Industry: Sportswear in India

Anand S (H16126)
Iti Sharma (H1641)
Ram Srinivas Sai (H16156)
Soumya Subrahmanyam (H16171)

Introduction
India’s sportswear market has evolved from solely catering to needs of sportspersons, to
one catering to a wide consumer base. The industry has witnessed rapid growth driven by
growth in income levels, changing lifestyles and the entry of foreign players. The ever-
increasing popularity of cricket, combined with the growing interest in sports such as
football, hockey and tennis, has contributed to the growth of the functional sportswear
market in the country. In addition to this, the trend of using sportswear as casual wear has
expanded the definition of target consumers for leading brands.
Sportswear includes a broad range of products which can be classified into two categories –
one being active wear, which includes clothing and footwear used for comfort and safety
while engaging in physical activity or sports and the second category comprising sports-
specific garments which include including special garments for sports like wet suit
(diving/surfing), swimsuits (swimming), ski suits (skiing) and leotards (gymnastics).
The sportswear industry globally is worth over $270 billion in annual sales. In India, The
industry is as large as size of INR 60 billion (including sports footwear, apparel and
accessories) and is growing at rate of 13% year-on-year. It is expected to reach INR 540
billion by 2020. The Indian sportswear market includes sports apparel, footwear and
accessories, with footwear being the largest segment, accounting for around 60% of the
total market. The country’s sportswear segment is largely unorganized with organized
players constituting only around 30% of the market. The retail segment consisting of
supermarkets, brand outlets and discount stores, accounts for a significant share in sales of
sportswear worldwide. Online platforms like e-commerce sites have also shown a robust
growth across the globe, owing to the ease of accessibility and availability of a wide range of
products at competitive prices. These trends are also being reflected in India in respect of
the sportswear industry with franchised exclusive brand outlets and multi-brand outlets
forming the core retail channels for sportswear in India along with e-commerce sites.
The various macro-environmental factors impacting the industry are:

Socio-Cultural
India is largely becoming a health conscious country and sports today is perceived as a step
towards a healthy lifestyle by people in different age groups. Sportswear are needed by all
age groups. The young and educated crowd is more aware and attracted to fitness and
sports and thus a major customer base. The increasing popularity of yoga and also increased
the requirement. The sports infrastructure of the country is in poor state attempts to
improve the same would result in better growth in the industry.

PoliYcal

Environmenta
l Legal

InternaYonal Economic

SportsWear
Industry

Demographic Socio-cultural

Regulatory Technological

Economic
The industry operates at low margins. In the long run these low profit margins might be
difficult to sustain. As India is a developing country and the purchasing power of customer is
increasing and a rise in disposable income, the industry can exploit the market but creating
increased customer awareness about jogging, gym and fitness in general.

Demographic
The demand for sportswear is large in metro and tier 1 cities, as the awareness for fitness is
more, also these are popular line for casual wear. The demand is also rising and catching up
in Tier 2 and tier 3 cities thus a huge market is expected in the years to come and industry
will grow. There exists no demand in rural areas for these products.
International
The major players in market are 5 international players, but the market has more entrants
that are competitors. Also the exercise duty on import further increase the cost. The local
vendors might come across as competition.

Political and Regulatory

In India, a tremendous increase in accessibility and growth of sales in sportswear has
occurred due to regulatory relaxations in the form of increasing FDI in multi-brand retail to
51% and 49% in single brand retail through the automatic route. Proposals to increase FDI in
both multi-brand and single-brand retail to 100% are under consideration. The burgeoning
of e-commerce sites, combined with the access to internet, growth in smartphones, lower
tariffs in internet services through mobiles, etc. have further contributed to a high growth in
sales.
Further, the political environment in the country is poised to encourage greater
manufacturing in India by relaxing norms for setting up of manufacturing units through the
‘Make in India’ initiative, which will further encourage improve profit margins (low labour
costs) and encourage sale of sportswear in the country.
Several prominent players in the industry have focused on opening retail stores in India to
expand their geographical presence and increase customer base.

Technological Factors
There is a high growth in the development of new fibres with desirable properties such as
thermal insulation properties (keep the wearer cool in hot weather; in cold situations, allow
the wearer to stay warm), light weight, stretch, dry-fit, etc.
For example, Moisture-wicking fabrics are a class of hi-tech fabrics that provide moisture
control for an athlete's skin. They move perspiration away from the body to the fabric's
outer surface where it can evaporate. Moisture wicking means that the fabric is absorbent
and this can leave a barrier of wet fabric on your skin. Dry wicking is the newest variation of
moisture wicking which besides ensuring the wearer can perform better, chemically
prevents odours since a bacteria microclimate cannot grow on dry skin.

Environmental Factors
The need for creating environmental friendly products is a high priority for several
international sportswear brands. Major players such as Adidas and Nike are part of the
Sustainable Apparel Coalition (SAC) – an industry-wide group of over 100 leading apparel
and footwear brands, retailers, suppliers, non-profits, and NGOs working to reduce the
environmental and social impacts of apparel and footwear products around the world. The
SAC’s vision is of an apparel, footwear, and home textiles industry that produces no
unnecessary environmental harm and has a positive impact on the people and communities
associated with its activities.

Legal Factors
Legislations such as relaxation of labour laws and improving exit norms have been enacted
with a view to encourage growth in manufacturing. Other measures such as tax benefits in
setting up of textile parks and other foreign investments have also been undertaken. These
legal measures are expected to enhance manufacturing of sportswear in the country.

Competition Analysis
The table below illustrates the major Indian and International players in the Indian sportswear
Industry along with their presence in the three broad divisions of Sportswear, namely:

• Apparel
• Footwear
• Accessories

Table 1.1 – Major Industry players with Presence in the aforementioned product divisions

S.No. Company Apparel Footwear Accessories

A Indian

1 Bata • •

2 Liberty •
3 Woodland • •
4 Planet Sports • • •
B International

1 Adidas AG • • •
2 Nike Inc. • • •
3 Decathlon Inc. • • •
4 Reebok International Ltd. • • •
5 Puma AG • • •

6 Fila • • •
7 Lotto Sport Italia • • •
8 Rockport • • •
9 Kappa • • •
10 Sketchers USA Inc. •

The three firms that our highlighted i.e. Adidas, Nike and Decathlon are the three largest players in
terms of Market-share in the sportswear segment. The strategies with regards to the Positioning
strategy, people strategy and general information about these three firms have been analysed in
table 1.2 and 1.3.


Table 1.2 – Profile of the Competitors Selected for Consideration

Nike Adidas Decathlon

Positioning World’s Leading brand for Trendy, style, Trendy, youthful,
sports apparel and shoes. Diversified Product Variety
Format Type Private Label Private Label (ADIDAS Private Label
Group) (MultiBrand)
Pitch High Performance Fabric Latest Trend in Affordable Clothing and
and technologies used sports apparel accessories

Target Upper class, upper middle Upper class, Upper Middle Class, Lower –
Customer class Middle class Middle Class


Table 1.3 – Competitor Analysis using the 5P parameter framework for analysis

Based on the above data, Porter’s Five Forces analysis is performed to gauge how our chosen brand
(Nike) fares in comparison to its competitors in the sportswear industry.

 Barriers to Entry Threats of SubsKtutes

• There are high entry barriers erected to • The threat of subsYtutes is low in this
minimize the possibility of new entrants industry because there are not many
reaping the high-profit potenYal of the alternaYve for customers to switch.
sportswear industry.
• The basic need catered by the sportswear
• Leading brands like Nike have invested industry (acYvewear apparel and footwear)
heavily in innovaYon, research and is to improve comfort and increase
development, factories and stores to retain performance during running, training, gym,
the performance advantage and have also workouts and while playing.
leveraged economies of scale to control its
costs over any emerging compeYtors. • The possible alternaYves for sports apparel
could be other casual apparel but it may not
serve the need well. For sports shoes, the
subsYtutes could be boots, casual shoes and
sandals but again they may not cater to the
need of athleYcs. In a nutshell, there are no
actual subsYtutes.

Bargaining Power of Customers Bargaining Power of Suppliers

• As there are several compeYng firms in the • There are a lot of input suppliers available in
industry with similar product offerings, the abundance in the sportswear industry. Among the
bargaining power of customers in high. Having exisYng suppliers, there is limle differenYaYon
said that, the number of buyers is also substanYal because of which the supplier’s bargaining power
and ever increasing in an emerging market like is very low. Typical input items such as Comon,
India. Therefore, firms like Nike need to engage in Rubber, Leather and PlasYcs are available in large
acYve markeYng of their products and try to bring quanYYes globally.
in differenYaYon in comparison to other brands.

• Big established organizaYons like Nike has a high
• Recently, firms have been able to penetrate the bargaining power over its suppliers because
market more because of the rise of e-commerce. procurement contracts with Nike is the only
This enables them to collect more data about means of survivals for most of these suppliers.
their customers, which can be used to bemer
direct the sales and markeYng iniYaYves. One of • Also, Nike has standardized the whole supply
the iniYaYve taken by Nike is the creaYon of chain procedures and has manufacturing
‘NikeiD’. NikeiD allows customers to customize contracts with firms located in various conYnents
their design by choosing their desired colours and in which cheap labour is available. This increases
other personalizaYon opYons. In this industry,
Nike’s flexibility to switch suppliers if they fail to
brands play a very vital role and most of the meeYng Nike’s standards.
customers are loyal to it.

CompeKKve Rivalry within the Industry

• Although there are countless compeYtors for Nike in the global stage, there are only a
handful of companies which are powerful enough to compete with it. The major
compeYtors for Nike are Adidas, Reebok, Puma, Fila and Lomo in the Indian market.

• These companies generally tend to fight in signing up popular sports teams and franchises
to use their merchandise. For example, in the English Premier League, Adidas sponsors 6
teams and Puma sponsors 4 teams whereas Nike sponsors only 1 team. Notably, Adidas
replaced Nike as the kit sponsor for Manchester United in a record £75 million deal. In
India, these companies focus primarily on Cricket and it is to be noted that Nike sponsors
the Indian Cricket Team’s official kit by paying ₹ 60 crore a year to BCCI. These companies
also compete for bat logo sponsorships, with other brands like Adidas and Puma. These are
expensive markeYng exercise as companies cough up around ₹ 7-10 Crore per year to put
their logos on the bats of players like Virat Kohli and M S Dhoni.


References
• http://www.columbia.com/About-Us_Corporate-Responsibility_Environmental-
Responsibility.html
• “Market Analysis and Competitor Mapping for Sportswear”
http://14.139.111.26/jspui/bitstream/1/30/1/gp720%202014.pdf
• http://youngbiztimes.com/global-brands-drive-indias-active-sportswear-market-to-over-rs-
6000-crores/
• https://en.wikipedia.org/wiki/Sportswear_(activewear)#Moisture-wicking_fabrics