Female innerwear’s $12 billion opportunity in India: RedSeer report

According to homegrown consulting firm RedSeer’s latest report, titled ‘Female innerwear’s USD $12 billion opportunity’, the female innerwear market in India which stood at approx. $6 billion in 2020, is set to grow up to $11-12 billion by 2025 (~2x). It is among the fastest growing apparel categories.

This market comprises lingerie, athleisure (loungewear and activewear) and ancillaries such as shapewear and swimwear.

The online female innerwear market is expected to be ~6x in the same period to be $1-1.2 billion by 2025. This will be largely driven by:

1. Higher incomes, discretionary spending leading to higher consumption
2. More of young women joining the workforce
3. Influence of social media
4. Convenience led online shopping
5. Increasing exposure to better brands, new trends, increased occasions and willingness to try new styles

The Branded Market

 The market is still highly fragmented with up to top 15 brands accounting for ~7% of the market, which shows a clear opportunity for brands to establish a strong position. The branded market is expected to grow 2x as fast as that of the unbranded market by 2025. The growth of branded products is expected to be driven by:  

1. Easily accessible brands- With new-age brands bringing in new trends, array of offerings, it is luring consumers who typically settled with local brands.
2. Lifestyle shifts- With the increased prominence of safe and accessible infrastructure, women are increasingly comfortable in engaging in physical activities like sports, yoga, gym.
3. Value-addition sought- Further, with better understanding and awareness about style, shape, comfort and utility of various innerwear products, women are increasingly adopting more premium, branded offerings.

The breakout opportunity

Within the branded segments, there are a few breakout categories that are likely to witness highest growth - to be a $2.5+ billion opportunity by 2025.

They are:

1. Branded Mid-premium lingerie (the innovative, affordable yet high quality lingerie increasingly preferred by women),
2. Branded Athleisure (includes Loungewear and Activewear)
3. Branded Ancillaries (includes Swimwear and Shapewear).

 This is driven by:

1. There are a number of brands, especially, the new-age ones who have been innovative around product design and optimised supply chains to bring very highquality products (comparable to premium brands’) at affordable prices
2. With investment around educating customers about such products, such brands have witnessed rapid adoption
3. New age distribution, led by online, disrupting the traditional challenges of the size & style heavy category
4. The category is evolving into ‘casuals at home’ or ’at home smart clothing’ with increasing use-cases of athleisure and nightwear merging from a consumer behaviour standpoint
5. Athleisure and Activewear benefiting from tailwinds like jump in aspirations, people becoming fitness conscious, higher engagement with gyms and specialized activities like cycling amongst others
6. International brands like Reebok, Nike, Puma have been present in India for over 2 decades and have made considerable investment in education and awareness around the category. The brands are widely distributed and are now often alternatively used as casualwear

“There have been clear shifts in consumer behaviour favouring the use of casual or leisure wear. This was further enhanced by the pandemic, as consumers spent time indoors, working from home, they opted for more comfortable wear, spent more for better quality and explored online options. Having experienced the convenience and quality of online products in the category, a significant number of customers are likely to stick - which is further validated by our consumer research. Overall, online purchase sentiment has increased by 510% across categories, which means that Direct-to-Consumer brands have a significant opportunity going forward,” said Anil Kumar, co-founder and CEO, RedSeer.

Growth driven by Tier 2+ cities

 The growth rate of the female innerwear market in tier 2+ cities is likely to be 1.5x that of the metro cities. In Tier 2+ cities, the major growth factors will be:  

1. Digital Penetration- India’s digital penetration growth has been one of the fastest in the world. With a projected user base of ~975 million internet users and 800-850 million smartphone users by 2025. The next wave of growth is expected to be driven by smaller cities and towns.
2. Brand awareness- As brands penetrate deeper into the smaller cities, there will be overall more awareness about products and the offerings leading to higher growth of these brands in the smaller cities. The brands will see consumers buying economical products but rely on the brand image. This will benefit the brands as they onboard new customers.

In the Metros and Tier 1 cities, the users are more of mid-high income, younger cohorts. The growth in metros will come from higher order frequency of existing users as well as increasing adoption from the lower income and the higher-age cohorts. Whereas in the smaller towns, adoption is still largely among the young, high-income, internet-savvy cohorts, with a vast majority of the population still not penetrated. Hence, a large portion of the next-wave users are likely to be value users from the Tier 2+ cities.

The key business models in this space 

Currently, the domestic market is seeing four types of online players operating in the market: 

1. Offline focused brands- Brands like Amante, Enamor, Triumph which have a more offline focused strategy. These brands are also available online but have a stronger presence offline.
2. Broader ecommerce players- Players like Flipkart and Amazon, which have an array of offerings and may not have a sharp, specific focus on female innerwear.
3. Online fashion marketplaces- Fashion focused players like Myntra, Ajio, have an array of fashion-related offerings with multiple categories and brands.
4. Digital-first omnichannel players - These are innerwear focused players, with a very focused target group of customers, and value chains customised accordingly. For instance, Clovia and Zivame

Consumer satisfaction with various business models 

Among online models (in the female innerwear category),

1. The Digital-first omnichannel players have the highest consumer satisfaction - with Net Promoter Score (NPS) of 49%
2. Much higher than 38% for Online fashion marketplaces
3. 34% for the Broader eCommerce players