TERM PAPER ON SPORTS APPAREL INDUSTRY

SUBMITED BY

VAIBHAV SRIVASTAVA

MBA 3RD SEM (MARKETING)

TABLE OF CONTENTS SPORTS APPAREL INDUSTRY IN INDIA

SPORTS APPAREL MARKET IN INDIA 2011

MAJOR PLAYERS OF SPORTS APPAREL INDUSTRY IN INDIA

FIVE COMPETITIVE FORCES IN SPORTS BUSINESS ENVIRONMENT

STEPS TOWARDS DEVELOPMENT FOR SPORTS APPAREL INDUSTRY

POTENTIAL OF SPORTS APPAREL INDUSTRY

SWOT ANALYSIS OF INDIAN SPORTS APPAREL INDUSTRY

SPORTS APPAREL INDUSTRY IN INDIA Sportswear is a niche segment of retailing whereby,

government, federations, manufacturers, sponsors, and consumers play an important role. Retailing of sportswear products in India is growing due to the rise in per capita income, changing lifestyle, and consumer preferences

The current size of the Indian sportswear industry is worth ` 365.8 Billion, which is expected to grow at a CAGR of around 33% during 2010-2014.

The Indian Sports equipments manufacturing industry has been exporting about 60% of its total domestic production to the sports loving consumers around the globe

The total value of the sports goods manufacturing in India is worth about 5,000 crores, the contribution of Jalandhar to this figure is about 60%.

SPORTS APPAREL MARKET IN INDIA 2011

The market is estimated to be worth INR 50 bn in 2010 and is expected to reach INR 120 bn by 2020

The key challenges identified include low sports participation rate, competition from unorganized players, poor state of sports infrastructure in the country and imposition of excise duty.

The key trends identified include players sponsoring sports events and teams, tie-ups between renowned Indian designers and the players and sportswear brand endorsements by prominent celebrities.

The competition section provides an overview of the competitive landscape in the industry and includes a brief profile of the major domestic and international players in the market along with their financials.

Sports goods account for 0.2 per cent of the retail market in India which translates into $1 billion (Rs 4,493 crore).The market is growing at 35-40 per cent a year and is expected to reach $3.6 billion (Rs 16,174 crore) by 2015.

SPORTSWEAR MARKET IN INDIA TO GROW AT A CAGR OF 33% Total sportswear market is expected to reach to ` 1,159

Billion by 2014, growing at a CAGR of around 33% during 2010-2014.

Indian sportswear market will be dominated by men’s sportswear section, which constitutes around 70% of the total sportswear market.

Rise of online sales has brought tremendous opportunities as well as challenges to the retail and commercial businesses in India. A growing number of sportswear companies in India are now leveraging on the Internet platform as a doorway to diversify their sales and marketing channels.

MAJOR PLAYERS OF SPORTS APPAREL INDUSTRY IN INDIA

ADIDAS

NIKE

PUMA

REEBOK

FIVE COMPETITIVE FORCES IN SPORT BUSINESS ENVIRONMENTS 1. Rivalry among competing firms : Businesses

compete for customers by price, quality, and speed (responding to new styles and models and getting these products quickly to retailers). Nike, Adidas-Reebok, Puma, and Fila are rivals in the athletic footwear industry. All four of these companies need to anticipate the moves of their competitors. They also need to be aware of newer competitors such as Under Armour.

2. Potential development of substitute products and services: This occurs when companies from other industries try to move into the market. For example, Crocs are slip-on shoes that have become popular in water sports and as a fashion item. Crocs normally come in bright colors and are easily recognizable. Crocs recently formed an alliance with the NFL to sell Crocs shoes in professional team colors.

3. Potential entry of new competitors: How difficult and costly is it for new businesses to enter the industry? Does the company need to defend itself against new competition? Under Armour, founded in 1996, has successfully entered the high-performance apparel industry.

4. Bargaining power of suppliers: Nike doesn’t manufacture its own sneakers; it uses private contractors in Vietnam to produce the sneakers. Workers are paid very low wages, which indirectly gives Nike a great deal of power over these oftentimes helpless factory workers. In effect, because Nike can easily switch factories, it controls the suppliers.

5. Bargaining power of consumers: How much does the business depend on the consumer? Consumers of footwear have power because they can shift to other manufacturers on a mere whim or because of a new style, better price, higher quality, greater convenience, and a host of other reasons. However, consumers lose power when they are loyal to a business like Nike and want to buy only Nike footwear. Because there are many consumers who want Nike products, Nike is in a strong position as long as it continues to offer appealing products.

STEPS TOWARDS DEVELOPMENT FOR SPORTS APPAREL INDUSTRY

The Indian sports goods manufacturing Industry is keenly looking forward to joint ventures and technical collaborations with suitable firms especially with a considerable degree of buy back arrangements, since the sports equipments manufactured in the country enjoy an immense export potential.

The principal factor that has boosted up the growth of a large number of small scale sports goods manufacturing units in the country are the liberalized industrial policies of the government that have helped them to actualize the goals set forth by the Indian Government.

POTENTIAL OF SPORT APPAREL INDUSTRY The sports goods manufacturing industry of India is

endowed with a huge potential across a wide spectrum of industrial issues including employment, economic

development, and exports. This segment has today generated direct employment

opportunities to about 1.5 lakh people. In Jalandhar alone, there are about 1,000 big and small sports goods manufacturers.

India need to increasingly implement more modern and value added technology in the process of manufacturing and evolving innovative products. This will help in meeting the growing competition in the international market.

SWOT ANALYSIS OF INDIAN SPORTS APPAREL INDUSTRY Strengths  More than 100 years old industry with strong base of

traditionally skilled man power Availability of most of the raw materials Abundant human resources at comparatively lower cost Emergence of India on global manufacturing scene Low overheads due to small scale production. Business acumen of entrepreneurs Manufacturing industry network & linkages Capacity to operate under adverse conditions

Weaknesses Most of the industry is in tiny sector, Low Volume

of Production Low mechanization in the MSME industry Lack of research and development facilities Lack of synergy and coordination amongst various manufacturers critical for Component Approach Higher production cost due to low scale of production Comparatively higher interest rates for loans Insensitivity to customer needs/ poor channels of customer feedback and customer complaint redressal system. Minimal expenditure on brand building, advertising Lack of professional management Lack of opportunities for sports goods manufacturers

Opportunities Large and expanding domestic market Increase in demand due to rise in the disposable income of domestic consumer Growing confidence of both- domestic and international

buyers on the Indian sports goods. Sports & fitness gaining importance at School/ College levels People are more health conscious now than ever Achievements of Indian sports persons increasing the

awareness and popularity of sports in India Overseas buyers are looking for alternate source of supply instead of heavy dependence on one country Government Support for manufacturers for export promotion. Sector no more reserved for SSIs, hence encouragement for large companies to set up manufacturing in this sector

Threats Competition from International brands in India. Low consciousness on international safety & quality standards Unable to adapt quickly to rapid changes in product designs Popularity of International brands amongst Indian consumers Introduction of high tech materials (Graphite, composites) by international manufacturers Easier import procedures & lower import duties increasing demand of imported equipment International brands gaining popularity in India. Single brand international stores already allowed by the govt. and growing in numbers Shift from traditional sports equipment to high tech equipment 

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