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Kids Merchandise Mix For National Brands

Ahmedabad Region

Arpit, Jinal, Satendra & Vishal

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CONTENTS

TOPIC
Executive Summary 3
Literature Review 4
Title Of The Project 15
Problem Statement 16
Research Objective 17
Research Sub-Objective 18
Research Design 19
Nature and Form of Result 20
Budget 21
Schedule 21
Bibliography 22

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Executive Summary:

Merchandize mix is the breadth and depth of the products carried by retailers. It requires planning of
the quantity and type of stocks in the retail store. Managing the merchandize mix in the kids wear is
challenging. There is a high demand of kids wear. It is estimated that kids wear market will be of 30,510
crore by 2013 and the volume of kids wear contributes to 24.9% compared to other apparels. Thus it
becomes necessary to manage and plan stocks in the optimum way to make higher profits and tap the
market.

Here we have conducted a study of Ahmedabad malls that carry kids wear merchandize. From the
study we are trying to understand what types of kids wear apparels customer’s prefer (willing to buy),
according to which the retailers can stock those products as per the required quantity of that style
product. There are times that certain product is stocked more than the other, in which case sale
opportunity is lost.

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Literature Review:

Introduction:

Scanning through the streets of any town or city, one can see a mind boggling array of kids apparels.
Spaghetti tops, Crystal studded denims, Italian cuts, Capris, and exclusive party wears. Kids fashion is a
diminutive version of adults wear. They have all the clothing as like that of adults, and even much more.
Children of today are much more intelligent than their previous generation. They like to have their own
choice of clothing. This metamorphosis of children; becoming independent buyers is enhancing the
kidswear market. Double income, increase in the amount of disposable income, and one or two kids are
the supporting factors to the growth of the kidswear market.

Global kidswear market during 2006 was estimated to be around US$ 163.92 billion, which was a small
contribution of 3.6% of the total clothing industry. Kidswear segment of the Asia-Pacific region is 35.1%
of the global market, and is considered by industry analysts as one of the fastest growing segment, due
to increase in child population, supported by many other factors.

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Indian Kidswear Market:

Good times for the Indian kids apparel market are in the offing. The evolution in the buying behavior of
children, and their influence over their parents results in a big difference in purchase decisions. Media
exposures and promotions also cause a significant influence in the market. Evolving dynamics in this
market have made it necessary for the manufacturers and retailers to evolve their business strategies’
in order to sustain themselves in the market. Many manufacturers come up with their own brands,
while some others enter into business through joint ventures.

Today’s kids are more fashion conscious, and are ready to experiment with clothing. Increase in the
amount of disposable income, and retail blitz has brought a sea change in the Indian kids apparel
market. With kidswear being considered as a part of the lifestyle segment and a strong emphasis is
being placed on brands, this segment proves to be a potential business.

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Industry Overview:

Market for kids apparel is the fastest growing industry in India. Manufacturers are coming up with
fancy materials targeting kids who are more interested in the upcoming fashion trends. Children’s
garments are available in various forms and designs. Kids apparel market is more unorganized than any
other segment of apparels. The market is a proposition of the good, bad and the ugly. A huge volume of
kids apparel in India is being dominated by local and unorganized players. This gives an excellent
opportunity for the organized players to lay a strong foundation in this segment. Indian market is now
moving towards an international look in terms of children’s apparel. Cotton plays a major role in the
clothing of children. Approximately, 86% of the kidswear are of cotton.

Branded kids apparel market is in its nascent stage in India with a handful of national and international
brands. Industry analyst estimate that market size of branded kidswear in India including brands like
Ruff Kids, Ruff Baby, Planet Kids, Gini & Jony, ZAPP, Li’l Tomatoes, and Weekender Kids is estimated to
be around Rs 1,000 crore. They positively assert that branded market for kids is growing at 15% per
annum. International brands including Barbie, Mothercare, Benetton Kids, Pepe, Lee Kids, Tommy
Hilfiger, and Adams Kids have also entered the Indian market.

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Market size and Growth:

According to the India Apparel Report, 2009 (Images Year Book, Vol VII), the size of kidswear market is
estimated to be at Rs. 30, 510 crore. Industry experts predict that the market will further grow to reach
Rs. 45, 000 crore by 2013, with braded apparels contributing to a major share. The volume of market
share of kids apparels in the total apparel market is at 24.9%, as against a 15% share in 2005. Urban
kids apparel market comprises about 60% of the total kidswear market. A research states that more
than 30% of the country’s population is below 15 years of age. The density of population makes
kidswear to be one of the fastest growing segments in the Indian market scenario.

Branded kidswear are well established in I tier cities, and are now experiencing a good growth in II & III
tier cities as well. Wanting the best outfit for their children, parents are seeking a variety of garments
offered by new brands, and are shopping in exclusive outlets dedicated for children’s apparel. Industry
players further predict that the market is set to grow by 12% annually and reach its peak by 2010.

The Indian children-wear market generated total revenues of $6 billion in 2009, representing a
compound annual growth rate (CAGR) of 10% for the period spanning 2005-2009. In comparison, the
Chinese market increased with a CAGR of 6.5%, and the Japanese market declined with a compound
annual rate of change (CARC) of -0.7%, over the same period, to reach respective values of $32.4 billion
and $10.9 billion in 2009.

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Market share of the Major Apparel Segments (2009)

Total size Rs. 122, 400 crore

Sales by clothing and accessories specialists proved the most lucrative for the Indian childrenswear
market in 2009, with total revenues of $5.1 billion, equivalent to 84.7% of the market's overall value.

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Characteristics of Kidswear Markets:

The market for kidswear is classified as follows:

󲐀 Infants (0 - 6 months)
󲐀 Toddlers (7 months - 2 years)
󲐀 Kids (3 - 8 Years)
󲐀 Pre-teens (9 - 12 Years)

Children’s wear is mainly on a seasonal basis. Highest sales figures are usually recorded during the
months of August – September. The average annual expenditure on Kidswear is approximately Rs. 3,
857.

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Average budget for kids apparel

For children’s wear, cotton is the most preferred material due to its non-allergic, comfortable, and easy
caring virtues. But with the advent of more and more fads emerging in the market, this fibre faces
competition with other synthetic ones, which are preferred for its washability, and non-creasing
abilities.

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Growth Drivers:

Children always keep growing. So, the possibility of this market being strong even in tough times is
evident, as there is always a demand for kids apparel.

Demography:

A survey states that, the maximum sales in children’s wear market comes from smaller towns. Patiala,
Bhatinda, Coimbatore, Phagwara, and Sonepat are a few to name. Branded wears are well established
in tier I cities and are now emerging into the II tier and III tier cities as well. In I tier cities, boutiques are
emerging to be a popular trend. Consumers expect these retailers to have a cutting-edge of garments,
and exclusive collection of clothes.

Generally stores that offer a wide range of selection at discounts and low prices attract more traffic. As
kids grow quickly, and are less attentive in keeping their clothes safe, parents consider kids apparel as
functional and disposable as well. In case of infant, and toddler wears, general merchandise, and
supermarkets dominate the sales. Specialty stores are successful in this segment as they are focused on
a particular section in the apparel segment. Few retailers dominate the kids apparel market in any one
particular area.

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Untapped market potential:

With a promising future for kids apparels, the market has attracted international brands into India.
Global brands like Mothercare, Mona Lisa, Benetton, Espirit, Bossini, and Kans have entered the Indian
kids apparel market. While international brands eye Indian kidswear market, domestic brands like
Lilliput, Li’l Tomatoes, and Catmoss are gearing up to have a share in the global market. Representing
Indian brands abroad, higher profit margins, and succulent opportunities are assumed to be the reasons
behind their foreign march.
India has a vast potential for export of kids apparel to foreign markets like US and EU. Brands like
Lilliput and Koutons are exploring opportunities for joint venture options to tap the children’s apparel
market in China. Indian players spot lucrative manufacturing capabilities in China, supported by strong
purchasing power. Hence, Indian business units are planning to acquire manufacturing units in China to
gain production scale for its operations in the ‘dragon nation’.

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Media Proliferation:

A brand; positioning itself in the market, depends on the level of differentiation it is able to establish.
The manufacturer must also ascertain a sizable amount of promotional budget to gain eyeballs. There
are no boundaries for the scope of merchandising activities for kidswear. With the effective publicity of
mediums like TV channels, video games, blockbuster of superheroes, and peer influence, children are
aware of the latest fashion in apparels, and other accessories.
Generally parents like to dress their children like themselves. They further seek to buy brands they are
already aware of, and have confidence in. Popular brands like Gap, Diesel, and many others plan to
extend into this segment. With the emergence of many TV channels, promotional strategies of
companies have become more intense. Innovative promotions which encourage the kids involvement,
finds more acceptance.

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Success Factors:

Craving for a niche, new entrants as well as existing players follow distinct strategies to market their
brand. Marketing task lies in capturing the imagination of the children with fashionable patterns, and
of the parents with quality apparels supplemented by reasonable prices. All these determine the success
of the manufacturer in this segment.

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Title of the Project:

“To suggest the merchandise mix for

kids-wear section for the national
brands in ahmedabad region.”

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Problem Statement:
“What are the most preferred merchandise
mix for the different apparel product
categories in relation to consumer buying
preferences and behavior with respect to
purchase of kids-wear garments in
Ahmedabad Region. “

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Research Objective:

The primary objective of the project was “to suggest the merchandise mix for the Apparel product
categories for kids”. This includes:

To suggest a broad merchandise mix in terms of assortment, categories, classes and sub
classes.

To prepare an assortment distribution plan to breakdown the merchandise classes defined in

the previous step into assortment factors-style, sizes, colors and price lines.

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Sub objective:

To analyze forecast of silhouette, style, color, fabric, for the merchandise (for the particular
season).

To understand the consumer buying preferences and behavior with respect to purchase of
garments.

To study the merchandise mix of the probable competitors for the brand.

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Methodology:

Exploratory research

Studying related literature on retail merchandising and fashion buying in books, magazines and
journals in order to understand the merchandise planning process.

Understanding the merchandising policies of the store by interviewing the key decision makers.

Study will be basically Analytical research based on Qualitative attributes.

Descriptive research:

• Competitor analysis- An analysis of probable competitors to style the merchandise assortment

in terms of stocked the style, sizes and colors and pricing of these items, relative allocation of
the garments.

• Consumer survey-To understand the preferences and purchase behavior of consumer in respect
of garments.

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Nature and Form of Result:

Product Type:
Kids Wear

Product Brands: Ginni

Category: Boys &Johny GAP Lilliput

Boys Girls

Jeans T-shirt

T-shirt Skirt

Capri Jeans

Shirt Frocks

Capri

Quantity in each brand and percentage

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Budget.:

Paper Photocopy 500

Transportation 400

Miscellaneous 500

Total 1400

Schedule:

• Total research project will span for 5 regular days that will consist of surveys, interviews and
data analysis with advent on the conclusions and recommendations.

• Date: 07/01/11 to 13/01/11

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Bibliography:

1. Fibretofashion:

http://www.fibre2fashion.com/industry-article/1/55/childrens-apparel-market-in-india1.asp

http://www.fibre2fashion.com/industry-article/market-research-industry-reports/indian-
kidswear-market-is-growing.asp

2. India Today: www.indiatoday.in/kidswear-market-to-touch-rs-58k-cr-by-2014.html

3. The Hindu Business Line:
http://www.thehindubusinessline.com/iw/2003/01/19/stories/2003011900580700.htm

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THANK YOU

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