The next big target of international fashion brands is India. Forecasts expect a market with the size of Germany and the UK on the subcontinent just in three years. This boom of apparel and fashion consumption is driven by an emerging middle class.
The yearly McKinsey Fashionscope report is an interesting addition how the centre of gravity of the growthoriented global economy is shifting to Asia. The State of Fashion 2019 stresses the importance of an emerging, all-consumer middle class behind this phenomenon.
This is especially true for India, which likely remains the fastest growing major economy with an average growth of 6,5% for the next 10 years. Moody’s expects the the economy of the country to grow around 7,3% in 2019-2020.
McKinsey estimates the income of the ’addressable population’ year to triple in six years. The reports sets the income threshold for a ’middle-class’ individual of India as 9500 USD annually. It forecasts a 19,4% expansion of the middle-class per year, which is a higher ratio than in India, Mexico or Brazil.
In other worlds, the continent-sized country is transforming – at least partially – from a (out)sourcing hub into an attractive consumer market. By 2022, the domestic market of apparel and fashion of India will be sixth largest of the world and comparable in value to Germany or the United Kingdom (apx. 60 billion USD).
The report highlights that despite the apparent problems of inequality and market fragmentation, the high economic growth, an increasingly powerful manufacturing sector and the rising tech-savviness make India the next big opportunity for the fashion industry. More than 300 international fashion brands are planning to open shop in India for the next two years.
One challenge they certainly have to overcome is the low ratio of formal retail, which was only 35% of the total sales in India in 2016.
China is expected to overtake the United States as the leading fashion market of the world in the same timeframe.