Not just K-Pop, Indians are in love with Korean self-care too

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December 31, 2024

Jasodhara Banerjee, Forbes India

31 December 2024

Once, there was alabaster. Then, there was porcelain. And now there is glass. And no, we are not talking about the different kinds material to make fine, delicate objet d’art, but the quality and texture of facial skin—smooth, flawless and luminescent—that humans aspire to.

While a Google search for the term ‘glass skin’ will churn out hundreds of results that describe not just what the term means—tracing it to Korean skin care routines and products—but also detail the meticulous steps, varying between five and 11, that will apparently make you look like your favourite K-pop singer or K-drama actor. Like all things K (read: Korean), be it television and OTT serials, or food and clothes, K-beauty seems to have taken the Indian market by storm. A search for ‘Korean brands’ on online platforms such as Nykaa and Tira Beauty brings up more than a thousand products, ranging from ₹75 for a facial sheet mask to ₹17,900 for 60 ml of face cream. Clearly, there is something for everybody.

Fuelling this surge has been a plethora of factors, including the rise of online marketplaces that have made Indian and foreign skin care and beauty products more accessible than before, the thriving ecosystem of influencers and content creators that has revolutionised the marketing of these products, and, of course, consumer demand for products that claim to have the goodness of natural ingredients backed by the surety of science. And, surprising as it may seem, the Covid-19 pandemic and accompanying lockdowns also seem to have played a role in this.

Case in point is Amorepacific Corporation, a Seoul-headquartered beauty and cosmetics company that operates in more than 50 countries, and has a portfolio of more than 30 brands, such as Sulwhasoo, Laneige, Mamonde, Etude House and Innisfree. It is one of the largest cosmetics companies, not just in South Korea, but in the world.

“We are the number one beauty and personal care brand in South Korea and were the first Korean corporation to enter India with direct management, with our own subsidiary,” says Paul Lee, managing director and country head, Amorepacific India. “We started our business in India with Innisfree, which uses natural ingredients from Jeju Island in South Korea. We started with Innisfree because India had a huge demand for brands with natural products. Then we introduced Laneige and Sulwhasoo, which fall in the luxury skin care segment, and these were followed by Etude, which is a makeup brand.”

Amorepacific entered India sometime in 2012, taking tentative steps in a fledgling market with minimal investments and a retail store in Delhi’s Khan market. “At that time, the awareness of K-beauty was very small, and our momentum of growth started with the popularity of dedicated ecommerce players like Nykaa. In the last seven years, our annual growth has been 50 percent, our current growth is 60 percent year-on-year,” says Lee.

A potent potion for growth

Although industry players and experts feel there are multiple factors behind this growth, the popularity of Korean cultural elements is a significant one. “Korean beauty and personal care brands have multiple enabling factors. The global expansion of Korean beauty and personal care products has been on the back of a cultural export wave like any other earlier in history; in this case through the growing popularity of K-pop and K-dramas,” says Devangshu Dutta, founder, Third Eyesight and co-founder, PVC Partners. “In India, these brands initially had an influence in the Northeastern states, where customers are usually ahead on the fashion curve and also find resonance with the look of these brands.” He adds that factors such as the increasing number of Indian tourists to East Asian countries, and the growing presence of Korean and Japanese expatriates within India have also supported the growing footprint of these brands.

A spokesperson for Tira Beauty, which was launched in April 2023, agrees with Dutta, and attributes the demand for K-beauty products to the exposure that consumers have to K-dramas and K-pop. However, she adds that a significant factor is rooted in the products themselves. “These are the innovations that these brands are bringing to the table,” she explains. “The kind of formulations they offer are very well-suited for the Indian consumer. The ingredients are very efficacy oriented, and deliver a lot of quality, thus resolving a lot of concerns that consumers in India have.”

For instance, skin hydration is a core need of consumers, and a lot of Korean skin care products focus on hyaluronic acid as an ingredient. “Consumers who have sensitive skin or inflammation as a key concern get to use ingredients like centella asiatica, that a lot of Korean products use,” she says.

The spokesperson adds that the texture of the products is also a factor behind their popularity in India: “A lot of Korean sunscreens are light weight, a lot of their essences are suited for the Indian skin and the Indian weather. Both these factors are contributing to the rise we are witnessing in the space of K-beauty.”

Lee of Amorepacific highlights the use of unique ingredients such as fermented beans, ginseng and green tea that were never used before by American or European companies. There are also many options for consumers to choose from, depending on what is best suited for them. For instance, there is a product line with green tea for consumers with sensitive skin, and the same products are available for those with dry skin. “There are three key metrics that we have seen among Indian consumers: One is the demand for premium quality, two is the demand for glass skin, and the third is reliability.”

Lee also attributes market factors that have been instrumental in making Korean products more accessible to Indian consumers. “There has been a lot of change before Covid, and after Covid. From the macro perspective, the number of internet users with access to low-cost data plans has increased. During the Covid-19 pandemic, the number of new people watching OTT platforms such as Netflix also surged. From the Netflix perspective, I think India is one of the top three countries, where the number of subscribers is concerned.”

According to the Korea Trade-Investment Promotion Agency, the beauty market in India saw substantial growth following the Covid-19 pandemic and is projected to expand by 10 percent annually from 2022 to 2027, more than twice the global average growth rate for the beauty sector. According to market analyst Mordor Intelligence, the K-beauty market in India is expected to grow annually by 9.4 percent from 2021 to 2026.

Lee highlights the popularity of Korean OTT series such as Squid Games in making Indians familiar with Korean culture, and YouTube videos making a lot of people aware of K-beauty. “When we started operating in India, there were hardly two or three brands operating here, but currently there are more than 60 Korean brands in India. The influence of TV and music content has made people familiar with Korean culture, which is similar to Indian culture in being family-centric,” he adds.

Content creator Scherezade Shroff Talwar says, “The Hallyu [Korean] wave during the pandemic has definitely contributed to, what I would say, an over-consumption of Korean culture and I definitely contribute to it as well. K-beauty products have been around in India for a while, but with the increasing popularity of K-dramas and K-pop, people are seeing more such content across multiple platforms. This has contributed to the rising number of Korean brands in India, and the use of their products.” She recalls how, in November, she was in South Korea with her K-drama club, and the members had lists of the products that they wanted to buy there because they are not available in India.

According to a September report by market research firm Mintel, social media analysis in India reveals that there have been 6.2 million posts in the last two years discussing K-drama, K-pop, and K-beauty trends, predominantly among the 19 to 24 age group. This continued popularity in K-pop throughout the APAC region influences consumers’ interest in Korean skin care and beauty products, the report adds.

Lee says that Korean beauty companies have also been prompt to react to the demands in the market. For instance, Innisfree introduces new products every three months, and they are based on consumer feedback through social media and actual stores. Given the demand from Indian consumers, Amorepacific has also formed a task force at its headquarters which is dedicated to reviewing and studying the Indian market, with plans bring in more brands and businesses.

Data shows, adds Lee, that the import of Korean skin care products into India is increasing by 63 percent every year, going up four times compared to 2020. Amorepacific’s own research shows that 53 percent of Indian beauty consumers have already tried Korean products. “Fifteen percent of the entire skin care products market is now dominated by Korean products,” he claims.

Although Amorepacific decided to close all 23 of its exclusive stores in India because of the losses suffered during the pandemic, it decided to partner instead with local channels such as Nykaa, Tira Beauty and SS Beauty, and its products are today available across 400 counters in 45 cities. “Although our company is seeing 60 percent growth every year now, our retail area is doubling every year,” says Lee. “Our aim is to be available in 500 counters within a year.”

The availability and accessibility of Korean skin care and beauty products have also coincided with the rise of marketing products through influencers and content creators. The spokesperson for Tira Beauty says that influencers have played a massive role in the popularity of Korean products. “One of the reasons why K-beauty products do well across markets is because Gen-Z consumers tend to follow a lot of these influencers,” she explains. For instance, Tira launched the Beauty of Joseon sunscreen, and it went out of stock very quickly. “We experienced this because there was a lot of awareness due to influencer activations, and there’s a certain amount of virality these products enjoy even before they are launched.” She also gives the example of the brand Tirtir, which was launched on Tira Beauty in India in November. “The brand rolled out samples to influencers in India in July, and that helped propel demand to a great extent.”

According to business consulting firm Grand View Research, celebrity influencers have been beneficial to marketers due to their global reach, which often transcends cultural boundaries. Hence, the top strategy used by Korean cosmetics brands is to sell their products to Korean celebrities. Storytelling using Korean celebrities as brand ambassadors, and streaming advertisements and video tutorials all over the social media platform are some of the major strategies adopted by K-beauty brands.

Grand View Research gives the example of the lip layering bar of Laniege, which has emerged as a convenient tool for those who want to get the trendy gradient lip look with just a single application. Celebrities such as actors Song Hye Kyo and Lee Sung Kyung have used the product, enhancing its appeal and desirability among consumers.

Celebrities from different parts of the world promote K-beauty products, and this fosters a cross-cultural appeal and encourages individuals from diverse backgrounds to explore and adopt these products in their skin care routines. Following this global trend, in India, young celebrities have been roped in to appeal to Gen-Z consumers. For instance, actor Palak Tiwari became the first Indian brand ambassador for Etude, while actor Wamiqa Gabbi became first Indian brand ambassador for Innisfree, and Sara Tendulkar, daughter of cricketing legend Sachin Tendulkar, is the brand ambassador for Laneige.

Dutta of Third Eyesight says, “Influencers certainly have played a role in building the buzz around K-beauty and have formed a relatively cost-effective means to spread the message in the past. However, in recent years with a growing number of social influencers, there is more clutter as well on the channels.”

India not in the big league, but demanding

Although the rise of K-beauty products in India has been significant, the country remains a far smaller market for these brands compared to markets such as the US, Europe and China. According to Grand View Research, the global K-beauty products market size was valued at $91.99 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 9.3 percent from 2023 to 2030.

The consulting firm says the Korean cosmetics industry grew steadily during the Covid-19 pandemic, owing to an increase in awareness of the numerous benefits offered by the products. Moreover, due to a rise in popularity among consumers, major K-beauty companies are taking initiatives such as R&D, product launches, mergers and acquisitions to retain shares in the market and respond to changes in the marketplace by introducing a range of items.

Grand View Research valued the US market, one of the largest for K-beauty products, at $20.2 billion in 2021 and expects it to grow at a CAGR of 8.8 percent between 2023 and 2030. Compared to this, Statista valued the India K-beauty market at $486 million in 2021, and expects it to grow to over $1.3 billion by 2032.

Lee of Amorepacific says the US remains the largest beauty market as a whole, followed by China, Japan, the UK, France and India. “One of the differentiating factors between the US and Indian consumers is that the premium market in India is very small, and it is still a mass-product driven market,” he says. “Secondly, ecommerce in India is still quite small. In South Korea and the US, ecommerce just in the beauty segment, is 30 to 40 percent, while in India it is 13 percent. India is traditionally an offline market.”

He adds that despite the growth, Indians remain sceptical about whether Korean products are suitable for Indian skins, and there is demand for products that are made only for Indians. “Localisation, therefore, has become important for the company. Although we conduct clinical trials in different geographies, we are starting to take more feedback from Indian consumers, and we are ready to develop products only for the Indian market. For instance, we have introduced the Innisfree kajal and the Innisfree hair massage oil, and have developed lip colours for the Indian market.”

Although the company did not divulge revenue figures, it is expecting to grow six times in the next six years in India, and plans to introduce at least five more brands within the next seven years in this market.

(Published in Forbes India)

Top sportswear companies’ growth run slows after Covid highs

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December 4, 2024

Sagar Malviya, Economic Times

4 December 2024

Demand for sportswear from running shoes to joggers and yoga mats slowed down for leading firms such as Puma, Adidas, Nike, Skechers and Asics, halting their sprint since the easing of the Covid-19 pandemic when they doubled their sales in two years.

Sportswear firms have reported 1-25% year-on-year increase for 2023-24, down from 35-85% increase for the previous financial year, according to the latest regulatory filings. While demand for fitness wear and sports equipment for disciplines other than cricket grew as people prioritised health with the onset of Covid-19, consumers cut back on discretionary spends across categories over the past six to eight quarters.

Experts said companies capitalised on the popularity of more casual styles in the wake of the pandemic, a trend that has subsided now although people are more health conscious than ever. A broader slowdown, especially in cities, hurt premium categories including sportswear, which are completely dominated by global players.

“Sportswear or footwear has a slower replacement cycle than apparel and lifestyle products. Also, there is a distinct slowdown as it all comes down to income growth versus inflation. So, a longer term potential still remains for the segment but there is a short-term consumption stress,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight.

With a population of 1.4 billion, India is among the fastest growing and largest international markets for footwear companies and over the years companies such as Under Armour, Asics and Skechers have expanded aggressively in the country.

Puma India managing director Karthik Balagopalan said the category has outpaced market growth with mid to high single digit growth rates even as subdued demand has lagged expectations.

“When it comes to health and fitness, consumers continue to spend on performance products and our sports-first strategy also leans towards that. Our ambition continues to grow at or be above market CAGR (compound annual growth rate) over the mid-term, and we think we are in a good place with our back-end infrastructure, our product portfolio and pipeline, BIS (Bureau of Indian Standards) readiness and our best-in-class team, who will continue to cement and retain our lead on competition,” he said.

In October, Foot Locker entered India through a long-term licensing agreement with Metro Brands, which will own and operate stores, while Nykaa Fashion will be its exclusive e-commerce partner.

However, there are challenges. In August this year, the government made it mandatory for footwear companies to obtain BIS certification for more than a dozen footwear products including sports brands. This impacted sales even last year as BIS had not issued licences to several foreign brands whose products were manufactured outside India, which in turn, forced brands to cut down on supplies.

American footwear firm Skechers said in its last earnings call that it had been growing exceptionally well in India for several years but there was a bit of an anomaly in part because of some of the regulatory changes that it had not yet fully responded to.

“We continue to work closely with both our India team and regulators to further advance our local sourcing strategy. We are seeing positive trends and remain optimistic about the progress in this important market. We see tremendous opportunity, not only in our lifestyle business, but also in performance,” Skechers chief operating officer David Weinberg told analysts.

(Published in Economic Times)

Mid-sized global restaurant chains find Indian market palatable

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August 19, 2024

Ratna Bhushan, Economic Times
New Delhi, 19 August 2024

Close to a dozen small to mid-sized global cafes and restaurant brands have either entered India in the past two quarters or are in talks with local players at a time when large global chains are seeing sharp decline in same store sales and growth.

Mid-sized global chains are making investments even in a modest range of Rs. 20-30 crore to tap select cities and intend to keep store counts under about 30 to stay profitable on each store. This is in contrast to earlier times when cafes and chains entered India with mega deals and investment plans, executives said.

Belgian bakery Le Pain Quotidien, French patisserie chain Laduree, UK’s JD Wetherspoon and Frank HotDogs are among those to have inked collaborations with Indian partners, while newer homegrown ones such as Harley’s, Paper & Pie, abCoffee and First Coffee are expanding with first-time investors and mid-rung store rollouts.

“A combination of factors is driving this change of newer, smaller launches,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. “There are niches the newer chains are addressing as consumers’ choices evolve and get more specific. Also, there’s a broadening of a wealth base in India leading to mid-sized business houses having capability to invest and willingness to try out newer segments,” he said.

With the big-bang launches in food services drying up, there’s been a mushrooming of small deals that is expected to surge.

Bake & Brew, which has inked a master franchise agreement with Belgian bakery chain Le Pain Quotidien to re-enter India, is investing Rs 35 crore in the first year. “We’ll start in metros and may expand to smaller towns later. We also see potential in travel retail, airports and larger train stations,” Annick Van Overstraeten, chief executive of Le Pain Quotidien, told ET. Bake & Brew is backed by the Nalanda group with core business interests in automotive metal parts.

Earlier this month, the French patisserie chain Laduree said it was launching its cafe at Ritz-Carlton, Pune, in collaboration with CK Israni Group which has business interests in home decor and construction. Its Managing Director Chandni Nath Israni said in a statement that the CK Israni group planned to expand Laduree’s presence across other Indian cities.

Experimenting in newer cuisines is also driving the change. “Our decision to expand in India stems from a deep appreciation for variety and a passion for bold flavours. We see great potential in the Indian market,” said Benjamin Attal, founder of US chain Franks Hot Dog.

Smaller and newer homegrown chains, in contrast, are expanding, backed by mid-ticket investors and business houses, many of whom are foraying into food services for the first time.

Last week Brigade Group, a realtor, announced a partnership with specialty coffee chain abCoffee to set up six outlets within Brigade properties.

“We partnered with abCoffee to enhance the F&B offerings at our office parks. abCoffee is able to retrofit into operational buildings without requiring additional water or gas points,” Arvind Rao, vice president – commercial business, Brigade Group, said.

Specialty coffee startup First Coffee plans to open 35 stores by 2024-end “focused on delivery and minimalist store aesthetic,” according to a company statement, to sell flavoured coffees, cold brews and bubble teas.

(Published in Economic Times)

Uniqlo India profit jumps 25%, sales growth declines

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August 10, 2024

Faizan Haidar, Economic Times
10 Aug 2024, New Delhi

Japanese apparel major Uniqlo’s sales growth in India slipped by more than half to a still-strong 32% last fiscal year while its net profit expanded by 25%.

The Indian unit of Asia’s biggest clothing brand posted a net profit of ₹85.1 crore for the year ended March 2024 with net revenues of ₹824 crore, according to its latest filing with the Registrar of Companies (RoC). Uniqlo India had posted a profit of ₹68.1 crore with sales of ₹625 crore in the previous year. Its on-year revenue growth was 69% in FY23 and 64% in FY22.

Uniqlo opened its first door in the country in September 2019, but lockdowns and other constraints during the Covid-19 pandemic delayed its store expansion plans. At present, it has about 13 outlets in the country. Overall retail sales growth rate across segments such as apparel, footwear and quick service restaurants (QSR) fell year-on-year every month in FY24, reflecting comparatively weaker consumer sentiment.

Last fiscal’s comparatively slower 4-7% growth rate sustained this year as well, with May and June seeing a 3% and 5% rise each, Retailers Association of India (RAI) recently said after a survey of top 100 retailers.

“The market was sluggish for the industry as a whole last year, and that will reflect in practice every brand P&L, whether Indian or international,” said Devangshu Dutta, chief executive of retail sector consultancy Third Eyesight. “However, any brand that is committed to the Indian market as a strategic market for its future growth will take the ups and downs in its stride,” he said.

“Uniqlo’s expansion plans now include store sizes that would be smaller both in the cities it is already present in and in newer cities, which should help it tap into the demand at operating costs that are appropriate to each location,” Dutta said. Inditex Trent, Spanish fast-fashion major Zara’s joint venture with Tata that runs 23 stores in the country, saw its revenue rise 8% to ₹2,775 crore last fiscal, significantly down from 40% growth a year earlier, according to Trent’s annual report. Its net profit fell 8% on year to ₹244 crore.

Over the past decade, global brands Zara and H&M have become market leaders in the fast fashion segment in India.

Uniqlo has said India is one of the most priority markets where consumers are increasingly shifting from ‘fast fashion’ to long-lasting essentials and functional wear. As the world’s second most-populated country, India is an attractive market for apparel brands, especially with youngsters increasingly embracing western-style clothing.

Uniqlo is globally popular for functional basics like T-shirts, jeans and woollen wear, unlike fast-fashion rivals which are associated with designs that move quickly from the catwalk to the showroom.

(Published in Economic Times)

How Shein-Reliance Nexus Will Shake Up India’s Online Fashion Market

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July 20, 2024

Gargi Sarkar, Inc42

20 July 2024

The Indian government’s ban on Chinese apps and products in 2020 saw two massive casualties. Everyone knows about TikTok, but fast fashion brand Shein was equally as big in India four years ago.

But the India setback did not halt Shein’s global momentum, just as it did not stop TikTok from becoming what it is today. Shein became the world’s largest online-only fashion company in 2022.

Valued at a staggering $10 Bn, the brand accounted for nearly one-fifth of the global fast-fashion market in 2022, outpacing giants such as Zara and H&M. To put things in context, Shein was founded in 2008, whereas Zara was incorporated in 1975 and H&M in 1947.

In India, Shein set the market on fire. Launched in India in 2018, the brand was already a major player by 2020, dominating online searches and influencer-led content. But the ban in 2020 meant all that came to a halt.

The Indian government’s ban stemmed from fears of Shein’s Chinese parent company storing or transferring data of Indian customers to China. While the ban itself came under a tense geopolitical climate, one could say that Shein’s exit left a gap in India’s fashion market which D2C brands quickly filled.

Brands such as Urbanic, Twenty Dresses, Cilory, attempted to fill the void but couldn’t quite match Shein’s popularity. Indeed, VCs also backed fast fashion and casual wear startups such as The Souled Store, Virgio, NewMe and others which looked to replicate the Shein formula.

Ecommerce unicorn Meesho has also looked to fill the gap with affordable fashion and a similar content-led sales strategy that worked wonders for Shein.

While many of these brands have grown in scale over the past four years, none of them — at least so far — have quite replicated the magic of Shein and how quickly it disrupted the market.

And that’s arguably why Shein’s re-entry into India through a partnership with Reliance Retail is a big deal.

Shein joins the Mukesh Ambani-led conglomerate’s exclusive portfolio of over 50 brands, including Silk Feet, Jivers, Xlerate, Feet Up, Dhuni by Avaasa, Riva, John Player Select, Kidlyboo, and Altair. Besides this, Reliance Retail has similar deals with designer labels such as Kenzo, Y3, Marc Jacobs, ​​Coach, Steve Madden, Kate Spade, among others.

It’s clear why Shein has looked to re-enter India, where the fast fashion industry is projected to reach a size of $30 Bn by FY23, as per a Redseer report. The overall fashion segment grew at a modest 6% YoY in FY24, whereas the fast fashion subsegment surged by up to 40% in the same period. Now, Shein is back to grab a large chunk of the market once again, though there’s definitely a lot different about this Shein.

Reliance Punches Shein’s Ticket To India

The first thing that we need to note is that Shein is not back as a standalone entity, but its products will be available on Reliance Retail’s apps and physical stores. Shein is not operating business in India — Reliance is said to be bringing in former Meta director Manish Chopra to lead the brand.

Shein’s parent entity will receive a licence fee as a share of profits generated solely within India. The operations will be managed by a company wholly owned by Reliance Retail. Crucially, all data and the app itself will be hosted and stored within India, ensuring that Shein has no access to or control over this data.

These are some of the key factors behind Shein’s comeback to India being approved by the government nearly one year ago.

Reliance Retail is set to launch the Chinese fast-fashion label Shein within the coming weeks. Further, to diversify its supply chain and promote domestic industries, Shein reportedly will be sourcing goods from India for its global operation in the Middle East and other markets.

More than anything else, fast fashion brands and indeed other some of the more premium brands need to worry about the Reliance factor. Shein’s brand name and Reliance’s massive resource base are a deadly combo.

Reliance Retail’s fashion ecommerce app Ajio directly competes with Myntra, Nykaa Fashion, Meesho, Amazon India, Flipkart, Tata Cliq, and other platforms. From a distribution point of view, Ajio will be the exclusive storefront for Shein, and exclusivity is a big deal in fashion ecommerce.

Ajio commands around 30% market share based on monthly active users (MAUs), data sourced from AllianceBernstein shows.

Flipkart Group’s Myntra maintains the highest market share in terms of active users, surpassing 50%. However, the report notes a decrease in transaction frequency, with Myntra’s GMV growing only 12% in FY23 compared to 35% in FY22.

“Shein’s re-entry may have a somewhat negative impact on Nykaa Fashion, as Nykaa primarily targets the premium fashion segment. In contrast, Myntra caters to both the mass and premium fashion markets and already has strong brand recognition in the fashion industry. Therefore, the impact on Myntra might be mild, whereas Nykaa Fashion could feel more significant effects,” Karan Taurani, SVP, at Elara Capital said.

He added that Shein is part of a broader strategy by Reliance Retail to expand its portfolio of brands. In that sense, Shein is just another addition to its portfolio.

A Myntra executive admitted to Inc42 that Ajio has an edge when it comes to exclusivity, but added that Myntra has also introduced Gen Z-focussed features which are gaining fast traction. Myntra’s focus on in-house brands or private labels is paying off, however, at the same time, the company is also looking to snap up more exclusive brand partnerships.

Should D2C Brands Worry?

One thing that Ajio cannot afford to do is give Shein more prominence. Fashion ecommerce marketplaces are quick to see gaps in terms of sales of particular brands and look to woo them to their side. In this regard, Shein will be competing with a number of D2C brands as well as international labels in fast fashion.

As per Inc42 data, between 2018 and 2023, D2C fashion brands captured almost 93% of the total funding raised in the Indian fashion ecommerce space.

The Myntra executive quoted above believes that Shein will definitely disrupt D2C fashion brands in India as many of them target the Gen Z audience, but they are also looking to protect margins and break into the premium segment.

The D2C landscape in fashion includes the likes of Andamen, House Of Rare, Bombay Shirt Company, Snitch, Damensch, The Souled Store among others. And there are houses of brands such as Mensa Brands, TMRW and others which combined have dozens of brands across categories in fashion. It’s not easy to stand out, and Shein will have to fight for its space on the aisles.

Most of these brands are looking to widen their net margins by adding premium products. Premiumisation is a major thesis among Indian D2C brands right now as they realise many of them are targeting a very limited cream of the market.

On the other hand, Shein has built its reputation on affordability. So is Shein actually directly competing with these players? Market experts believe that Shein is not successful just because of its pricing, but its use of data.

“Brands with the right product and high-quality service should attract customers who are not price-sensitive. A price-oriented brand is not a major threat; the real risk is if your product fails to keep up with market trends. Fashion-driven brands could take your business away if your product quality and service do not meet customer expectations. However, if your product is trendy, the quality is high, and your service is good, you should be safe in retaining customers who are not focused on price,” Devangshu Dutta, founder and CEO of Third Eyesight, said.

Those in the industry do believe that one brand cannot conquer the fashion market. That simply does not happen with the fashion industry, which is why there is so much depth in the market. Shein’s success will lead to the emergence of more D2C brands that look to mimic the data-led, trend-first model.

“The potential of the Indian market is evident, and it’s becoming increasingly exciting. This means that many companies will emerge in this category to serve this customer base. It validates the hypothesis we had two and a half years ago: the Indian consumer is evolving, and fashion should evolve along with them. From that perspective, Shein’s entry justifies and validates our hypothesis,” the founder of a Bengaluru-based GenZ-focussed fashion brand said.

Good brands always emerge from intense competitive churn, and Indian brands have the potential to go global if they hit it big. “Competing against Shein and building a successful business will open new opportunities for us and strengthen our execution and agility,” the founded quoted above added.
Is Shein Ready For Second Innings?

Now, coming back to Shein, it remains to be seen if it will be able to gain popularity like its first stint in India. One must remember that Shein tried to make a comeback in India in 2021 after the government’s ban through ecommerce giant Amazon, but the brand supposedly did not get much traction.

“I think the case of visibility is different when comparing Amazon and Reliance Retail. Through Reliance Retail, the visibility could be much higher compared to Amazon because Reliance Retail already has a very wide portfolio of fashion brands, including more than 25-30 luxury brands across various categories. It’s all about creating visibility, generating buzz, and going to market together in terms of marketing efforts. Reliance has a very strong omnichannel presence, both online and offline,” Elara Capital’s Taurani said.

While Amazon is, of course, a large ecommerce phenomenon, the platform is not a primary port-of-call for online fashion shoppers. This is why Shein could potentially perform better with Reliance Retail.

“We have to wait and see how Shein performs in India. We will need to observe how this unfolds to comment on its visibility and performance, both online and offline. In marketplaces, brands compete daily, and Shein’s strength has always been its designs. We’ll have to closely watch how Reliance leverages this strength,” an industry analyst said.

(Published on Inc42)