The past week sitting idle at home and waiting for college to start a greater part of my day is spent on the internet and in particular facebook. So surfing the web I glanced upon not one, not two but hundreds of new start ups, online retailers and other stores which are selling clothing.
And the question which popped into my head was that is this space getting overcrowded?
Would the clothing segment like other segments such as retail, banking, automobile get crowded? Would margins of all these companies fall? And would the market be converted into such that no individual seller would be able to make monumental profits in the long run or would the smaller brands faced with extinction simply phase out?
Well here goes nothing. The first thing I found was that retailers. The big brands be it A nike, an Adidas or A Puma are really sweating it out to clear stocks. Adidas has a bigger problem in India thanks to the Reebok scandal. But with sales on all brands with flat 50% off and stores still not as crowded as they used to be it makes me wonder is the world all right? Or have people just gotten smarter or have they just gotten poorer.
Surprisingly there was one store which was so overcrowded that I felt claustrophobic inside that store. It's Inditex's Zara which clearly sizzles out the competition from it's opponents. Somehow people just can't get enough of Zara. And while other stores give flat 50% off Zara's discounts vary from 10 to 35%. And with stock clearing out on a daily basis it's clear that Zara will survive.
But what about the smaller brands. The not so favoured. How would a premium seller such as Color Plus survive? Or how would Marks and spencer who have some of the largest stores in the country survive?
Couple this with consumers slowly shifting to buying clothes and shoes online where there are year long discounts it seems that while the clothing sector may be getting overcrowded it's not dying out. One's loss is another one's gain. So someone is making a sale at the end of the day and earning a hefty profit on it as well. With newer sites such as Jabong, Myntra and others coming up it seems that the concept of a retail store in itself is becoming redundant
Then there's the whole story of the startups. Who with virtually non existential capital are creating holes in the sales of the larger brands. For instance Xtees, T Go, Almater and others are coming up with T-shirts that don't just look great but are way cheaper than the competition. Quality is a whole different ball game. But a Johnny Bravo or Simpsons T shirt for barely 400 bucks is a pretty good deal. At the same time this creates a huge dent in the sales of larger brands. Puma's T-shirts in sale start at around 700 a piece which is nearly twice the cost.
Somehow anyone who wants to start a new business feels that Clothing is the way to go. But clearly it isn't. Imagine the entire market as a huge ocean with a variety of fish some eating grass others eating smaller fish. Now imagine everyone starts eating grass. No one wants to eat other fish. The number of fishes will increase and subsequently the ocean becomes to small for all of them to survive.
The point is that with the bigger conglomerates such as Reliance who started retailing Steve Madden in India and others getting onto the band wagon called Clothing it's only going to get overcrowded. The small will
either stop manufacturing or be absorbed by the larger firms.
Another problem is that if Venture Capitalists start pumping in money like crazy the sector may just develop a huge bubble. With LVMH investing in India there's a huge danger of that. They have deep pockets and wouldn't mind losing a few million. There last investment was in Fab India in May. The future looks like a two way street for the clothing sector and it can go either ways!!
On behalf of Doodle inc
- Udit Sabharwal
And the question which popped into my head was that is this space getting overcrowded?
Would the clothing segment like other segments such as retail, banking, automobile get crowded? Would margins of all these companies fall? And would the market be converted into such that no individual seller would be able to make monumental profits in the long run or would the smaller brands faced with extinction simply phase out?
Well here goes nothing. The first thing I found was that retailers. The big brands be it A nike, an Adidas or A Puma are really sweating it out to clear stocks. Adidas has a bigger problem in India thanks to the Reebok scandal. But with sales on all brands with flat 50% off and stores still not as crowded as they used to be it makes me wonder is the world all right? Or have people just gotten smarter or have they just gotten poorer.
Surprisingly there was one store which was so overcrowded that I felt claustrophobic inside that store. It's Inditex's Zara which clearly sizzles out the competition from it's opponents. Somehow people just can't get enough of Zara. And while other stores give flat 50% off Zara's discounts vary from 10 to 35%. And with stock clearing out on a daily basis it's clear that Zara will survive.
But what about the smaller brands. The not so favoured. How would a premium seller such as Color Plus survive? Or how would Marks and spencer who have some of the largest stores in the country survive?
Couple this with consumers slowly shifting to buying clothes and shoes online where there are year long discounts it seems that while the clothing sector may be getting overcrowded it's not dying out. One's loss is another one's gain. So someone is making a sale at the end of the day and earning a hefty profit on it as well. With newer sites such as Jabong, Myntra and others coming up it seems that the concept of a retail store in itself is becoming redundant
Then there's the whole story of the startups. Who with virtually non existential capital are creating holes in the sales of the larger brands. For instance Xtees, T Go, Almater and others are coming up with T-shirts that don't just look great but are way cheaper than the competition. Quality is a whole different ball game. But a Johnny Bravo or Simpsons T shirt for barely 400 bucks is a pretty good deal. At the same time this creates a huge dent in the sales of larger brands. Puma's T-shirts in sale start at around 700 a piece which is nearly twice the cost.
Somehow anyone who wants to start a new business feels that Clothing is the way to go. But clearly it isn't. Imagine the entire market as a huge ocean with a variety of fish some eating grass others eating smaller fish. Now imagine everyone starts eating grass. No one wants to eat other fish. The number of fishes will increase and subsequently the ocean becomes to small for all of them to survive.
The point is that with the bigger conglomerates such as Reliance who started retailing Steve Madden in India and others getting onto the band wagon called Clothing it's only going to get overcrowded. The small will
either stop manufacturing or be absorbed by the larger firms.
Another problem is that if Venture Capitalists start pumping in money like crazy the sector may just develop a huge bubble. With LVMH investing in India there's a huge danger of that. They have deep pockets and wouldn't mind losing a few million. There last investment was in Fab India in May. The future looks like a two way street for the clothing sector and it can go either ways!!
On behalf of Doodle inc
- Udit Sabharwal
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