The Fashion Channel

Sports Goods Industry Economic AnalysisSubmitted By : (Group 1) Aabid Bains (15P001) Arti Jain (15P011) Gautam Bindlish (15P021) Mayank Rajput(15P031) Rohit Gupta(15P041) Siddharth Gupta(15P051){The sports eco system in India

Industry of India finds its roots in Sialkot, Pakistan.After the introduction of economic liberalization in India in 1991 and integration of world markets under WTO agreements in 1995, sports goods sector has come under tremendous competition from foreign brandsJalandhar and Meerut are important suppliers of quality sports goods to more than 130 countries including some of the developed nations in the worldThere are about 1250 registered and 2000 unregistered large, medium and small sports goods manufacturing units providing direct and indirect employment to about 1,70,000 personsLabour-intensive in nature, the industry provides employment to more than 500,000 peopleJalandhar and Meerut account for nearly 75 per cent of total production; together, morethan 3,000 manufacturing units and 130 exportersThe Jalandhar cluster is the only cluster to introduce the concept of machine-stitched footballs to meet the demands of the FIFA world cup 2010 and beyondThe Indian sports goods industry also has a presence in the cities of Mumbai, Kolkata and Chennai, albeit at a lower scale

A Historical PerspectiveSorts Equipment

Sports Apparel

Sports Accessories

Sports Goods IndustryIndustry can be classified into two categories:

1. RetailRetailing of sports good is undertaken through companies such as Nike, Adidas, DecathlonThere are two types of retail shops: Single Brand Retail and Multi Brand Retail

2. Manufacturing It is primarily undertaken by medium sector enterprises. There are two main regions Jalandhar and Meerut Classification of sports goods industry Bulk of sports good market is captured in terms of the sports shoes segment which is about 60%.The premium sports goods segment is of Rs 40-50 billions. Reebok amounts to 50% of this and Nike amounts to 20%There are many regional players like Yonex, Wilson and number of family owned retailers Composition of Sports Retailing in IndiaTraditional Retailing

Modern Retail

Decathlon became the first sports goods retailer to invest in single-brand retail trading in India last year after it got approval for 100% foreign direct investment (FDI) in the formatCommittedRs.700 crore to open stores in the next five years as it sees latent demand for local and international sporting goods picking up in the country.

Decathlon A silver liningThe annual growth rate of the industry is about 10-12% Labour intensive industry especially unskilled and semi skilled labourersIn the past demand trends were export oriented. Nearly 60% demand came from overseas customersPresently the overseas demand has flattened and domestic demand has increasedThis means the sports retail in India is growing the domestic market shareSports Good Manufacturing

Distribution based on number of manufacturersThe Demand CurveThe demand curve represents an upper bound on consumers willingness to pay Law of Demand: as the price of the good falls, the quantity purchased of the good increasesFor a sports goods manufacturer, total revenue is derived from sales of goods (final output). However, what are the factors which influence this demand? Some given level of acceptable quality, popularity of the sports, consumer preferences. The quality of these games thus determines how many fans will buy the goods which determine the output that is important to the manufacturer

{The Supply CurveThe output is produced using a range of inputs or factors of production. These can include labour, raw materials, capital (machines), energy, land, knowledge, organizational skills and so on for a sports goods manufacturer. The ability of the business to hire these factors in large enough quantities will determine the amount of output that can be producedThe supply curve represents the minimum price a producer must receive to produce a given quantity of goods or services. Thus the supply curve is a lower bound on the producers price for a given quantity of goodsThe supply curve can slope upward or downward depending on the cost conditions facing the firm

{ Spending on Sports and recreational goods

ExpectationMake in India to boost sports goods manufacturingHigher disposable income and growing fitness craze to fuel growing demand RealityAdidas has closed nearly 600 stores in the last financial yearJalandhar is witnessing a stagnant demand even after events such as the cricket world cupPotential v/s RealityYoung Population: With more than 50 percent of Indias population falling under 0-24 age bracket and given the number of sporting events held in India in recent years, demand for sports goods may increase over the years. Major trade fairs: Kids India, September 2015, Mumbai, IndiaIndia Sports Expo, October 2015, New Delhi, IndiaIndia International Sporting Goods Show, September 2016, New Delhi, IndiaCustom-made products: Indian products are tailor made to individual product specifications, with hand-crafted goods such as cricket balls carving a niche in global marketStrong workforce: A highly skilled workforce is available for designing and producing high volumes of sports goodsCompetitive labour costs: Indias average labour cost for manufacturing is much lower than that in the rest of the worldbroadcasting rights

Advantage IndiaIndia's share of the global sports goods export market is expected to grow manifold establishing the credibility of its goods in the international market India exports nearly 60 per cent of its total output to sports-loving people the world overThe sports goods market in India was valued at US$ 2 billion in 2012-13. The market is growing as 35-40 per cent a year and is expected to reach US$ 3.6 billion by 2015Growth on account of increasing awareness about health andfitnessIndia exported sports goods worth around US$ 256 million in 2013-14 as compared to US$ 214.95 million in 2012-13 and registering a growth of about 19 per centThe major items to be exported during 2013-14 includes inflatable balls, cricket bats general exercise equipments, sports nets and protective equipment for cricket.Sports Goods Export Promotion Council : SGEPC promotes the export of sports goods andtoysfrom India. SGEPC represents the leading 200 manufacturers and exporters of sports goods and toys in India.Exports : Growth strategy

Increase FDI in retail to 100 %Increase the linkage between sports goods industry and sports to create a lifestyle productFocus on technological up gradation and develop capabilities to compete with Chinese productsDevelop specialised industrial clusters to improve sports goods manufacturingFocus on export competitiveness to increase overseas demand which should complement the domestic marketThe sports goods manufacturing industry should follow the sports goods retail towards greater organisation and involvement of Multi national companiesFuture Strategy