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DENIM MARKET STUDY

EXISTING AND POTENTIAL EXPORT MARKETS

SUBMITTED BY: SAMAPIKA SANYAL COURSE PGD-IBM COLLEGE INSTITUTE OF MANAGEMENT AND ENTERPRENEURSHIP DEVELOPMENT BHARTI VIDYAPEETH UNIVERSITY, PUNE

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TABLE OF CONTENT
1. Executive Summary 2.Research objectives & methodology 3. Introduction 3.1 Denim A lifestyle necessity 3.2 History & Timeline of Denim 3.3 Global Denim Statistics 3.4 Denim & Its Customers 4. Indian Denim Market 4.1 Demand by age group & gender 4.2 Market size & scope 4.3 Scope in exports 5. Global denim market 5.1 Main traditional market 5.1.1 USA 5.1.1.1 Denim market in USA 5.1.1.2 Denim imports 2011 5.1.2 Europe 5.1.2.1 Germany 5.1.2.2 Italy 5.1.2.3 U.K 6. Prospective future export markets 6.1 Russia 6.2 Middle East 7. Competitors at global level 7.1 Premium Denim Segment 7.2 Fashion Denim Segment 7.3 Mass Denim Segment 8. Recommendations 8.1 In premium denim segment 8.2 in fashion and mass denim segment 8.3 Product diversification 8.4 Domestic Market 9. Conclusion 10. Bibliography 11. Appendix 2|Page 3 4 5 5 6 12 13 16 18 21 23 24 25 27 29 32 33 36 38 41 41 43 45 45 46 49 51 51 52 53 56 57 59 60

EXECUTIVE SUMMARY
This study is carried out to get an elaborate picture of denim market at global level. The analysis was made so as to develop an understanding the key market determinants of the denim segment as well as the participants of it. During the course of my internship I got an opportunity to work and observe the working of renowned Arvind Ltd. I also got the chance to discuss with some of the top level managers to get an insight of the industry. The project undertaken is divided into two phases. The first phase is a market research onDenim Market Study- Existing and Potential Export Markets. The second phase analyze where India is lacking at global arena, who are its competitors in different denim segments. A comparative study is carried on different suppliers of denim fabric as well as garment to international retailers. The study also focuses on consumer behaviour and attitude towards denim. Why it is still in fashion, how it has evolved since its inception and what its future prospects are as a Multi Occasional Garment. A special emphasis is given to the Indian denim market. As the rise in middle class people in Indian society and with an advent of malls and increasing purchasing power of Indian consumers, domestic market has become an alluring market for all denim manufacturers. The objective of the project is to gain deep understanding of global denim consumption pattern, global suppliers of denim fabric, the fashion centers of the world that cater the premium denim market segment, prospective future of the fabric, and the shifting scenario of the supply base of world denim fabric. This study will help to ascertain the blocking areas in the Indian denim manufacturing sector, and the factors which will help in future to emerge India as the number one supplier of fabric as well as garment to the world. The last section covers possible recommendations which will help to promote the existing ever growing denim business from India and arise as a global supplier to the world.

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RESEARCH OBJECTIVES
To map down global denim market scenario, in order to find out current major consumers/producers of denim fabric/garment. The focus is to segregate global market on the basis of existing consumption pattern and find out potential future export markets for denim fabric/garment. To identify the Indian denim market- domestic consumption as well as production trend. To understand the problems facing by Indian denim manufacturers- Why India cant be at the top despite of being one of the top suppliers of cotton.

RESEARCH METHEDOLOGY

Secondary Research The aim is to have a thorough understanding of the past as well as current trend of denim consumption and production on a worldwide base. Apart from the trend- past & projected, a brief history and evolution of denim is given to have a clearer background of the study. For this purpose, secondary sources of data were scanned. These included various magazines, journals, internet archives, blogs, portals, research articles carried out by organizations and individuals. Primary Research This includes thorough discussion conducted with the marketing head (Europe) Mr. Parvez Khan, Arvind Ltd.

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INTRODUCTION

Denim A lifestyle necessity Denim fabric has a long, rich history, and like other products such as wine, automobiles and electronics that have garnered universal aficionados, denim has morphed and changed over the years, its status evolving from functional to fashionable staple. Around the world, the concept of denim continues to evolve. Some trends, such as 1980s-inspired silhouettes, seem almost universal; while surface trends tend to celebrate the rich diversity of their origins. The individual emerging trends of key fashion cities will gravitate and merge, creating the next global trendfeeding and fueling the evolution of jean mainly because, from New York to Berlin; Los Angeles to Melbourne, the citizens of the world continue to crave denim. There is no stopping their craving for fresh ideas and new applications. According to the Global Lifestyle Monitor survey denim has been beloved in its jeans form for decades. Worldwide, nearly 90% of consumers own at least one pair of denim jeans, and they wear them an average of three days a week. The Global Monitor shows the average number of denim garments owned per global consumer increased nearly 20% in last five years, with the most growth in jeans and skirts. Consumer attraction to denim remains steady for a number of reasons. More than six out of 10 Global Monitor consumers wear denim because they like the feel of the fabric. Consumers also like the weight of denim and the styles offered in the market. Although three out of four surveyed say they like the current styles in denim, 67% say they enjoy keeping up with denim styles and are always looking for something new in their favorite apparel categories.

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HISTORY OF DENIM
The word denim is an Americanization of the French name "serge de Nimes," a fabric which originated in Nimes, France during the middle Ages. In 19th century, Americans reserved Denim fabric seems to have been for work clothes, when both durability and comfort were needed. Common uses included overalls made of blue denim, worn by mechanics andpainters.Before World War II jeans were only worn in America's Western states. In the east they were synonymous with romantic notions of the cowboy - rugged, independent and American, but at the same time rural and working class. Over the last 160 years blue jeans have woven their way into American and even world culture. Classless, utilitarian, and yet classically stylish, jeans have been worn by prisoners, plumbers, and presidents alike. Levi Strauss and Jacob Davis patented their riveted design on 20 May 1873 - said to be the birth of jeans. Outside America the trend was beginning to catch on too. Many of the GIs stationed in Europe and Japan during the war were working-class boys from the Western states. While off duty they wore their jeans proudly as a symbol of home. The trousers represented an easier, happier American way of life, which Europeans wanted to buy into.

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ICONIC AMERICAN FIGURES ASSOCIATED WITH BLUE JEANS

The Cowboy Movie star cowboys remained enormously popular from the 1930s through the 1960s. The new medium of television also adopted Western themes as mainstays of programming. Added into the mix were a host of singing cowboys, honky-tonk heroes, and country music superstars, all riding the trendy cowboy image to new heights of fame and fortune. Real cowboys became increasingly rare during the period. The Biker When talking about the biker, it is oftenreferred to the 1950s vets who returned from WWII and hit the road on bikes because they needed excitement and freedom in their lives. The Young Rebel Today, nothing could be more main stream than denim, but jeans used to be the badge of the rebel, where the man who broke from the traditional dress of society and rejected the old way of doing things. Rebels of all types have flocked to denim, starting in the 1940s with rule-breaking college youth who wore them against the wishes of their parents.During the 1960s jeans had also spread to the American middle class. Protesting college students began wearing them as a token of solidarity with the working class - those most affected by racial discrimination and the war draft.

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The Blue Collar Worker Blue is the color of the working class; the classless blue jean, prized for its inexpensive durability and ability to suck up grease, was and is the pants of the working man. Not only were they more durable but each pair of jeans began to tell the story of the worker and his work. Personified in the 1980s, the blue collar worker loves his blue jeans because they, like him, are made to be worn but never beaten.

So, it all began as a sturdy work dress for laborers and coalminers but soon took the world by storm. Today the humble jeans have become everything from a casual outfit to a fashion icon! What started out as a loose garment much like a pair of bib overalls without the bib, became a symbol of youth rebellion in the 1950s and today, no matter what is the age or gender, it is quite acceptable to step out in a pair of jeans (in some countries).

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TIMELINE OF DENIM
As with many modern American icons, denim can trace its origins back across the Atlantic to Europe. But it was in the New World of America - the land of opportunity - that denim would become much more than a humdrum fabric, but rather a living and vibrant cloth with innate qualities: youth, freedom, rebellion, and heritage. Its history is the history of America and, as the USA grew to become the dominant world superpower.

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1800s

American gold miners wanted clothes that were strong and did not tear easily. To meet this demand from the miners a man called Leob Strauss started a wholesale business, supplying clothes to people who required it. Strauss later changed his name from the rather plain Leob to the extremely recognisable Levi, this is when the brand Levi Strauss was created and is still extremely successful today.

1930s

Cowboys often wore jeans in the movies. This made jeans become very popular. This lead to a huge increase in people wanting to purchase jeans.

1940s

Fewer jeans were made due to World War 2, but American soldiers did introduce them to the world by wearing them when they were off duty as a casual, comfy item of clothing. After the war, rival companies, like Wrangler and Lee, began to compete with Levis for a share of the international market.

1950

Denim became very popular with young people. It was the symbol of the teenage rebellion in TV programmes and movies. James Dean, in the 1955 film Rebel Without a Cause, was a symbol of this. Some schools in the US went so far as to ban students from wearing denim on the premises!

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1960s-70s

Manufacturers started to make different styles of jeans to match the 60s fashions which included embroidered jeans, painted jeans, psychedelic jeans etc, these were a huge part of the fashion and culture.! In many non-western countries, jeans became a symbol of western decadence which meant they were very hard to get.

1980s

Jeans became a very high fashion clothing. Famous fashion designers like Gucci started making jeans, with their own labels on them. This meant jeans had lost their appeal as a workers fabric now and were classed as a very fashionable item of clothing to own. Denim jackets. Denim really was taking the fashion industry by storm!

1990s

The 1990s youth market wasnt particularly interested in 501s and other traditional jeans styles, mainly because their parents: were still wearing them. The1990s youth turned to other fabrics and styles like cargo pants, khakis and branded sportswear.

2000s

Jeans made a huge come back on the catwalk with big name designers like Chanel, Dior, Chloe and Versace adding them to their summer 99 collections. Jeans were back in fashion. Every single brand almost has a denim line

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GLOBAL DENIM STATISTICS [1]

Expected to become 56.2$ billion by 2014 Global demand growing at 5%, supply at 8% Global Denim fabric production in 2006- 2.7 billion meters Top global denim fabric exporting countries - China, Hong Kong,Turkey, Italy, Pakistan India,Spain and Brazil. ( 83% of world denim fabric exports) Between EU, US and China, 70% of world jeans consumption. Estimated Share of Jeans Purchase By RegionNorth America: 39% Western Europe: 20% Japan & Korea: 10% Rest of the world: 31%

Share of jeans purchase by region

North America Western Europe Japan & Korea Rest of world

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DENIM AND ITS CUSTOMERS [2]

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INDIAN DENIM MARKET


India joined the jeans revolution in the 1980s but within a few decades, denim became the outfit of the day and today, even in a conservative country like India, it is as popular among adults as it is among youngsters and teenagers.Jeanswear trends started in India truly in the eighties, with the establishment and the movement of brands like Avis, Wings, Flying Machine, UFO, along with international brands like FU's. The growth in the domestic jeans and casualwear market is attracting an increasing number of multinationals into the segment.With the Indian youth becoming increasingly fashion conscious and with spending power being consistently on the rise, making life easier for the fastgrowing 'premium' category of jeanswear brands. From clothing to meet the rough and tumble of a day at the mines some centuries ago, to todays all-purpose wear, this eternally young fabric seems to be getting more versatile each passing day. Whatever may have been the course of its journey from its beginning in France to India, what cannot be denied is that this indigo fabric has cast its indelible hue across all walks of life, so much so that today India is among the top three manufacturers of denim! Denim production in India was 600-650 million meters in 2010-11, is set to witness an addition by another 100 million meters in 2012[3] . This has been growing at a healthy rate of about 10 per cent over the last two years. Traditionally strong in denim manufacturing, India is able to meet a major part of its denim fabric needs through local suppliers. [4] Consumers in India spend approximately 9 percent of their disposable income on clothing and footwear, and nearly 47 percent on food, alcohol, and tobacco, compared to 5 percent on clothing and shoes, and 36 percent on food, alcohol, and tobacco in United States. Clothing expenditures in India tend to be relatively higher for households with higher incomes. Currently, disposable incomes of the majority of Indian consumers are so relative to their basic needs that there is little residual for spending on better quality clothing.[15] As projected by NCAER (National Council of Applied Economic Research), as the disposable income increases, consumers are expected to spend more on lifestyle products and quality clothing. Integration of diversified cultures and traditions are the unique 16 | P a g e

feature of India and has been a determining factor of clothing pattern of the people of the Indian sub-continent. Combined with the cultural heritage, the factors such as area, sex, income, variety, price range etc. have significant effect on the textile consumption demand. Indian market is segmented into two broader classes- urban and rural market. Urban market is further divided into metropolitan cities and smaller cities. Cloth consumption demand differs significantly among these market due to differences in profession, social status, level of income and awareness of people. In urban market consumers have revealed preference in favor of shirts, trousers, jeans, Tshirts etc. Rural India prefers salwar, dhoti, saree etc. The Indian cities are the major consumer of denim products. The total consumption of denim trouser in the 15 major cities is estimated at 21.46 million pieces and constitutes about 62.95 percent of total denim jeans consumption of the cities. [5] From 2001 to 2010, the percent of consumers reporting they love or enjoy wearing denim has more than doubled, from 13% to 29%, on average, though the preference is significantly stronger for male consumers (44% versus 14% of female consumers). During the same time period, the percentage of Indian consumers purchasing jeans has tripled, from 10% to 30%. Among all regions surveyed, consumers in Mumbai own the most denim items, an average of 11, and 40% said they like or love wearing denim.

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DEMAND BY AGE GROUP AND GENDER The average age of the population of India is 26 years which represents a youth profile of India. Normally youth are filled with spirit of enthusiasm and positive attitude. As Indian market is passing through an era of globalization, people are migrating from rural areas to urban areas. This movement of people creates opportunity to adorn westernized cloths.

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AGE GROUP WISE CONSUMPTION OF JEANS [6] The demand pattern across various age groups indicate that about 49 percent of the market share of jeans goes in favor of the young generation in the age group of 15-24 years followed by 25- 39 years ( 27.79%) . The younger generation of the population below the age of 14 and the older generation above 40 are also using denim generously. The consumption reduces at a higher age of 60 and above. AGE WISE CONSUMPTION OF JEANS (IN %)

1.09 5.51 27.79 13.61 6 to 14 15 to 24 25 to 39 48.97 40 to 59 > 60

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The gender differential of the consumption shows a remarkable market penetration to the mens wear segment than the womens wear. The womens wear segment of denim trousers at higher age groups very quickly discards the jeans use. This may be because of Indian tradition and comforts of other wears while the women are indoors. But interestingly, the women in the age group of 6 to 24 are the most consumers of denim jeans, but at the same time the male counterparts are way ahead in the jeans use. Male consumers in India own more denim and wear denim more often than female consumers. Indian men reported owning an average of four denim bottoms (compared to 1 for women) and wearing denim bottoms an average of 2.5 days per week. Greater acceptance of Western fashion for Indian men than for Indian women may account for this difference. In 2010, 42% of survey respondents reported purchasing traditional Indian clothing for themselves, and among these respondents, 89% were women. With the increasing brand consciousness of Indian consumers and demand for Western clothing styles, denim's popularity in India is expected to continue to grow. Alongside the recent news of India's allowance of direct international investment of multi-brand retailers into India's retail sector, consumers in India can look forward to greater access to international brands, retailers and products. Indians' evolving preferences for how they procure, select and wear clothing are modernizing the retail landscape. Regardless of where they live, traditional preferences for cotton are being carried forward as Indian consumers emerge as a strong and viable consumer power.[8]

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MARKET SIZE AND SCOPE


Indian denim fabric market size is only 600-650 million meters per annum but the global denim market size is five billion meters per annum. So, they have the opportunity of exporting fabric also. Out of the 650 million meters Indian denim fabric market, domestic market is only 400 million meters while exports come up to 200-250 million meters. So there is a sizeable element of export as, Indian denim producers are also competitive globally. [4] The women western wear market in India has become the latest fashion trend everywhere. With increasing exposure of the Indian subcontinent to the Western World, the need for the adoption of western clothing styles and practices are getting more and more inevitable. According to Indian Women Wear Market Forecast to 2015, segment, especially women denim wear have been showing tremendous performance and has emerged as a potential investment area for players. With the increasing brand consciousness of Indian women and demand for western clothing styles, denim's popularity in India is expected to continue growing at a CAGR of 12% during 2012-2014, thus outpacing almost all casual wear segments growth by margins. [9] The rugged fabric is desperately seeking female attention. With women constituting only 8% of the '4,700-crore Indian denim markets, the fabric is keen to drape the fairer sex. Denim makers say men led the 10- fold jump in consumption over the last 15 years and now, it is over to women to lead the next growth phase. At present, for each 100 men who own a pair of jeans, there are 15 women. This ratio will change to 100:30 by 2015, predict experts, even as designers work on newer trends that would appeal to women. AshishDhir, head, Fashion Practice at Technopak, says women's denim category would grow 23% much faster than men's 15% annually. The market share of women's denim too would grow from 8% t0 25% by 2014. The Indian consumers are still far away from their American counterpart, but are fast catching up. With Indian women yet to accept jeans, there is ample opportunity for the category to grow. In cities,

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women in the age group of 15-45 purchase around 1.7 jeans per year, against 1.9 jeans bought by men annually, adds Dhir. "While acceptance of denim would require a change in mindset, India should expect women in big numbers to take to denim in the next five years. The category should grow to at least 30% then, "says Mukherjee who has seen composition of stretch denim fabrics that are typically used in women's denim growing from 10-12% to more than 20% over the last few years Apparel retailer Pantaloons too has witnessed tremendous excitement in the category. ZahidShaikh, (head marketing) at Pantaloons says, "Denim is an ever popular fabric and the usage is increasing tremendously day after day. Denim is the largest category for Pantaloons next to women's ethnic wear." Pantaloon retails denim brands like Bare Denim, UMM for men and women and Jealous 21 for women. Rahul Mehta, president of Clothing Manufacturers' Association of India, who supplies denim garments to retailers like Pantaloons, Big Bazaar, Lifestyle and Reliance, says sociological changes have given a big boost to the women's denim category in India. He admits that five years ago,for 100 denim garments-stitched for men,mere 2- 3 would be for women whereas now, it is 100: 10-15 and five years from now, it would be 100:30-35. Mehta reasons that with young adults and women accepting slim-fit denim jeans as a bottom wear against their ethnic pyjamas or churidars, there is a cultural revolution that is sweeping the denim retail. Girls have begun teaming their knits, kurtis, kurtas with either a pair of jeans or jeggings, a new concept in India," says the head of Mumbai based Creative Garments Group, for whom women's jeans contribute 50% to the kitty.Taking a cue from the consumer, ArunSirdeshmukh, (chief executive) at Reliance Trends has introduced jeggings at ' 499. [10] According to recent estimates, the size of the denim market in India is about 65-70 million pairs. It's a large structured industry growing at about 15-20% a year. According to Mr. Chakor Jain, business head for Lee in India they are only growing as there is a robust demand for denim in India. The East Asian market is growing aggressively. Europe has seen a general slowdown and in the entire apparel sector. The brand is experimenting with different washes like washed down denims, dark washes and fabrics like back stretch fabric, fabrics which are coated and Jeggingsa hybrid between jeans and leggings that offer greater stretch ability. As per Rajesh Dudeja, founder of Denim Club of India (DCI), the rate at which denim capacities are being added, it will touch the one billion meters mark by 22 | P a g e

2013. In fact, by end of 2012 itself denim capacities are expected to cross 800 million meters per annum. [11]

SCOPE IN EXPORTS
Denim industry like any other textile and clothing products is largely fragmented. While the westerners were the major producers of denim in yesteryears, now Asian manufacturers are contributing to about 60 percent of the world denim capacity. Most of the production in Asia is generated primarily in China & India. Some of the capacity expansion is taking place in the countries like Bangladesh, Indonesia, Pakistan and Turkey. There are several thousands of companies targeting specific customer segments for increasing their market shares. Since the companies are shaping up their products vis-a-vis defined consumer segments, they obviously are investing heavily on fit, style and fashion statements. In the demand side, the world demand for denim is projected to reach US$ 65 billion by 2015 from a level of US$ 49 billion in 2004[12]. Further it is estimated that the denim demand in the world will increase by 5-6 percent while the supply will increase roughly by 8 percent, thereby indicating a buyers market. The Americans top the list of denim jeans users and an average estimate puts the figure at 450 million pairs a year. [13]The participants of recently held session titled Denim Club: Overview of the Indian Denim Business at INFASHION 2012, Mumbai, were of the view that though the Indian market is currently fragmented, consolidation is not the answer to its growth. This is because in the more developed markets such as Europe and USA, consolidation happens in case of market stagnation or negative growth. In contrast, the Indian market is seeing a robust growth of 15 to 20 percent in recent years, and there is ample space for all players to grow. The panelists said that though the Indian denim market is flourishing, the country still has a lower consumption of the fabric compared to the production. This has led to a considerable surplus available for export. With import duties coming down and stiff competition from countries such as Bangladesh, the speakers said innovation has become a necessary condition to ensure further growth and profitability for the Indian denim companies. They said the need of the hour is an effective collaboration between countries such as India and Bangladesh, where the respective strengths of the two countries in abundant raw material and cheap production facilities can be combined to create a winning proposition. [14] 23 | P a g e

GLOBAL DENIM MARKET [15] MAIN TRADITIONAL MARKETS FOR DENIM USA US Apparel and Textile Imports in 2011

Import From

2011 (Jan Dec)

2010 (Jan-Dec) 2009 (Jan- Dec)

World Under Free Trade Agreements % under Free Trade Agreements Source: Otexa

$106.1 billion $15.7 billion

$96.7 billion $13.99 billion

$90.5 billion $13.6 billion

14.8%

14.46%

15.02%

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The total textile and apparel imports into US in 2010 were about $104 billion and those in 2011 (Jan-Nov) have touched $106 billion. Also when compared with 2009, the imports increased from $90.5 billion significantly rose to $104 billion in 2010 and continue to rise in 2011. This reflects the inherent strength of the US market that in spite of the economic recession the textile and apparel imports continue to rise.Though the increased cotton prices may have played some role in increasing the value of these imports, still the sentiment for imports seems positive for the entire industry. Also, it is interesting to note that almost 15% of all imports fall under the various Free Trade Agreements like CAFTA etc. The govt. has been maintaining this figure at around 15% for last 2 years. Percentage of denim apparel imports out of these total imports its around 4%! Though it looks small, denim is still an important apparel category when viewed in comparison to other categories.

DENIM MARKET IN USA [16]


Denim jeans are a cornerstone of the American wardrobe and an important cotton product (accounting for almost one-fifth of all cotton clothing at retail). Almost all U.S. consumers own denim jeans and 76% say their closets are full of denim and they enjoy wearing it regularly. Consumer fondness for denim jeans stems from their versatility and durability.

Regardless of the price they pay, consumers expect denim jeans to last longer than any other clothing item in their wardrobe. In 2010, approximately 98% of 25 | P a g e

denim jeans available at U.S. retailers were imported. A record 604.9 million denim jeans were imported into the U.S. in 2010. China, Mexico, and Bangladesh were the top suppliers, accounting for 68.4% of imports. Following the record shipments in 2010, from January to May 2011, denim imports were down 8.0% over 2010 to 171.4 million units and dollar volumes were down 0.1% to $1,316.9 million. Among the top 10 suppliers, only Nicaragua, Lesotho, Indonesia, and Cambodia saw increases in units shipped. Mexico continues to be the largest sourcing location for men's and boys' denim jeans (41.0% 2011), while China is the top supplier for women's and girls' jeans (44.2% 2011).

COMPETITIVE RETAIL LANDSCAPE According to the Cotton Incorporated Retail Monitor survey, in the first quarter of 2011, denim jeans represented 12% of clothing (excluding childrens wear) at U.S. retailers, down from the same period in the past two years. Higher-thanaverage inventories of knit shirts, replaced denim jeans on store shelves. This 26 | P a g e

increase, as discussed in an article in the Wall Street Journal, is advantageous for both the retailer and consumer. Retailers are able to provide a low-cost, easily replenish able product and consumers get a quick and lower-priced wardrobe update. The shift was most notable in the specialty sector, where denim jeans represented only 4% of retail offerings (down from 9% in 2010), while knit shirts increased their presence to represent almost half (47%), up from 37% in 2010.According to the Cotton Incorporated Lifestyle Monitor survey, 43% of consumers said they typically purchase denim jeans at mid-tier department stores like Kohls, JCPenney, and Sears. Mid-tier department stores allocate the most retail floor space to jeans (15% compared to 11% at other retailers), and offer more denim jeans on sale than other retailers, 70% compared to 32% respectively. Average prices of denim jeans increased in the first quarter of 2011. Almost threequarters of denim jeans at retail are priced below $39.99. The average retail price of denim jeans was $37.41, up slightly from $36.24 in the previous quarter and from $35.46 a year ago. Although there have been increases, this first-quarter price is lower than the average retail price in 2009 ($39.28). While full effects of higher raw material prices have not likely made their way to retail shelves, lower retail inventories resulted in fewer discounted jeans.In fact, only 46% of denim jeans were priced on sale in the first quarter of 2011, down from 55% for the same period in 2010.

FACTORS IN FOCUS While price is at the top of the list for general clothing purchasing decisions, it is less of a factor for consumers when buying denim jeans. The premium denim movement that peaked in 2005 initially increased consumers willingness to pay more for jeans; however, over time, the lasting effect on the jeans market is the trickle-down to the mass market of premium fabrics, styling, and fit, bringing with it increased expectations of quality and fit regardless of where consumers shop for jeans. Jeans with a higher cotton content (90% cotton or higher) have historically garnered a price premium. Consumers see the value in paying a little more for a jean that will fit better and last longer, and 76% of consumers think better quality clothing is made from natural fibers. Women consider more factors when purchasing denim jeans and find greater importance in these factors than men. Fit was ranked as the top factor for women when purchasing, which was found to be very important by 83% of women surveyed. Women also considered comfort (77%) and flattering look (71%) as top 27 | P a g e

factors, with price (66%) coming in fourth. Fit and comfort are equally important for men, with 66% finding those factors very important, and fewer than half of men finding price important. This is not surprising, as men are generally more likely than women to pay full price than to wait for clothing to go on sale, and this has been a constant trend for almost two decades.

BRAND FACTOR Brand, as a deciding factor in denim jeans purchases, ranked lower in terms of importance to both male and female purchasers. However, this does not necessarily mean brand is not considered. While brand name alone may not affect whether a consumer purchases denim jeans, it may communicate how the jeans will fit, feel, and look based on his or her previous experience with the brand. In fact, over half of consumers prefer to buy the same brands of jeans they already own (56% of women and 52% of men). However, 31% of women said they had no one favorite brand, compared to 24% of men. LOOKING FORWARD Sixty-six percent of consumers say they will purchase new jeans, and 78% of parents plan to purchase new jeans for their children. Euromonitor International projects that sales of denim jeans will increase 4.1% in 2011 to $14.7 billion. Denim jeans are purchased for durability, longevity, and versatility because consumers find greater value in a product they know will last longer and fit better; therefore price is not the main factor in the denim jeans purchase decision, unlike other clothing. This positioning ensures that denim jeans will continue to have a place on store shelves and in consumers closets. [10]

REASONS WHY THERE WAS INCREASE IN THE DEMNAD FOR DENIM AFTER RECESSION The recession in US and EU had helped increase the sales of jeans since jeans are a- MOG- Multiple Occasion Garment -i.e. they can be worn on various social and even official occasions. Thus it made economic sense for consumers to buy jeans compared to other bottoms. Hence the increased sales of denim in past few years cannibalized on the sales of other bottom products. 28 | P a g e

The competing products of denim like piece dyed bottoms, corduroys have been suffering as compared to denim when it came to consumer choice.

DENIM APPAREL IMPORTS INTO US FALL IN 2011[17]


The denim apparel import continues to fall in the first 2 months of 2011. The fall is not small -at about 6.3% compared to the same period in 2010. The fall is even more when one considers that the last quarter of 2010; the imports had fallen by 6.8%. Period Oct Dec Jan Feb 2009 157 million pcs 2010 148 million pcs 74.5 million pcs 2011 Fall % -6.8%

69.8 million pcs

-6.3%

This fall is even more surprising when it is to be considered that retail sales of clothing in US is not falling and had in fact increased in the last quarter of 2010 by about 5% . US Denim Imports Fall 14.7 percent in 2011 2011 has not been a great year for the US denim market. The retail sales were not so great and for the first time since 2007, the imports of denim apparel fell by a large number 14% over those in 2010.

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It is interesting to see the imports of denim apparel into US were faring in the last 5 years from 2006 to 2010. As the table shows, the imports only fell in 2007and thereafter there has been a steady increase in the quantities of imported products. However, the average price did fell in 2009 and 2010.

For 2011
Total quantity: 521 million pieces Value: $4,344 million Average Price per piece: $8.33 The average prices for the imports rose significantly in 2011 due to average increase in prices of cotton and other fibers. The increase in price was actually huge about +16.5% Among the gainers or the countries not much affected were Mexico and Nicaragua and some other countries like Lesotho, Guatemala etc. 30 | P a g e

Country Mexico Nicaragua

2010 (million pcs) 2011 (million pcs) 132 19 127 24

% change -3% +19%

The countries which lost out the most during 2011 were the following: Country China Bangladesh Egypt Pakistan Cambodia 2010 (million pcs) 192 82 28 22 25 2011 151 66 23 18 21 % Change -21.6% -20% -18% -17.5% -16%

The statistics give an indication that the concept of near sourcing is catching on with the buyers in US. The effect of the rising costs in China is particularly being felt and though the options of shifting bases to countries in Asia like Bangladesh, Cambodia, Vietnam etc. remains, the buyers also want to put more eggs in the South American markets.

WHAT COULD BE THE POSSIBLE REASONS FOR THIS FALL OF DENIM IMPORTS? There could be a number of reasons for this continued decrease in imports of denim jeans and apparels into US. Some of these could be: The rising price of cotton had the maximum impact on the jeans costing and forced retailers to promote other bottoms as they were not really able to pass on the price increase to the consumers. The continued boom in denim consumption in the last three years has peaked out and is in a consolidation phase where inventories need to clear from the system.

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EUROPE
Denim jeans and Europe seem to be made for each other. The relationship goes back a long time. In fact the very word jeans come from a type of material that was named after sailors from Genoa in Italy. The word denim is from another French material serge de nimes. The end of the Second World War was the time when denim blue jeans gained new status in Europe. Rugged yet relaxing they stood for freedom and a great future. Both men and women wore them. In Europe the surplus Levi's jeans left behind by American armed forces were now available in limited supplies. They were extremely popular with teens.The 60's saw the coming in of slim jeans. They were extremely popular as leisurewear. Teens began to have real fun with them. The 70's saw the bell-bottoms hitting their peak. Creativity flourished as far as denim jeans go. Customized denim embroidery made an appearance, so too did stud and patched jeans, giving jeans an all new glamorous appeal. Designer jeans were literally everywhere in Europe and were a symbol of the affluence and status of the society. Leading designer labels flooded the market in the 80's. Acid wash debuted in 1986 in Europe and took the market by storm. The 90's heralded the advent of a generation that was more concerned with oldfashioned values, environment and family life.

In a recent survey of consumers in 10 countries carried out by the Cotton Incorporateds Lifestyle Monitor, European consumers are wearing more denim than other regions surveyed. In Germany, more than one consumer in any other country, surveyed, 88% enjoy or love wearing denim compared with 78% of US consumers and the global average of 65%. Germans also own the most denim jeans and denim jackets, and also wear denim the most often (5.2 days a week, versus 3.5 globally, 4.3 in Italy, and 4.2 in USA). These findings reflect the continued casual attitude towards dress code in todays work place. UK consumers are also among the most denim-loving in the world, ranking behind only Germans & Americans, and have reported a large denim wardrobe not solely focused on denim jeans owning an average of 21 denim garments in 2010, up from 17 in 2008. UK women have the highest ownership of denim dresses and skirts. However, UK consumers wear denim fewer days as per week on average possibly because casual dress in UK is less acceptable in the UK than in most countries. Additionally, according to Emma Clifford, Fashion analyst at leading 32 | P a g e

market researcher Mintel, while wearing jeans in UK for office based work is significantly less common (12%) than wearing jeans for non-office based work (21%), jeans are increasingly losing their appeal as people get older. British designer Wayne Hemmingway (campaigner for eco and vintage fashion and founder of Red and Dead Label) , and Gordon Richardson, Fashion director at Topman ( a successfully young fashion chain of the Arcadia Group) have both admitted recently that after age of 35, they did not find it appropriate to be wearing jeans. [20]

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ANALYSIS OF THREE MAIN MARKETS IN EUROPE


[18]

GERMANY, ITALY, UNITED KINGDOM


According to the 2012 Global Lifestyle Monitor Survey, economic optimism is the strongest among German consumers, who tend to shop for clothes more often and buy more on impulse. Regardless of age, German consumers are seeking quality and value in their clothing through wardrobe staples like denim, valueadded performance finishes, and cotton. The austere economic situation in Italy has influenced consumers to shop more for clothing on sale, decrease impulse purchases, and to sacrifice some clothing quality for a better price. However, apparel-loving Italian shoppers continue to prioritize spending on their wardrobe and to prefer cotton clothing to meet their high quality expectations whereas the dour economic situation in the UK has caused consumers to become more pragmatic and price-conscious clothing shoppers as they shop less often, bargainhunt more often, and shift to lower-priced retail channels.

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GERMANY
As the largest economy and clothing market in the European Union (EU), Germany accounted for 20% of EU GDP and 19% of EU clothing expenditures in 2011. Real German clothing expenditures grew 3% in 2011 and are projected to grow another 2% from 58.3 billion to 59.5 billion in 2012.German consumers of all ages love denim, as 85% say they love or enjoy wearing denim, which is higher than in Italy (71%) and the UK (64%). In fact, enthusiasm for denim garments and denim jean ownership is higher in Germany among both younger and older consumers compared to their counterparts in Italy and the UK. Denim jeans are truly a wardrobe staple, as ownership has remained consistently strong for more than a decade in Germany, and enthusiasm for denim jeans will likely remain strong throughout 2012, as skinny and vintage jean styles are expected to be popular among German consumers. Germans are more enthusiastic about denim than consumers in any other country surveyed by Lifestyle monitor Inc. 88% enjoy or love wearing denim, compared with 78% of U.S. consumers and the global average of 65%. Among global consumers, Germans own the most denim jeans (8.6) and denim jackets (2.3) and rank third in total number of denim garments owned (18). They also wear denim the most often (5.2 days a week, vs. 3.5 globally and 4.2 in the U.S.). Casual dress is widely allowed in the workplace, and although Germans feel more strongly than any other consumers that one must wear a suit or jacket to look professional (with 66% agreeing), half of German consumers say they wear casual clothes, including jeans, to work.

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ITALY
Despite the current economic situation, Italian consumers' dedication to personal style, love of clothes shopping, and affinity for well-made clothing remains strong. While the Italian economy grew at a moderate pace in 2011 (+0.4%), real GDP growth is projected to decline 1.7% in 2012, and real clothing expenditures are projected to decline 2% from 56.9 billion to 55.2 billion in 2012 (Euromonitor International). According to the 2012 Global Lifestyle Monitor Survey, the austere economic situation in Italy has influenced consumers to shop more for clothing on sale, decrease impulse purchases, and to sacrifice some clothing quality for a better price. However, apparel-loving Italian shoppers continue to prioritize spending on their wardrobe and to prefer cotton clothing to meet their high quality expectations. Denim apparel, especially denim jeans, is a fashion favorite and a staple in consumer wardrobes around the world. The majority of Italian consumers (64%) say they love or enjoy wearing denim, which has held steady over the past few years. Younger consumers (ages 1534) are significantly more likely than older consumers (ages 3554) to say that they love or enjoy denim (78% and 52% respectively). On average, Italian consumers report owning about 13 denim garments; younger consumers own about 15 garments, and older consumers have 11. The denim wardrobe of the younger Italian consumer is more diverse, as they dedicate less of their wardrobe to jeans (only 46% compared to 54% for older consumers). Younger consumers' wardrobes are more dedicated to denim shirts and shorts compared to their older counterparts. Among Italian consumers, 62% love or enjoy wearing denim, up from 44% in 1999. Although Italians rank seventh globally in their love of denim, they rank third in how often they wear denim jeans or shorts (an average of 4.3 days a week, compared with the global average of 3.5). The finding that they wear denim more often than most consumers globally could be related to the prevalence of casual attire in Italian workplaces. About two thirds of Italian consumers are allowed to wear casual clothes to work at least one day a week, and the average number of casual days per week (5.4) is the second highest among the countries surveyed. Nearly half of Italian consumers (48%) say they wear casual clothes to work, slightly above the global average of 46%.

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UNITED KINGDOM
The United Kingdom (UK) clothing market is one of the largest in Europe, accounting for 17% of EU clothing expenditures in 2011. With sluggish economic growth in recent years, real UK clothing expenditures declined 2% in 2011 and are projected to decline 1% from 43.9 billion to 43.4 billion in 2012 (Euromonitor International). According to the 2012 Global Lifestyle Monitor Survey, the dour economic situation in the UK has caused consumers to become more pragmatic and price-conscious clothing shoppers as they shop less often, bargain-hunt more often, and shift to lower-priced retail channels. Even as UK consumers have become more price-conscious, the importance of clothing durability has increased, with the majority of UK consumers expecting to wear their clothing longer than in past years. UK consumers are ultimately seeking value in their clothing purchases and continue to prefer cotton apparel to meet their comfort and quality needs. Enthusiasm for denim and denim ownership has remained strong in the UK. More than 7 out of 10 consumers (71%) say they love or enjoy wearing denim, which is consistent among consumers of all ages and has held steady over time. On average, UK consumers own about 20 denim garments, 5 of which are jeans. While overall denim garment ownership is higher than in Germany and Italy (13 denim garments each), denim jean ownership is lower than in Germany (8 denim jeans) and Italy (6 denim jeans). UK consumers' denim wardrobes are much more diverse than their European counterparts, as 26% of consumers' denim wardrobes are dedicated to jeans, compared to 50% in Italy and 58% in Germany. Relative to 2008, UK consumers have increased their ownership of denim shirts and dresses.UK consumers are among the most denim-loving in the world, ranking behind only German and U.S. consumers. While UK consumers are not as focused on fiber content as Italians and Germans, their love of denim shows that they appreciate cottons qualities. UK consumers are more likely than Germans to say that they wear denim because of the feel of the fabric (59% vs. 49%), and 62% know that denim is made of cotton, ahead of Germans (61%), Italians (56%), and the global average (42%). UK consumers own an average of 17 denim garments and rank third in jeans ownership (7.6 pairs). Worldwide, UK women are the most likely to own denim dresses and rank second in denim skirt ownership. But despite their love of denim, UK consumers wear denim fewer days per week on average (3.8) than do 38 | P a g e

consumers in Germany, Italy, or the U.S. possibly because casual dress at work is less acceptable in the UK than in most countries. Although the percentage of UK consumers allowed at least one casual day per week has risen from 25% in 1997 to 58% in 2008, the average number of casual days per week is 3.6, still lower than the global average or in Italy or Germany. Globally, UK has the lowest percentage of consumers who wear casual clothes to work (26%) and the secondhighest percentage who wears formal business suits (20%).

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DENIM DEMAND IN GERMANY, ITALY.UK

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PROSPECTIVE NON TRADITIONAL MARKETS


As it is a well-known fact that USA and Europe consist of the major traditional markets for denim, love for denim garments is increasing in some of the nontraditional markets too.

RUSSIA
According to a study conducted by University of North Caroliana, in comparison to consumers in an established market- based economy, consumers in post- socialist market have unique perceptions of clothing attributes (quality, brand name, country of origin, retail channel) critical for buying decisions. Overall, appearance and clothing play a special role in the emerging Russian market as they help construct and communicate new identities more than any other product category Exports of garments to Russia are seen growing at 30-40% over the next two years.According to Vinod Kumar Saraogi, managing director of Meridian Apparels Ltd, the Russian economy is doing well compared to Europe and customers are also fashion conscious. Indian clothing manufacturers shipped garments worth $120 million to Russia in 2011, or 1% of the total $11 billion. That compares with the 70% share of Europe and the US.Russia may offer a lifeline for Indian apparel exporters hit by overexposure to the slow-growing economies of Europe and the US. It is the best time to diversify into countries like Russia as the duties are standard for all countries Russia levies the same 20% duty on all countries, including Bangladesh, which has overtaken India in the global export market in recent years helped by lower labor costs and custom duty waivers in key European and American markets.That has helped Bangladesh take a 4.5% share of world garment exports, compared with Indias 3.5%, according to a report by credit rating agency Crisil.Moreover, the Russian economy is expected to log 4% growth this year and the next, according to the Organization for Economic Cooperation and Development (OECD). While this growth rate isnt spectacular, it compares favorably with that of Europe and the US, which together account for 67% of global garment imports.The economic growth of the European countries has slowed down due to the recession; the experts forecast the surge in the 41 | P a g e

consumer activity of the Russian buyers. In this situation it would be a good time for Indian suppliers to try to take over a part of the Russian market from China. As per European Fashion & Textile Export Council (EFTEC), Russia is experiencing an increasing demand in denim since in 2007. Four years ago there was a peak in the Russian denim sales, and the import volume of jeans clothes from European countries made 1 billion Euros. Back then, in 2007 35% of jeans were bought by men, and 65% by women. In 90s the picture was inverse, as not so many women in Russia wanted to wear jeans. Foreign producers launched jeans for Russian women in 2000, and now the market is expecting another phase of high demand. According to experts, the Russian denim market will grow with 12-15% in 2011, and this tendency will continue until 2013. Russian consumers see denim as something more than work wear these days, hence the increasing sales numbers. The denim is imported from the authentic labels in America, and then Turkey is actively entering the market, and jeans from China represent the lowest price segment. The Apparel Export Promotion Group, which held talks with its Russian counterpart several times in 2011 with plans for yet another meet in September, 2012, hopes to see exports to Russia touch $170 million in 12-24 months SOME FACTS ABOUT RUSSIAN DENIM MARKET In , Russia, whether in a department store or open-air market, almost all of the clothing retail outlets sells jeans, jeans distribution of profits is very attractive, some well-known brand of denim product performance is outstanding, the distributor from which profits are up to 3-4 times. Russian jeans market is divided into multiple price points: the high-end market, Versace (Versace), Trussardi and Calvin Klein (Calvinklein) where jeans retail price goes up to 250 U.S. dollars. In the popular and dependable market, Lee, Whig (Wrangler), Sasch, Levi Strauss, Guess and Sisley brands price from 50-150 dollars. As for the low-end jeans market, the popular low-cost brands have Mustang, Motor, Bigstar and the Cross and so on. Retail price ranges between 20-30 dollars, mainly for young people, students and younger workers. It is noteworthy that the younger generation who like to buy authentic jeans, jeans in particular, but the market for sale of counterfeit goods over the street market is rapidly growing.

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MIDDLE EAST MARKET FOR DENIM


The denim sector in the Middle East is as diverse as it is fragmented, with strong demand in the Gulf and Israel for major brand names and the latest trends. Driving consumer habits towards buying denim has been the rise of advertising and pan-Arab media in the region, which has increased the exposure of consumers to western fashion trends, which is increasingly regarded as the clothing style to adopt, particularly among young people. Denim sales have also been fuelled by recent significant changes to the Middle East retail sector, with malls springing up throughout the region and multinational retailers moving in to establish a presence in both its emerging and wealthy markets. Although the region is retaining many of its traditions, including clothing, there is currently a mix of styles, with Muslim women who wear the hijab and long overcoats or abayas often wearing jeans underneath. Men are also moving away from a more conservative look, particularly outside the workplace, towards jeans. Muslim-majority countries are culturally diverse and constantly in flux; the notion that the "Muslim world" is monolithic, mostly Arab, and static is a stereotype. In earlier decades, women in Muslim-majority countries, especially educated urban women, often did not wear hijab. The resurgence of religious commitment, encouraged by organizations devoted to a politicized Islam and preachers calling people to greater levels of piety made hijab, mosque attendance and other signs of religious commitment more popular, especially for young people. Many Muslim women are fashion-conscious consumers, having access to styles from Western Europe and the United States. To meet the need for fashionable modesty, designers in Istanbul, Tehran, Cairo and other major cities in Muslim-majority countries develop fashion trends for garments to cover the head and body. Elaborate hijab styles, which may feature unusual shaping or embellishments, make headlines when they appear on the runway and are adopted by fashionconscious Muslim women. European designers such as Christian Dior have designed clothing for Muslim women in the Middle East and used elements from traditional Islamic clothing for pieces for Paris shows.

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Nowadays, denim hijabs are the latest trend. They are trendy yet comfortable to wear. Materials used are soft denim. They are easy to care for. They are made from soft cotton materials. They are available in unique designs. These hijabs are suitable for all occasions. Ladies wear them to the office, casual outing with family and friends, and also to semi-formal functions.

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COMPETITORS AT GLOBAL LEVEL[19]


Global denim market is segmented into premium denims, fashion denims/value for money denims and mass denims. In premium denims, Indias competition is with Italy, Japan and a couple of Turkish mills; in fashion denims, our competition is with Turkey, Thailand, some Chinese mills and a couple of Pakistani mills; and in mass denims there is competition from majority of Chinese, Pakistani and Bangladeshi denim manufacturers.

PREMIUM DENIM MARKET SEGMENT The premium denim labels cost $300 or more. The market had started moving in a direction since early 2000s when a good amount of manufacturing started happening in the US. A True Religion jeans which costs $50 in US can being wholesaled at $150 and retailed at $335. Some advantages that USA, Japan, Turkey have in the premium denim market segments are High quality of fabrics used made in old looms dated back to 1950s. Internationally, the whole trend is to do collaborative projects. For example, designers do design forecast, and fabric and color forecasts are done by experts from the respective fields. It is not possible to manufacture with exact specifications in India where labor cost is cheap. Made in LA tag appeals to customers. Short lead time - it typically takes six to eight weeks to make a pair of premium denim in the U.S., compared with three to six months in India

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FASHION DENIM MARKET SEGMENT In fashion denim market segment, the main competitors are Turkey, Thailand, some Chinese mills and a couple of Pakistani mills. The following table provides a comparative analysis of the above countries on the basis of some prominent key factors of production.

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MASS DENIM MARKET SEGMENT Mass denim market reasonably priced denim worn with mass market appeal. In the mass denim market, India faces a lot of competition from Bangladesh and China. The following table compromises the comparative analysis of the three countries.

INDIA
FABRIC SOURCING Plenty of resources of raw materials, one of the largest producer of cotton yarn

BANGLADESH

PAKISTAN

21 domestic denim It has own supply of cotton producers supply 40% , and fabric hence it enjoys 60% is imported short lead times Long lead times (around 45 days) as fabric is sourced from India or China It enjoys GSP facility from EU Duty free access to consuming market like Europe and Canada Government provides gas at subsidized prices to existing denim manufacturers Readymade garment industry enjoys facilities like duty free import and income tax exemption

BENEFITS/ SUBSIDIES

Exporters in India get 3.5-4 percent duty drawback on export of fabric and 4-5 percent on denim export. Government support for concessional duty import and subsidy under the TUF (technology up gradation fund) scheme

DISADVANTAGES

Not present in Premium Lack of domestic denim market segment cotton production capacity makes it difficult to operate in Just in Time logistics system

Geopolitical instability in Pakistan may keep buyers away from Pakistan

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WHAT IS EXPECTED FROM INDIA AT A GLOBAL PATFORM There are good opportunities in this business sector, the US, Japanese, European customers dont really buy denim fabrics. They buy garments. Their ultimate concern is how to source the final product. The final product is composed of denim, stitching, and washing. Two of those components are critical to jeans. Denim is obvious and washing is even more obvious. Washing relies on good fabric also. Export markets expect design, price, technical competence, service, and quick delivery. For India to dominate the export markets, they have to think like consumers in those markets. Chinas capacity will decrease in next 10 years and Indias will increase, Chinas domestic demand will also increase in coming years.

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RECOMMENDATIONS
WHAT IS RECOMMENDED FOR INDIA TO BECOME MORE ACTIVE IN PREMIUM DENIM MARKET SEGMENT? India lacks in collaborative projects between denim manufacturers and fashion designers. There is a strong need of denim dedicated shows like Denim by Premiere Vision, which can provide a platform for both. In India, everybody works in isolation and designers dont have the kind of infrastructure, technical support or funding to experiment with the fabric. Industry should make an effort to attract not only the established designers, but it must also try and reach out to the budding designers in the design schools across the country. It is also necessary to organize events and tradeshows to provide a unified platform and a supportive environment for forming and promoting sustainable collaborations. Denim companies should sponsor potential designers to get new ideas and newer denim products. The perception of denim, in the minds of Indians, should be changed from a rough and tough fabric to that of a luxurious and fashionable fabric. A lot can be achieved in the field of denim with the variety available in terms of colors and styles. However, one needs a different set up for designing denims since denim in itself is a totally different area. None of the big manufacturing houses or others is working with the designers. There has to be a collaborative effort by the mills and designers to explore the real potential of denim fabric

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WHAT IS RECOMMENDED FOR INDIA TO BECOME THE GLOBAL DESTINATION FOR SOURCING FASHION AND MASS DENIM? The denim sector has to deal with one of the most competitive markets in the world. India has to be more dynamic, monitor the markets and keep up with competitive pressure. There is always a possibility to lose market advantage any day because of the USD/INR exchange rate, rapid changes in cotton prices or for similar reasons; therefore it is an important task to keep an eye on global market trends. Cost is one of the most important competitive factors. India has to keep its costs low to be able to sell at competitive prices. It should also emphasis on production conditions in the mills. Mills have to go through all kinds of social compatibility supervision, in order to get attention from global outsourcers. Social compatibility supervision in the areas like waste water treatment, chemical treatment, working conditions, safety measures. All these built reputation at global platform. Just low prices, good quality production will not be enough in todays market. Consumers are more conscious now and want to wear neat jeans. Effective collaboration between countries like Bangladesh, where the respective strengths of the two countries in abundant raw material and cheap production facilities can be combined to create competitive advantage. Development of in-house design capabilities to leverage new fiber and yarn blends. Sustained and stable growth in the domestic retail and fashion business will be the key driver for Indian denim manufacture. Such future growth will certainly require a quick response to fashion cycles in retail, with proactive backup from strong in-house design capabilities.

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PRODUCT DIVERSIFICATION WITHIN DENIM FABRIC


There is always a way for product diversification. Denim is a trend that never fades away. Summer/Spring2012, is experiencing a rising trend of printed and colored denim. Brightly colored denim is a hot choice for the ladies and now it seems like printed denim is making their way in this Spring/Summer. From floral to tough python and subtle leopard to loud celestial designs are in fashion.

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DENIM BAGS

WHY DENIM BAGS ARE IN TREND These bags have five excellent qualities other bags dont have. These bags are classy, durable, lightweight, inexpensive and versatile. As a result of their elegant glimpse, even well-known people, celebrities and personalities come across these bags alluring. They are not only utilized in casual moments but they are a lot more usually utilized in special occasions to flaunt their model. Denim bags look straightforward, but when theyre well-carried, they complement to the users fashion taste. No matter what the size is, denim built bags is comfortable to carry because they are unlike other plastic bags which present additional weight apart from their contents. Denim bags are versatile and their design constantly appears to fit diverse occasions in life. They usually are not distinct for casual occasions alone. Men and women are discovering their functionality as the form they can use in events they see fit. They also go perfectly with various sorts of outfit. 54 | P a g e

DENIM SHOES

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DENMIM HOME FURNISHING

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DOMESTIC MARKET[21]
The Indian market provides ample of growth opportunities in the denim market segment. The Indian consumer is now wants to have world class quality and satisfaction in whatever he buys. He is brand conscious, quality conscious and style conscious. The Indian market has the potential to boom in the next few years with an increasing purchasing power and globalization taking place. The main hurdle is the reach. The distribution channels should be widened specially in 2 & 3 tier cities, so that denim is available to every Indian.
India's share 2010 650MMPA
India ROW

India's share 2015 5.8BNMPA


India ROW

11%

14%

89%

86%

India's share 2020 6.7BNMPA


India ROW

17%

83%

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CONCLUSION
In the financial year 2011- 2012, all denim manufacturers reported healthy sales and robust profitability. However, while the sales growth continued during FY12, the profitability was under pressure during this period mainly on account of rising input cost. While prices of cotton cooled off during FY12, the benefits of the same were largely offset by significant increase in power and fuel cost, interest cost and forex losses. Overall, the domestic denim market grew by almost 10 % during FY12 over FY11, while the growth in exports market was in range of 10-15 % due to increase in export demand on account of rupee depreciation. Denim manufacturers have added almost 100 billion meters per annum in the last one year. The total installed capacity stood around at 780-800 mmpa (million meters per annum) in the last one year. Furthermore, most of the denim players are currently operating their capacities at optimum level and have plans for expansion. This is in stark contrast to China, the worlds largest denim manufacturer and exporter, which has cut its denim capacities during this period, mainly on account of its declining competitiveness from increase in power and labor cost, and appreciation in the value of Chinese Yuan. While the Chinese Yuan has appreciated against the US dollar over the last one year, the Indian rupee has depreciated significantly. This has resulted in an increase of 10-15% in export order book of Indian manufacturer. Going forward, as China is expected to further cut down on its denim production, a large chunk of export demand for denim is expected to shift to India, Bangladesh and Pakistan, the leading manufacturer after China. India faces tough competition from Bangladesh and Pakistan as far as demand shift from China is concerned. Since these countries have cheaper labor costs as compared to India and their currencies have devalued more as compared to the Indian rupee, they too are expected to benefit from Chinese cut down on denim manufacturing. However geopolitical instability in Pakistan may keep buyers away from Pakistan. Further Indian denim manufacturers have proven track record of manufacturing high quality, fashion denim as against denim manufacturers in these countries who largely produce basic commodity segment denim. Further Indian denim manufacturers will also benefit with the emergence of Bangladesh as a hub for apparel manufacturing since majority of denim fabric for apparel manufacturing in Bangladesh is sourced from India. While demand shift from China and increased demand from Bangladesh is expected to result in significant growth in Indias denim export, the domestic demand for denim is also expected to remain robust, with increasing urbanization, growing households, 58 | P a g e

improving standard of living, increasing disposable income and relatively young population in India. Over the last decade, the denim sector has been highly cyclical in nature with slowdowns witnessed in FY01 and FY08-09 mainly on the back of pilling up of excess capacity. Subsequent to FY09, the demand outlook has again turned positive and the denim segment is again witnessing a growth with all the major denim manufacturers adding new capacities. However, with new capacity additions, there is a risk of excess supply which may adversely impact the profitability of denim manufacturer in the long term.

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BIBLIOGRAPHY

1. Denimsandjeans.com 2. Global Lifestyle Monitor survey, a special series of Supply Chain Insights, and a biennial consumer research study sponsored by Cotton Council International and Cotton Incorporated. In the 2012 survey, 5,000 consumers (approximately 500 in each of the 10 countries surveyed) were surveyed via telephone, face-to-face interviews, and online. Respondents were male and female, aged 15 to 54. The ten countries included in the 2012 survey were Brazil, China, Colombia, Germany, India, Italy, Japan, Thailand, Turkey, and the United Kingdom. 3. Denim capacity to rise by 100 million in India by 2011 Business Standard (BS Reporter / Mumbai/ Ahmedabad Oct 26, 2010, 00:40 IS 4. Article Source: http://EzineArticles.com/364127T) 5. Trends and patterns of denim consumption in India by Dr. P Nayak. 6. Source- Textile Committee, Ministry of Textiles, Government of India, Mumbai, Fibre2fashion.com 7. Trends and patterns of denim consumption in India by Dr. P Nayak. 8. Source- Textile Committee, Ministry of Textiles, Government of India, Mumbai, Fibre2fashion.com 9. Trends and patterns of denim consumption in India by Dr. P Nayak. 10.Source- Textile Committee, Ministry of Textiles, Government of India, Mumbai, Fibre2fashion.com 11.http://www.fibre2fashion.com, June 21, 2011 12.http://articles.economictimes.indiatimes.com, June, 2011 13.http://www.denimsandjeans.com , article dated May 11th, 2011 14.http://www.denimsandjeans.com , article dated May 11th, 2011 15.http://www.rncos.com/Report/IM385.htm 16.www.textilealumni.org 17.http://www.indiaretailing.com/News.aspx?Topic=1&Id=6430 18.http://www.denimsandjeans.com/latest-denim-reports/denim-datafigures/us-denim-imports-fall-14-7-%cent-in-2011/, dated February 21st, 2012 19.Global Lifestyle Monitor survey 60 | P a g e

20.http://www.denimsandjeans.com 21.Global Lifestyle Monitor survey 22.Fiber2fashion.com 23.MDL estimates 24.CARE ratings Industry update May 18, 2012

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APPENDIX
QUESTIONS DISCUSSED WITH MR. PARVEZ KHAN (MARKETING HEAD- EUROPE)

What is Arvinds approach to venture into new markets? Any slowdown in demand from European countries due to global meltdown? What are the sources of its raw materials? Local / imported? How Arvind is competing with global brands in denim section? How it is dealing with competition faced by competing countries? What are the major brands it is dealing with? Why India is still lacking behind other global suppliers What are the competitive advantages that Arvind has over its competitors? How Arvind provides new and innovative products to its customers? Denim value chain process Global denim market segmentation fabric & garment What can be done at the managerial level to capture more market share especially in fashion & mass denim market segment?

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