerous SMEs and big g roups alike. Some twenty trades are represented, from fibre production and spinning through to clothes-making and assembly, and cover 12 sectors of application. This type of material is regularly used in widely varying fields such as packaging, protection and safety, clothing, construction, transport, the environment and the medical sector. All these mutually complementary companies work within a net of technical essences, laboratories, universities, competitiveness clusters and professional associations. Their excellence is recognized far beyond the borders of France.Indian manufactures can learn a lot from French technologies and products in technical textile segment. In order to facilitate this learning Techtextil India International Trade Fair for Technical Textiles and Nonwovens is form where pavilions from Germany, Frnace and Italy present their latest innovations. The objective of the fair is to come upon a future oriented perspective and practical technical information in a range of presentations and discussions specially formulated for the high potential Indian market. Techtextil India is supported by the Office of the Textile Commissioner of the Ministry of Textiles, Government of India.In words of Mr. Dayanidhi Maran, Union Textiles Minister, present at Techtextil 2009- The technical textile industry has a high potential to attract investments worth $1.03 billion and generate around 3,00,000 additional employment by 2012. Since India has passing-skilled manpower and abundant availability of raw material, it can make out as a key player in the technical textiles industryInnovation through Competitive pole In order to improve the highly fragmented textile industry of India the French model of competitive poles can be applied. Since French textile industry is a mature sector, innovation is the key factor driving the industry. The French textile industry has been re-organised in the past few years in order to respond to the current innovation an d technology creation needs. In 2004, the Ples de Comptitivit (Competitive Poles) were put in place to respond to this need. These poles are associations that group enterprises, research centres, and public and private training institutions. The objective of these poles is to create the environment to the sparingal renewing of the regions by implementing new products and services. Innovation is, therefore, in the centre of the competitive poles. There are in France now 71 poles go around across the country.The programmes of the poles are financed by the government, by 1.5bn EUR each year in total (including all industries and activities), but local authorities and associations also contribute to the financing.The competitive pole is organized under 2 main axisTechnical textilesCustomization of clothing textilesThe Lile region is a key example of the competitive pole approach. Nowadays, more than 50 % of the textile engineer in France are graduated in the metropolitan area of Lille Mtropole at lENSAIT and HEI. Technical trainings are also in stock(predicate) at the ESAAT.The UP-tex is the pole dedicated to the textile, technical and traditional (clothing), that is located in the metropolitan area of Lile. The UP-tex works as an association of enterprises, research centres, and centres dedicated to technology transference. Its ambition is to become the European reference in terms of advanced textile materials, polysensoriality and design and mass customisation. Furthermore, the labelling of the competitive pole UP-tex has also contributed to the reinforcement of Liles pip as a reference in terms of innovative and clothing textiles.The UP-tex has as objectivesDevelop the project of the customized enterprise, in order to create a new value chain to the textile/ clothing branchPromote the national and international plan of the high-performance textile regional pole, its economic interlocking (through the CLUBTEX) and its scientific competencesCreate basis for the emergence of an European technological platform through the creation of the CETI (French Centre Europen du Textile Innovant, English European centre of the Innovative textile)Support the research projects by the attribution of labels to selected projectsFurther develop innovation in the textile and clothing industryCLUBTEX, which is the association of local industrials to advocate innovation in technical textiles, is key element to the success of the Lile textile pole. The association is grouping, nowadays, 58 industrial, 1 union and 6 training and researching centres, all with one common objective to create innovation through the mutualisation of resources. The industries participating in CLUBTEX produce under the SPL (SPL French for Systme Productif Local , in English Local take System) District Textiles Techniques label, which helps on the identification and differentiation of the products towards the customers.RecommendationsGovernment InitiativesGovernment can take action s under the following heads for improving the textile industryFlexibility of withdraw labor law Labor Laws should be more liberalized and made favorable that will help to make labor more productive. Textile industry should be exempted from contract labor lawBetter implementation of TUF Government should focus on providing uniform disbursement of incentives through TUFAttracting FDIs Government should provide tax incentives to attract FDI to make it more competitive in global marketplace. Establish integrated textile parks. Allow more Foreign Direct Investment (FDI) in lop Retailing to enable large, modern retail showrooms to set up shops in India which will promote local sourcing and will result in correct productionEncourage Private Sector for Partnership collaborationDevelop supporting Industry Develop textile machinery industry (currently 70% of textile machinery is imported. Faster port clearance and cheaper transportSkill development Initiatives Set up skill development cen ters. More Training centers should be opened to train the workforce and consciousness of new technology and trends should be increased among manpower. Collaboration with Institute like SITRA (South India Textile Research Association) for labor skill developmentReduce power tariff, foster renewable sources of energy through government subsidy, reduce interest rates and transaction costs.Setting up of quality checking laboratories to hold back global competitiveness uniform park to promote exports In National Textile Policy 2000 government established raiment International Mart apparel Export Promotion Council has constructed an Apparel International Mart (AIM) at Gurgaon to provide showrooms on lease and license basis to the established exporters to showcase their productsAid to agriculture industry to improve the availability, productivity and quality of Raw Material In National Textile Policy 2000 government implemented like Technology Mission To improve the performance of Co tton sector through improvement in Research Development, quality and productivity of products. The Govt. of India is aimed to increase production of cotton plant by 50% with improved quality and productivityFirm level InitiativesCompanies should improve the productivity at firm level to develop economies of scaleUp-grading technology Form JVs with global players for technology up-gradation and scaleImplementing TQM ensure waste minimization, product durability and reliability.Lean manufacturing optimized distribution network and supply chain management to attain reduced cycle timeUse of IT servicesIn-house skill development programApparel Industry LandscapeGlobal Textile and Apparel trade is recovering after a slump during the economic recession in 2008-09, and is expected to reach US$ 1 Trillion by 2020 from the current US$ 510 Bn. The growth in trade is driven by increased outsourcing of western / developed countries towards lower cost countries in Asia. Indias Textile Apparel industry ( municipal + exports) is expected to grow from the current US$ 70 bn to US$ 220 bn by 2020. The Indian domestic Textile and Apparel market size in 2009 was US$ 47 bn and is expected to grow 11% CAGR to reach US$ 140 Bn by 2020 Domestic Apparel retail market was worth US$33 Bn in 2009 and is expected to reach US$ 100 Bn by 2020.Export Sector Indias exports have also recovered in 2009-10 following increased global demand and is currently worth US$ 23.5 Bn. Indian apparel exports have also grown by a CAGR of 11.7% in last 4 years. The export market includes readymade garments of cotton, man made, silk, wool and other textile materials with cotton products accounting for the major share. India has the potential to increase its export share in world trade from the current 4.5% to 8% and reach US$ 80 Bn by 2020. India has the potential of this strong growth in exports because of increased sourcing shift from developed countries to Asia. Indias also possess different strengths w hich makes it a suitable alternative to China for global buyers. In terms of financial returns, Apparel is the most attractive product category amongst retail product categories both in terms of Returns on capital Employed and EBITDA. Garmenting Technical Textiles are the most attractive segments within the Apparel value chain in terms of ROA and EBITDA. According to KPMG research investments upto US$ 68 Bn will be required by 2020 across the Textile supply chain to tap the potential market generated by the growth of textile industry. Investment required in garment sector by 2020 is to the tune of US$ 14 Bn and for processing is US$ 19 Bn.Apparel Industry However Indian Apparel Industry is a small scale sector with high degree of fragmentation. Apparel manufacturing has about 77,000 small scale units classified as domestic manufacturers, manufacturer exporters and fabricators. Due to low entry barrier, garments industry is the least capital intensive part of textiles value chain, leading to high fragmentation. There are around 8200 registered apparel exporters in India. The turnover of 4800 exporters is less than 5 million INR which indicates the high level of fragmentation.Apparel Retailing A huge chunk of apparel market is contributed by urban segment. Majority of this urban segment stays in few selected cities where organized retail is preferred mode of shopping thus organized retail plays a very important role in domestic apparel consumption. Total apparel and fashion accessories retail market was worth Rs.80,000 crore in 2004, which grew by 11% each year till 2006. Although organized retails chains and exclusive brand outlets are gaining momentum, traditional retailers and MBOs still dominate apparel retailing. unity of the key factors for the huge growth is due to expansion by apparel brands and retailers to small but potential cities. Many global brands like Marks Spencer are getting established in India by franchisee route. Malls are expected to be one of the main drivers for growth of apparel retailing, as they provide large areas.Mens Apparel Man apparel stands at $ 8.1bn in 2007 with a market share of 42% of total apparel market. It is expected to see high growth in near future but % share will decrease due to growth in other segments.In 2007 men apparel industry was mainly henpecked by shirts accounting for 36.5% of total men segement. The established key players are Arvind mills, Madura Garment, Westside, shoppers stop and Pantaoon. Levis Strauss is the major newcomer in the same segment.Women Apparel women apparel stands at $ 6.7bn in 2007 with a market share of 34% of total apparel market. It is expected to grow till 11bn by 2009. Some of the important changiing trends observed in this segment areLiberalization of casual wear in the office is increasing the ready to wear marketWorking women demand western or indo-western outfits that last in fashion and qualitySaree have the higest share but trouser and skirts are grow ing rapidly due to changing kind trendsFrom 2002 to 2007 saree demand has shown a CAGR of 12.8% whereas Trouser and skirts have shown CAGR of 34%1.pngKid Apparel Kid apparel is the smallest segment of $ 4.7 bn. Licensing interntional kids apparel is a successful schema to capture the premium market. Some popular brands in same category are Disney, Barbie etc. This segment have very little brand shrewdness of 5-8% but it is expected to grow at 15-20%A comparitive analysis of all segments with their expected growth is shown belowKey growth drivers for the textile and apparel Industry are Growth in organized retailing at 41% CAGR.Increasing number of working women.Increasing household incomeChanging demographicsAffinity for brands and better shopping experienceProfile of French brandsHigh end/ Luxury BrandsProducts coverageGender targetedTarget guestMarketing strategyProduct strategyHerms vestments accessories antheral/ feminineHigh-end/ lavish population of all agesExclusivity is the key word.Products are very Expensive and often perceived as immutable goods (can be passed from mother to daughter)Overbuying is discoraged clients do not have the right to by more than a X number of items per collectionVery high-quality, often hand-made by specialized artisans eg. leather goods often produced by experts in Italy.Each maison has its Flagship products, that remain unchanged, or are slightly updated across collections.Pret-a-porter collections are innovative and trend-setter for the rest of the clothing industryLVMH Louis Vuitton clothes accessoriesMale/FemaleHigh-end/ rich population of all agesChannel garments accessoriesFemaleHigh-end/ rich population of all agesLVMH DiorClothing accessoriesMale/FemaleHigh-end/ rich population of all agesChloClothing accessoriesFemaleHigh-end/ rich population of all agesYves Saint LaurentClothing accessoriesMale/FemaleHigh-end/ rich population of all agesLanvinClothing accessoriesMale/FemaleHigh-end/ rich population of all agesLVMH GivenchyClothing accessoriesFemaleHigh-end/ rich population of all agesMaison Martin MargielaClothing accessoriesMale/FemaleHigh-end/ rich population of all agesPremium/ mid(prenominal)dleProduct reportingGender TargetedTarget CustomerMarketing StrategyProducts StrategyIsabel MarantClothing accessoriesFemaleMid 30s/ primeval 40sTargets are high-end of medium class, that cannot afford luxe but wants to buy the beaver product they can afford.Price sensibility is not to be neglected.Brand strengh based on notoriety, string communication campaigns and sales to clean stocks.New trend is the affiliated-brand strategy, such as Ath and Etoile, by respectivelly V.Bruno and I.Marant, that target at different age ranges as a way to maximise salesFit and Design are the key words.Quality is important, but not overvalued as for luxe products.Some brands will have a few flagship products, but as general rule the collections are completely renovated each seasongenus Vanessa BrunoClothing accessoriesFemaleMid 30s/ first 40sCarvenClothing accessoriesMale / FemaleMid 30s/ Early 40sDe FursacClothing accessoriesMaleLate 30s/ Late 40sJacadiClothing accessoriesChildren0 to 8y +/-BonpointClothing accessoriesChildren0 to 8y +/-Gerard DarelClothing accessoriesFemaleMid 30s/ Early 40sAgnsClothing accessoriesFemaleMid 30s/ Early 40sClaudine PierrotClothing accessoriesFemaleMid 30s/ Early 40sManoushClothing accessoriesFemaleLate 20s/ Early 30sMajeClothing accessoriesFemaleLate 20s/ Early 30sZadig VoltaireClothing accessoriesChildren/ Male / FemaleLate 20s/ Early 30sBa ShClothing accessoriesFemaleLate 20s/ Early 30sSandroClothing accessoriesFemaleLate 20s/ Early 30sLes PetitesClothing accessoriesChildren/ FemaleLate 20s/ Early 30sComptoir des CotoniersClothing accessoriesChildren/ FemaleLate 20s/ Early 30sAth Vanessa BrunoClothing accessoriesFemaleLate 20s/ Early 30sEtoile Isabel MarantClothing accessoriesFemaleLate 20s/ Early 30sKooplesClothin g accessoriesMale / Female all told 20sBereniceClothing accessoriesMale / FemaleLate 20s/ Early 30sBel AirClothing accessoriesFemaleWhole 20sMiddle/Low rangeProduct CoverageGender TargetedTarget CustomerMarketing StrategyProducts StrategyZara (Spanish)Clothing accessoriesFemaleMid 30s/ Early 40s spendable Fashion.Easy-to-wear collection hits, constantly renovated (short collections)Design Disposable fashion.Quality is not perceived as key product attribute.Products are often produced outside EuropeMango (Spanish)Clothing accessoriesFemaleMid 30s/ Early 40sH M (UK)Clothing accessoriesFemaleMid 30s/ Early 40sNaf NafClothing accessoriesFemaleLate 20s/ Early 30sSud ExpressClothing accessoriesFemaleLate 20s/ Early 30sPROMODClothing accessoriesFemaleLate 20s/ Early 30sEtamClothing accessoriesFemaleVariousMiddle/Low rangeProduct CoverageGender TargetedTarget CustomerMarketing StrategyProducts StrategyUniqlo (Japan)Clothing accessoriesMale/ femaleFamilies looking for basic item s with average quality and good priceLong-lasting collections, not truly fashion-driven (does not follow trends).Good value for moneyLe Petit BateauClothing accessoriesChildren/ FemaleFrench brand in IndiaBased on the consumption visibleness we can see that women segment is the fastest growing segment and also the share of formal wear like trousers and skirts is increasing due to increasing number of working women in the society. Thus a French brand targeting female consumers in the age range of Late 20s/Early 30s will be best suited for India. Though the disposable income is increasing, the target group of women is highly value conscious hence Premium/Middle or Middle/Low class brand will perform better than the luxury brands. Also the segment purchasing luxury brands is although growing but currently too small to target. serious Parameters to consider while entering IndiaPositioning The most important part is the positioning in the Indian consumer mind-space. Smart casual posit ions are taken in by the brand such as ColorPlus, Dockers and Canary Blue. Design wear are gone with square-1 mall and Kimaya, Kazo and individual designer having their stand alone store. whatsoever positioning below that is lapped up by Zillions of manufacturers. However there are still wide open gaps which lie agape between these broad categories which can be easily targeted. Also Indian consumers show an affinity for foreign brands as it is considered a proxy for status. Therefore even the Indian Manufactures like ITC, Madura garment give exotic names to their brands for eg John Players, Allen Solly.Location The location is the key to the positioning, it determines and in turns reinforces positioning in fact, with about 50% of the operational expenses are taken up by the rentals, it has assumed an even more important position. Exclusive showrooms at a high end street or space in well reputed mall are the two options for establishing a high end brand.Buying vs. Manufacturing It is very important decision for the fore

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