Market Assessment of contract management for a leading clothing brand

For clothing brands to understand their target customers and identify the latest trends and consumer preferences in the retail and fashion industry, a constant assessment of the market is highly crucial. Our client, a leading player in the Indian branded retail, textile, and apparel industry, wanted to understand the contract manufacturing space to take strategic next steps toward their business expansion objectives.

The firm sought to collaborate with us to conduct a primary and desk research study to provide timely insights into the contract manufacturing market overview, market size, drivers, trends, competition, and supply chain processes for contract manufacturers in the Indian apparel market.

Through our competitive analysis, Netscribes helped the apparel brand better understand the contract manufacturing space in India and the most preferred countries for contract manufacturers in readymade apparel. Insights from our market assessment of its rival clothing brands enabled them to navigate the competitive landscape and make strategic business moves to drive growth and success.

About the client

One of the most renowned brand names in Indian retail, textile, and apparel industries, this company was founded in 1998. Stores in its portfolio include hypermarkets and supermarkets focusing on categories such as health and beauty, apparel, home décor, and home care.

Objective

To get an in-depth understanding of their competitive position, the company sought a view of the contract manufacturing process, partnership model, and supply chain and procurement processes. The stalwart approached Netscribes to perform a competitive intelligence study by including a few of their key competitors across categories in the apparel, lingerie, and men’s clothing segments.

Netscribes solution

Our team of research experts conducted a primary research study combined with a desk research study involving 16 respondents employed at senior management and mid-management levels across the client’s competitors, contract manufacturers, and industry experts. Telephonic interviews (CATI) were conducted with representatives from our end.

Respondent criteria

• Mid-to-senior level executives in production, procurement/supply chain
• Industry experts in fashion retail, and board members of key retail apparel associations

Approach

We combined insights acquired from these interviews along with our own research, evaluation, and analysis to provide timely insights. Here’s a glimpse into what we evaluated and found:

Contract manufacturing market overview: This included attributes, market trends, and competition
Market size: Textiles and apparel sales are anticipated to grow at a 10% CAGR between 2020 and 2025, reaching USD 190 Bn by the end of March 2026
Drivers: Growing numbers of middle-income earners seeking affordable fashion solutions driving market expansion
Foreign dependence: Owing to competition from foreign contract manufacturers located in select countries, the reliance of domestic retailers on them grew
Dependence on a particular foreign contract manufacturing partner: One manufacturing partner stood out as a preferred foreign contract manufacturer owing to superiority, given its reduced production costs

Trends

• Due to certain trends such as digital fashion and demand for comfortable clothes, loungewear, etc., the market demand for formal clothing decreased from 40% to 25%
• Changing consumer trends and a recovering economy resulted in a 15% drop in profit margins for contract manufacturers
• Contract manufacturers are making attempts to recoup costs by supplying local businesses
• Online shopping orders in Tier 3 and 4 grew the most (~192%). An increase of 118% was reported in order volumes in Tier 2 cities

Competition

• Market expansion in Tier 2+ cities is a priority for competing retailers
• Among the competitors, one has a large market share, and the other has a stronger USP as an affordable fashion provider
• Business strategies aimed at increasing conversion rates, personalization, and revenue are based on technologies such as SAP, AI, and analytics

Competitive landscape
Raw materials were primarily imported from Southeast Asian countries by retailers, while a certain percentage of manufacturers had long-term contracts with retailers.

Trends in the domestic textile and apparel industry

• Shift in demand for comfort and casual clothing owing to evolving consumption patterns
• 100% FDI permitted in the Indian textile sector
• With more than 200% growth in online order volumes in FY2021, kids’ wear has been the biggest winner in online apparel shopping
• A number of countries, including Bangladesh, Sri Lanka, Indonesia, etc., have enacted zero trade duty
  agreements to facilitate easy import of readymade clothing

Shifts in consumption patterns

• Demand for comfort clothing has increased
• In the category of kids’ wear, a competitor reported a surge of 1.3 to 1.4 times
• Customers’ inclination towards athleisure, comfort wear, loungewear, and sleepwear categories sparked a 127% growth in a competitor’s online channel
• There are separate loungewear and sleepwear lines for men, women, and children from both competitors

Supply chain process for contract manufacturers

• Small local manufacturers: Information on available contracts to the large contract manufacturers
• Requests for proposals: To find new contract manufacturers, retailers often publish requests for proposals (RFPs)
• Internal company contacts: Internal contacts provide information on upcoming designs retailers are looking for

Results delivered

The final report included an assessment of business expansion and competitive strengths:

• State-wise retail store count across India
• Details (including names) and production specifics (% of total volume produced by each contract manufacturer)* contract manufacturers for specific categories
• Processes involved in procurement and supply chain management
• An overview of the Indian apparel market and the contract manufacturing environment