Genius of the Local — Textiles, Garments, Saree, Darzi and Retail in India

Author : Sunny Narang

Source : From LinkedIn Archives

Date first published : August 16th , 2014

Kishore Biyani
CEO, Future Group

Just watching Saravana Store

“Some of the best advice I ever received was unspoken. I never had mentors who would advise… I got it from books and plain observation. Probably the most breakthrough and decisive ‘advice’ came from watching a store in Chennai’s Ranganathan Street sometime in 2000, when we were working for an idea of starting a retail chain that would sell almost every merchandise that an Indian household consumes and offer them at a discounted price”. The consultants would tell Biyani to study hypermarkets in the US and Europe, but Biyani who had not been abroad much couldn’t relate. “Local businessmen would say it will not work here. That’s when I came across Saravana Store… I noticed hordes of people walking in through the day. The store had five floors and a basement. To many, it may be a shopper’s nightmare, but lot of customers just loved it. Saravana served as a template to build upon the idea of Big Bazaar. We developed a model that could be replicated and turned into a pan-Indian chain. Some of the best advice for Big Bazaar has often come from just watching customers and how they behave.”

India is the most fun market to study for me. Organised is always getting the biggest hard-sell, but local brands , stores and the unorganised market takes the cake always !

Of the overall turnover of the Surat textile traders, AP contributed 8 to 10 per cent some years back. This has now plummeted to 2 to 3 per cent. “Over the last five years there has been a significant impact on the Surat textile industry,” said Devkishan Manghani, a trader.

As against an average annual turnover of roughly ~ 3,600 crore through textile trading between Surat and AP, the split has brought the numbers down to ~ 700–1,000 crore.

Just the Surat saree trade is about 40,000 crores . (if 3600 crore is 8%) . Imagine how many lacs of crores is the Indian unorganised saree market !

Saravana Stores does annual business of Rs.510+ crores from a 7-floor store (that’s more than what any single Lifestyle, Central or Shoppers Stop store does). From four stores, Saravana does Rs.1200+ crores. That’s two-thirds more than the Rs.717 crores turnover reported by Tata’s Trent, which includes Westside (54 stores), Landmark (18 stores) and Star Bazaar (12 stores). The Chennai Silks is estimated to be doing business of Rs.1150+ crores (excluding jewellery) from nine stores, Nalli Rs.700+ crores from 22 stores, Pothys Rs.650+ crores from four stores and RMKV Rs.510+ crores from four stores. These five Tamil Nadu retailers do sales of Rs.4200+ crores, more than the turnover of Shoppers Stop, Lifestyle, Westside and Reliance Trends put together.

This is the power of regional retail. Modern retailers are still trying to figure out how to make it happen.

As on March 3, 2006, the Indian garment industry had an estimated 1.50 lakh units each with a minimum capacity of 15 sewing machines. The industry produced around 10,000 million pieces of garments .Out of this production, about 2,500 million pieces were exported and the rest consumed in the domestic market.

So about 75% of Indian ready-made garment production is domestic consumption . And still a majority of India uses local tailors . Tailored clothes account for half the garment market in big cities and 60% of the market in smaller town and cities, say retailers. So only 25% of about 45% , or about 12% of actual Indian garment production is exported .

And this is also a bloated estimate as a large percentage of Indian blouses , salwaar kameez and children’s clothes are stitched by women at home or for informal neighbourhood clients . In Indian villages poorer women stitch for better off women .

I would say easily that 95% of India “Kapda” is for self-consumption produced by low-paid labour for low income clients .Indian brands are facing a tough battle to build brands as Indians are value for money people .

The unorganised , unbranded is way ahead in most Indian markets . And its not changing soon as no organised player can deliver the value for money proposition for most of the 6.5 lac villages and 6000 small towns .

http://www.business-standard.com/article/companies/surat-textile-industry-hopes-for-stability-in-ap-114022000849_1.html
http://articles.economictimes.indiatimes.com/2010-12-06/news/27603851_1_tailors-readymade-value-retailers