India textile and apparel trends 2007

Fashion Business: In-Tune with Retail Evolution

Source: Technopak Advisors Pvt. Ltd.

India in recent years has been the focal point of continuous growth anddevelopment making it one of the fastest growing economies of the world. It isthe 4^th largest economy in terms of Purchasing Power Parity, after USA, China & Japan, and is rated among the top 10 FDI destinations.

The Indian consumer is evolving and driving retail growthdue to increased consumption. Private consumption growth contributes to morethan half of the GDP growth and is growing in double digit figures. Severalbusinesses are reacting to this evolution positively, both through pull andpush phenomenon.

Following a similar trend, the Indian textile and apparelindustry is also experiencing rapid changes and growth. Apparel today has the largestshare of the modern organized retail in India i.e. 20% of the current market ofRs. 56,000 crore and this is expected to grow at a constant rate of 20% overthe next 4 years.

This report puts together some of the recent trends beingwitnessed by the textile and apparel industry. The central theme woven throughthese trends is the way the consumer at various income-levels is evolving,thereby ensuring that businesses are reacting in multiple ways.

India is the secondfastest growing major economy in the world.

Fashion industryis pushing to keep pace with the retail evolution witnessed in India

With such hectic activity on the consumer level, fashionbusinesses need funds for expansion and for investing into building theirsystems/processes - retailers as well as private equity funds are fuelling thisgrowth by purchasing stakes in apparel brands. On the manufacturing front,companies are realising the need to forward/horizontally integrate theirbusinesses and buying stakes/acquiring front end/related businesses to get abetter grip on the value chain.

This report digs deeper into each of these trends citingexamples of thought leaders who have already moved in this direction. Withinthese trends there are signs of related 'mini trends' and/or 'contra trends',clearly visible in this industry. Each trend poses a question on what could bethe possible path for companies going forward.

Below is a pictoral interpretation of trends that we arecovering:

Foreignacquisitions have specially caught the attention of the textile industry

Private equityfirms make large investments in growing textile industry

Given the new growth opportunity presented by the quota-freeglobal textile market and the favourable investment climate created by thepro-active government measures, private equity flow into the domestic textilesector is picking up. Textile companies are also realising that this inflow offunds can help them in ramping up capacities and integrating at a faster paceto face the quota phase out challenge.

Another trend which is simultaneously visible is the growinginvestment by Private Equity firms in the textile sector.

Below are few examples of PE firms which have invested inthe Indian textile industry:

Going forward, what is going to be the growth path of thetextile industry - are we looking at increased foreign acquisitions to forwardintegrate in these markets or are the textile companies looking atstrengthening their manufacturing advantage by acquiring / buying stake incomplementary manufacturing companies?

Another visible trend has been the emergence of private equity firms investing in fast growing apparel brands & companies. US based private equity firm Argonaut has invested nearly Rs. 50 crore in menswear brand Koutons Retail India to fund its expansion plans. Similarly New York Life Investment Management Holding (NYLlM), the investment arm of New York Life Insurance, is said to have bought 8%-1 0% stake in SP Apparels for Rs. 36 crore. Former World Bank President James Wolfensohn's private investment fund has picked up 6% stake in Fabindia for Rs. 44 crore.

Going forward, will this consolidation continue or is this only an off shoot of the unprecedented retail boom in India? Will the interest of PE firms buying into brands continue or will it reach a plateau in the next 2-3 years?

v      Indian textile companies realising the fact: Wealth at the end of Chain

Trend 9

Textile companies are strengthening front and back end operations through mergers and acquisitions

Companies are increasingly looking to acquire domestic and overseas companies which complement the value chain. However, it is the foreign acquisitions which have caught the attention of the industry and the world. Indian companies are taking on larger companies, integrating the Indian advantage of manpower & raw material with the acquired company's strategic location, technology and/or well established distribution channels.

Textile companies providing raw materials (yarns & fabrics) for the apparel & made-up manufacturers are also realising the importance of control through the value chain. This is happening by forging growth relationships with textile/apparel companies to create synergies and by forward integrating to get a share in retail markets. This is being done through mergers, strategic acquisitions or forward integrations.

The sheer number of mergers and acquisition (M&A) deals struck last year has made 2006 a milestone year for India Inc. According to the Dealtracker study by Grant Thornton, there were 480 M&A deals in India alone with a total value of about $20.3 billion in 2006 with the average deal size being $42 million.

Primarily IT, pharma and biotech have garnered the highest number of M&As, however textile industry has also had its share in the opportunity. Forward integration, by the textile companies has been prominent in this sector as the margins in the initial stages (spinning, weaving) have shrunk, while subsequent stages (processing, garmenting & retailing) still manage to have relatively better margins. Another reason for this frantic move is buyer's high expectations of vertical setups and bigger capacities in garmenting, be it for domestic or exports.

Some of the deals effected by prominent Indian textile companies since 2006 are mentioned below:

Conclusion:

The trends discussed above clearly show that the fashion business is exploring all aspects of expansion i.e. it is bound for a multilateral expansion rather than only unilateral expansion. Multi lateral expansion is happening at every part of the value chain as well as for every consumer segment.

The Indian fashion business is taking cue from international standards as well as the burgeoning consumer appetite to create their own growth path. Fashion companies are taking a much larger perspective of this industry in India and consolidating their position to face it. On the other hand, the Indian consumer is at a preliminary stage of development and yet due to international exposure trying to keep pace with the international fashion scene creating unprecedented pressure on companies to perform.

This is a window of opportunity which the Indian fashion industry should make the most of before it reaches maturity which will signify slowdown. Companies need to react as well as participate through in-depth understanding of fashion and consumer demands to take on this challenge.

Indian businesses are creating their unique growth path guided by the Indian consumer

Fashion industry is exploring myriad options for expansion and thus creating synergies for itself

References

1. www.organicexchange.com
2. www.fibre2fashion.com
3. www.emergingtextiles.com
4. India Luxury Trends The Knowledge Company
5. India Consumer Trends 2006 The knowledge Company
6. Hindu Business Line
7. The Economic Times

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The 'mass consumer' segment is moving from tailored clothes to stitched apparel giving rise to discounted apparel stores/retailers. This is causing a shift from unbranded to branded apparel. The 'middle end consumers', already exposed to brands is now looking to extend these brands into all aspects of their life. Brands are thereby becoming lifestyle brands instead of being product brands only. These consumers are also moving up the social ladder and wish to flaunt the change in stature by wearing affordable 'designer prt wear'. This is prompting designers to introduce prt lines and corporatise their lines to reach out to a larger audience. The 'high end consumer' who is exposed to international luxury brands, now demands them in his/her vicinity. Apparel businesses are realising this and tying up with international brands to retail in India. These consumers are also increasingly exposed to environmental issues and want to use eco-friendly products (including apparel) to do their bit for the society. Though this concept is at a very nascent stage in India, apparel companies are reacting by 'going green' and using natural fibers in some of their collections.

As all consumers, especially kids and the youth, are exposed to fashion and media, they wish to associate themselves with characters and icons. Picking on this trend, apparel companies are licensing these characters/icons for apparel & accessories to increase their customer base.

Additionally, as consumers face hectic lifestyles, they are looking for convenience in all aspects of life including shopping. Fashion businesses are taking the lead from here and taking on consumers at unconventional avenues of retailing like airports, metro stations, cafes, beauty saloons, etc.

v      Indian consumer likes a bargain: Rise of discount retailers

Trend 1

Indian consumers are converting from stitched apparel to ready-to-wear causing a surge in discount retailing

Factory outlets have become distinct and important shopping destinations

Retailers are increasingly accepting the widely agreed fact that consumers love a bargain and always look forward to buying brands at low prices. Factory outlets have become distinct shopping destinations with distinct audiences. Apparel companies are focusing on this market to cash in on consumers converting from stitched apparel to ready-to-wear, further graduating to branded apparel. India is thus seeing a surge in discount retailers offering year round discounts, ranging anywhere between 30% to 70%.

The Future Group has recently launched a new format called the 'Brand Factory' selling national and international fashion brands at discounted prices with discounts ranging between 25-50%. The store will have as many as 120 brands such as Arrow, Esprit, Van Heusen, Levis, Reebok, Lee, Pepe, Wrangler, Provogue and many others, spread over 70,000 sq. ft of space. The group plans to expand its presence by opening as many as 55 outlets by 2010 The concept is positioned as a direct competition to Arvind Brand's Mega Mart which also sells its brands at discounted prices. Arvind Brands is rapidly expanding their Mega Mart chain with plans to increase there number of stores from the current count of 54 to 150 stores in the next 5 years.

Koutons Retail India, which started as a product brand is today the largest menswear brand in India in terms of its sales and number of stores. The success of the brand's positioning is very clear from the fact that from a store count of 240 a year ago, it has expanded to 999 in 2007, and its turnover grew from Rs. 58 crore in 2004-05 to Rs 400 crore in 2006-07.

Close on the heels is Cotton County which will be increasing its stores from 300 to 500 in 2007 and reach a count of 1000+ by 2010. Turnover currently stands at Rs. 100 crore and is projected to grow to Rs. 500 crore by 2010. They are also extending their product portfolio to include womenswear and kidswear.

The Provogue Apparel Group introduced its multi brand discount format 'Promart' in 2007 in Ahmedabad spread over 40,000 sq. ft. and this store has already achieved a turnover of Rs.25 crore. Their future plans include opening 20 stores in the next 3 years. The 'Loot' is another discount format retailer with 16 operational stores mostly in the West and South. By 201 0 they plan to set up 100 such stores pan-India. The company runs three formats, viz: signature stores, shop in shop and mega stores of 30000 sq. ft. It carries all major local and some international brands.

Going forward, how will these discount stores bring in higher revenue - by increasing number of stores to cater to untapped consumer base, or by adding more segments like womenswear/kidswear/accessories or by offering better quality/colour co-ordinated merchandise?

v      Product brands turn lifestyle: Portfolio extensions towards casualisation & accessorisation

Trend 2

Consumers now desire branded products in all aspects of their life

Traditionally brands that offered formal wear are now extending into casual wear, accessories, footwear etc.

With most brands turning lifestyle brands, they are opening larger Exclusive Brand Outlets (EBOs) to showcase their complete range of merchandise and give an international feel, The past few months has seen brands opening up very large format stores in India.

The Indian consumer is empowered not only by sheer numbers, but also by the state of evolution he/she is witnessing, With increase in purchasing power, increasing globalisation and better discretionary spending incomes, lifestyle changes have lead to newer opportunities for apparel companies operating within this domain.

Apparel brands have realised that they need to evolve themselves along the lines of consumer evolution, Brands do not want to be restricted to one aspect of consumer life but wish to encompass all his needs, This can only be done by expanding their product portfolio.

It is thereby seen that most brands that traditionally offered formal wear are expanding their portfolio by adding new categories such as casual wear, accessories & footwear. While formal wear only gave them access to the 8 hour span of working customers with a desire to look good, casual wear gives them the access to a larger spectrum of customers and to their needs 24x7.

ITC Lifestyle introduced 'John Players' in 2002 as a budget formal wear brand similar to 'Peter England', The response was not as expected due to unclear positioning, However, in 2005 it was re invented as 'style with a playful side' or 'brand with a cool attitude'. Since then it has grown to over Rs, 90 crore brand at retail level. Similarly, Raymond's bought over ColorPlus to add premium casual wear to their portfolio and is now introducing womenswear. Arvind Brands Ltd, launched Arrow Sport in 2005 due to the growing popularity of the 'sporty-feel' i.e. casual shirts and trousers category. Today, this sub-brand comprises 22% of sales by volume and 12%-13% by value.

Similarly, brands are rapidly including accessories & footwear to offer an entire gamut of products besides apparel. Benetton, a brand that is traditionally known only for casual wear has also introduced footwear, time wear, eyewear, perfumes, luggage, wallets, belts etc, Likewise, Park Avenue has introduced footwear, both formal and ethnic, 'Study by Janak', a men's occasionwear brand also has footwear, belts, ties and scarves in their stores. Pepe Jeans which started off as a jeans brand in India is in the process of launching its range of innerwear and time wear soon. It has already introduced perfumes and sunglasses from its global accessories basket into India. Spykar Jeans and Lee Cooper have entered into multi-accessory categories such as footwear, eyewear and time wear recently.

Some of these brands are:

Going forward, how will these lifestyle brands expand their portfolio - by further sub-branding and re-inventing consumer needs, or by evolving as specialty stores for every segment or by moving to the higher value chain and including high end consumers? (E.g. Levis Diva jeans at Rs.8000)

Brands are opening large EBOs to showcase their expanded product range

These flagship stores are positioned as ultimate one-stop destinations for the latest fashion trends

v      Designers get organised: Reaching out to larger customer base

Trend 3

Designers realize the huge opportunities in ready-to-wear market and are introducing prt lines

Another trend visible in the Indian designer wear market is corporatisation i.e. strategic tie-ups with large corporates in related industries to provide the necessary financial support and expertise in operational management. The designer wear industry lacks the processes, systems, people and financial resources to rapidly scale up their operations. The direct advantage of this would accrue to the designers who would be able to concentrate on the design and aesthetics rather than on business planning.

Genesis Colors Pvt Ltd., is the forerunner in the corporatisation of the Indian designer industry. It is the parent company behind the labels Satya Paul, Deepika Gehani, Tie Bar and Samsaara. These designers enjoy a wide distribution network throughout India and abroad of standalone/franchisee stores and premier fashion boutiques.

Raymond Group launched the multi designer store carrying diffusion/prt line under the brand name of Be: It was an instant success among the target customer group i.e. upper middle segment aspiring to wear designer wear. This was soon followed by many other such designers. For e.g Ritu Kumar's 'Label', Kiran Uttam Ghose's 'Kimono', Narender Kumar's 'Chai' and Payal Jain's 'Ado'.

More recently, KK Birla group which owns two little known group-owned stores in Kolkata - '85 Lansdowne' on Sarat Bose Road and 'Rose Bird' in Park Street plans to enter into fashion garment retailing in a big way.

The designer wear market in India is witnessing a high growth pattern, especially in the last few years - efforts are being made to develop this segment by bringing it into the main stream retailing and making them more accessible to customers.

Until a decade back, Indian designers were limited to very small revenues through extremely high priced couture and diffusion line garments sold in limited quantities. However most recently, several designers have realised that there is a large market potential for affordable ready-to-wear apparel and they need to move into this segment to tap the opportunity. Many designers since then have launched their prt 'affordable and designer chic' lines starting as low as Rs.1500, with a lot of designers also seeking to sell their offerings at major retail outlets. Following this trend department stores such as Shoppers' Stop, Pantaloon, etc. have launched exclusive designer wear sections inside their stores. Also designers like Raghavendra Rathore and Anita Dongre have tied up with Shoppers' Stop. Similarly, Suneet Verma has tied up with Tuscan Verve to retail his prt lines through their stores.

Going forward, how will these designers expand their customer base - will it be by tying-up with lifestyle brands to retail in their stores (E.g. Wills Lifestyle) or will they tie-up with international specialty brands coming into India to design their private label here (E.g. A designer can tie-up with Macy's when they enter India)?

v      International fashion eyes India: Making room fro luxury

Trend 4

Indian companies see a huge opportunity in partnering with luxury brands wishing to enter India

The Indian consumer desires to possess international luxury brands as an inspirational product. Additionally, no Indian retail brand actually qualifies to be categorised as a luxury brand. This readiness for luxury as an organised market, has been recognised throughout the world and international luxury brands are exploring possible avenues and tie-ups to enter the Indian retail market.

Indian apparel companies have realised the huge potential of partnering with these global luxury brands wishing to enter India. This helps them not only to extend their portfolio into the luxury, super premium, premium segments, but also makes them probable sourcing partners for these brands in India as well as internationally. Vice versa, luxury brands gain access to well established distribution channels and customer base.

"Luxury is consumed by a subset of the Super Affluent class. There are 1.6 million Super Affluent urban households in India."

The market segment for luxury is only going to get bigger and better. The task is therefore to create retailing zones for luxury and upscale products. In the past, 5-star Hotels have been the most prominent addresses for luxury retail in India. However with the growing market for luxury in India, such spaces are proving inadequate. The concept of luxury retail is being further developed by retailers and mall developers alike.

S Kumars Nationwide Ltd. (SKNL) has specifically set up a subsidiary, "Brandhouse Retail Limited" to carry out its expansion plans. Brandhouse Retail Limited plans to bring in 17 international brands into India of which 5 will be luxury, 6 super premium and 6 in the premium segment. It has already tied-up with Alfred Dunhill Ltd. and Escada, to retail their offering in India.

In a similar move, Raymond has a 50:50 joint venture with the Italian major, Grotto S.P.A. The joint venture has launched the highly successful Gas brand in India.

Planet retail has launched Replay, a French Premium denim brand in India.

On the retailers side, Shoppers' Stop is planning to enter the luxury retail segment with large format retail stores which will house products from many of well-known luxury brands, including Louis Vuitton, Gucci, Zegna, Hugo Boss, YSL, Mont Blanc and Christian Dior. The company plans to invest Rs.100 crore in this model in the first year itself.

Going forward, how will these international luxury brands react to the Indian market - will they introduce bridge/semi-premium lines for greater penetration or will they introduce more brands from their umbrella in different segments? (E.g. Benetton, though not luxury, has now brought in its Sisley brand)

v      Consumer become eco-friendly: Apparel brands think green

Trend 5

Worldwide surge in demand for organic and eco-friendly products

Organic cotton, the most popular eco-friendly fibre finds its way into international apparel brands

Organic cotton has been able to achieve maximum popularity amongst all eco-friendly fibers. Global retail sales of organic cotton products are projected to grow to $2.6 billion by the end of 2008, reflecting a 40% average annual growth rate. Hence, the demand for organic cotton fibre is expected to grow to 100,000 metric tons in 2008, an average annual growth rate of 47%.

Consumers the world over are increasingly becoming environment and health conscious. Increased concern for protecting ecology and preventing global warming, especially in the western countries, is boosting the demand for organic and eco-friendly products across all categories. As a result of consumer interest, eco-friendly fibre is used in everything from personal care products, to home furnishings, and for apparel of all kinds and for all segments.

This growing demand is ensuring that brands and retailers are implementing long-term commitments to increase the use of such fibres. Prominent retailers allover the world has a dedicated line of products which are eco-friendly in nature. Nike, Marks and Spencer, CO-OP, Patagonia, Timberland and Wal-Mart, which already sell eco-friendly lines; have been joined by newcomers Reebok, C & A, Hennes & Mauritz, Target and Next.

The Indian market for these eco-friendly fibres is currently very small due to low awareness. Given that most international brands are present in India and Indian fashion trends are influenced highly by the west, it is expected that demand for eco-friendly apparel would expand substantially in the coming years.

Though eco-friendly concepts are gaining popularity on at the fibre level in India, currently the availability on the front end is minimal. Extensive research is being done by companies on developing other natural fibres derived from bamboo, soyabean, corn, etc. which lend unique properties to the garments made from them.

Raymond has introduced an entire range of apparel made from bamboo fabrics which naturally possess anti-bacterial, anti-static property and extra capacity to retain moisture. Raymond also uses soyabean fabrics in their trendy clothes line, as this fabric provides extra shine and moisture absorbing property. Apart from this

Raymond has developed a specially crafted fabric from Casein (made from a combination of milk proteins) to be used for making suits, shirts and jackets.

An international brand named BSC has launched its collection of organic towels in India. They are even planning to launch kidswear and home furnishing range this year. There are also some regional brands introducing a wide range of eco-friendly fabrics in cotton, linen, silk, etc. made from environmental friendly fibres and dyed with herbal dyes.

Going forward, how is eco-friendly apparel going to fare in India - will it be adopted only by high end brands or will it be demanded by the consumer? (Will it only stay a push strategy or will it become a pull phenomenon)

Indian brands are also introducing eco-friendly fibres for the 'conscious' Indian consumer

Demand for eco-friendly apparel in India is minimal from consumer end

v      Kids & youth emulate their icons in everyday life: Growth of Character licensing

Trend 6

Kids and youth are influenced by icons & characters and desire to possess them in their everyday life

India has become an important market for character licensing specially in apparel

Today's consumer is greatly influenced by media and he exhibits a propensity to follow icons to the extent of bringing them into his everyday life. This growing trend amongst consumers is being tapped by apparel companies by taking up licensing of popular characters and icons to be used in their merchandise. This is especially true for the kids and youth market since they identify with these characters and icons more strongly. According to Cartoon Network, the business of license merchandising of animated characters is estimated at Rs. 360 crore in India.

India has emerged as the No.1 market in Asia-Pacific for companies like Cartoon Network in terms of viewer ship and more importantly revenues. "Interestingly, children's licensing and merchandising market accounts for 10% of Cartoon Network's revenues i.e. approximately Rs. 300 crore, of which a large percentage is contributed by apparel, accessories, footwear and home textile products."

This trend is picking up very fast in India with many companies taking up licenses of popular cartoon characters. Cartoon Network had launched its Powerpuff Girls and Dexter apparel through 1,500 retailers in India, including lTC's Lifestyle stores. Disney entered into a pact with Indus Clothing in 2006 to launch Disney jeans in India. Mattel has granted The Shirt Company the license to manufacture and market Barbie apparel in India.

Nickelodeon, the children's channel, has tied up with Bombay Dyeing for a merchandising arrangement. Weekender has taken up the retailing for Toon World and Gini & Jony has tied up with Garfield.

This trend is not restricted to kidswear alone. Brands are also looking towards icons like cricketers, footballers, rock stars, wrestlers, and super heroes such as Spiderman, Superman, Tarzan, Krishh, etc. to sell their merchandise. Apparel merchandise with these icons are widely available in the unorganised market, however some sports retailers are already retailing them at their stores.

Nike retails the Indian cricket team jerseys at their stores. Similarly, Reebok has gone a step further and is retailing cricketer T-shirts like Rahul T-shirts, Bhajji T-shirts, 12th man to name a few.

Another similar trend has been used by Biba, the women's ethnic wear brand. Biba has ventured into film merchandising i.e. they liaisoned with the fashion designer of the film to market the apparel worn by the actress in the movie and timed its launch in their store with the release of the movie. By doing this, they have moved to the starting point of women's wear trends.

Going forward, how will apparel companies further cash in on this trend - will they add more celebrities like tennis players, rock/pop stars, or will they create more home grown characters or will they enter into partnerships with movies/tv/colleges to co-brand their merchandise?

v      Apparel finds off beat avenues to retail

Trend 7

Companies are exploring new' locations to retail in order to increase visibility of their brand

Brand building by cafs/restaurants through dedicated merchandise will also gain popularity in India

Apparel retailing is geared to take on customers at places other than the traditional locations like neighborhood markets, high streets and malls. With increased need for convenience and visibility retailing, companies explore newer locations like airports, metro stations, restaurants, cafs & even beauty salons.

Retailing at such outlets typically follows two formats - the first is when space is sublet for retailing branded merchandise at airports, metro stations, etc. The second kind is when cafs, restaurants, fast food chains sell merchandise to promote their own brand through T-shirts, caps, bags, mugs, etc. While brand retailing at airports/metro stations is growing at a fast pace, brand building by cafs/restaurants through retailing of merchandise will also be an important trend mostly targeted at kids and youth.

Airport retailing is an important area which will see growth for apparel and more importantly fashion accessories. The global duty free market is estimated at US $ 25 billion for the year 2004. India which has almost minimal exposure to duty free retailing is now witnessing a lot of activity in this sector. This has not gone unnoticed by international travel retail companies who have shown interest in entering India. Some of these companies are the Nuance Group, HMS Host, Gebrueder Heinemann, Dufry International, DFS Group, Alpha and SSP. On the domestic front, in the absence of travel retail companies, it is retailers like Shoppers' Stop, Oberoi and Pantaloon Retail that are keen to enter this market.

Future Group has tied up with Alpha Airport group for airport retailing. These Alpha future shops will be spread over 8000 sq. ft. of which 1100 sq. ft. is reserved for fashion, accessories and confectionary. Similarly, Shoppers' Stop has tied up with the Nuance group to operate stores in some airports and are expecting to earn revenue of up to Rs. 950 crore over the next 7 years.

Metro stations in Delhi with high footfalls are attracting the attention of retailers. Some metro stations already have outlets like Caf Coffee day and it would not be long before branded apparel is retailed here as well. Similarly, beauty salons like L'Oreal and Lakme selling skin and hair care products, can be ideal outlets for retailing categories like lingerie, swimwear, beachwear etc.

Internationally, Hard Rock Caf is the most successful example of own brand retail category. With the advent of such chains in India, we will be seeing a lot more of apparel merchandise at such avenues. Currently in India, Caf chains like Caf Coffee Day are already retailing T-shirts, caps & bags at their outlets.

Going forward, how will fashion businesses react to retailing at these off beat avenues - will they create special apparel/accessory range for these points of retail or will they start retailing aggressively at airports in other countries (E.g. Hidesign)? Will apparel companies tie-up with fast food chains (E.g. McDonald's, Pizza Hut etc.) to design and produce apparel for them?

v      Apparel brands attract: Investments from Retailers and Private Equity Firms

Trend 8

Promising growth in apparel brands is attracting investments from retailers and private equity firms

Conversely, brands are also buying stakes into retail companies for wider reach

A major trend witnessed in the domestic apparel market is the acquisitions or equity buying by retailers of well established apparel brands. Retailers gain because they can retail important brands in their stores at favourable terms, have a say in their design/product development and become a partner in the brand's growth. On the other hand, brands share equity in exchange for good money and assured presence in some of the best locations.

Following are the acquisitions and stakes bought by Future Group in various brands:

Similarly, Reliance Retail is already in talks with various brands for buying stakes into them. Maspar and Biba are a few of the brands they are in talks with.

A reverse trend is also seen, wherein brands are buying into department stores, thus helping them negotiate a better deal while selling their merchandise in such stores. An example is Zodiac, which has acquired 2.93% in Shoppers' Stop.