India is at the cusp of new digital revolution. Digital businesses are working aggressively to get silo chambers in tandem thereby providing an enriching experience to the consumer. Fashion as an industry is one of the leading business to do so. Of the $70 billion Indian fashion market today, about $7-9 billion is already digitally influenced.
This influence is expected to multiply nearly 4 times to reach ~$30 billion by 2020, a staggering number which will constitute 60-70% of the total branded apparel market, according to a report by management consulting firm Boston Consulting Group (BCG) and social networking giant Facebook, titled ‘Fashion Forward 2020.’
Here are the major findings of the report:
2016 Fashion in India
With the growth of Internet infrastructure in the country, there has been a high demand of urban Indian Internet users spending more time online. Internet users in urban India are already spending one and a half hours online everyday. The report indicates 75% of urban Internet users engage in social networking or chatting. Around one third rank social networking as their topmost online activity. Further, engagement levels on digital media are higher than on traditional media.
Mobile is playing the key role, not only among urban users but rural users too. 85% preferred mobile device for online shopping. This is driven by convenience and additional discounts offered on using apps. Within mobile, mobile apps are the most preferred way of purchasing with ~80% of consumers preferring to use them to mobile websites.
However, mobile websites are seeing higher usage in small towns where consumers are typically operating with low capacity handsets. Interestingly, rural users have shown higher percentage preference of mobile.
Marketers will have to look at both urban and rural users from two different lenses. One will have to give unique proposition for consumers to create space for new apps on their phones. At the moment on an average, a consumer keeps 3-4 online shopping apps on her phone.
Digital influence (fashion buyers who use Internet in their purchase process irrespective of whether they actually buy online or not) are driving fashion spends. According to the report, Digital influence in fashion has grown more than 5x since 2013. 40%-50% of branded spends are already digitally influenced. This changing dynamic of fashion will have implications for online and offline fashion players alike.
Ecommerce, the fastest growing business in the country is having its impact on fashion too. The online fashion market is estimated to treble by 2020, to reach $12-$14 bn. This will translate to a significant 11%-12% share of the total fashion market. 55-60 mn consumers are already buying fashion online. This is expected to grow to 130-135 mn by 2020, accounting for ~20% of the total fashion shopper base.
This growth is going to be led by 3 primary demand-side factors. Firstly, the growth of Internet user base led by growth of smartphones. Ecommerce adoption is expected to grow from 30% to ~40% of the user base (among urban Internet users). This leads to the drive of new shoppers and increase in spends by existing users, who mature further.
Fashion is already seeing unprecedented growth on digital but digital spends are lagging. On average, an urban Indian consumer spends a quarter of her time on digital media. Yet, digital media spends of brands and departmental stores are only 10%-15% of total media spends. Spends by e-commerce players, on the other hand, seem commensurate.
2020 Fashion in India
So far we have seen, young metro residing male users dominating the online shopping space. But 2020 is going to see a major shift, A larger number of women and older age groups will start buying online — creating a much more balanced and representative shopper profile. There will be 2.5x women shoppers and ~3x older shoppers compared to today.
The growth of women shoppers is good news as it is hoped that the category sales share of women’s wear (both ethnic and western) as well as that of kid’s wear, is expected to increase.
One would also see Tier 2/Tier 3/Tier 4 cities comprising more than 50% of the online fashion shopper base by 2020.
2020 will also come with set of challenges for brands and marketers. Discounts are the most important driver for online fashion shopping today. For men shoppers it has been discount but women needs are driven by the latest trends. Many more women buy online because of variety than men.
Barriers like touch and feel, fit issues from new brands are some of the barriers that women have highlighted for online shopping.
How to win the consumer
Leveraging digital across touch points: The role of digital in fashion is large — not only as a channel for purchase — but also as a major influence on consumer decision-making. Therefore, companies need to engage consumers through digital channels across the purchase journey. Globally companies are building communities that are leading to commerce via conversations over social media.
Differentiate product assortment: One fit applies to all will not work in fashion whether it be gender or shoppers from different cities and income groups. For instance, there lies stark differences across customer segments — metros, males driven by discounts; women & lower tiers driven more by variety.
Online and offline will co-exist: Consumer paths to purchase are increasingly getting complex; ~25% of transactions by online shoppers are made purely online; however ~30% have both online and offline touch points. Besides challenges like touch-and-feel for existing shoppers, more so in small town India; fit is a concern for women shoppers.
All these indicate that stores will remain pertinent in the near future, while consumers build confidence in the online channels. Fashion players must hence use novel store formats to economically expand their physical footprint to meet these diverse needs.
Personalization capabilities: Data allows the power of personalization to provide unique experience to consumers. From launching hyper-targeted campaigns to contextual location based content to retaining customers, fashion brands can really leverage data to great extent.
Optimizing product assortment and store shopping experience: Optimizing product assortment by store cluster is table stakes for the fashion players today. The usage of advanced analytics on the plethora of data can enable players to optimize the store assortment at an individual store level.
With the increasing popularity of digital, fashion players need to adopt digital elements into offering an end-to-end seamless experience to consumers. Global fashion players are already undertaking experiments to digitize the in-store experience using digital elements such as billboards, ‘magic mirrors’ in changing rooms, endless aisles and in-store apps.
The findings in this report are based on qualitative and quantitative research conducted by BCG’s Centre of Customer Insight (CCI). Insights from this research were then combined with BCG’s proprietary models as well as BCG’s industry intelligence.
Click here to download the complete report.