Excellent Opportunities in Kids’ Fashion Retail

The days when fashion was the exclusive preserve of adults are long gone. The millennial culture has provided kids’ fashion with the much-needed boost and unveiled the true potential of the segment within the fashion retail industry. Especially in India, where the sector was non-existent till a few years ago, it has now established itself as an individual and become a fruitful segment of the Indian fashion industry. The kids wear market in India has witnessed vast changes in the last few years – both product and consumer wise. Parents now exhibit considerable brand recognition and lean towards high-quality apparels for their children. This has trickled down to the kids as well, who are now emerging as an independent buyer group altogether.

“We are a solution provider in retail where customers can buy nappies to kids’ party wear from our stores. We also give a lot of emphasis on product quality; every garment that we sell is certified for 5 quality parameters, which are: safety for the child, colour bleeding, strengthening, any metal work that is embedded into the garment and sustainability” shares Sharad Venkta, CEO of Toonz Retail India.

GROWING DEMAND

The rise in disposable incomes, change in lifestyle of modern parents, rise in nuclear families, as well as frequent socialising and wanting to ensure that your children look good for social media are all factors that have contributed to the soaring growth of the kids fashion retail segment. Jaineel Aga, CEO of Planet Superheroes claims, “Customers are a lot more aware of the options available to them so the retail pricing of the product needs to be tight. Offline customers value the quality of the product and seek value vs. getting lured by meaningless discounts for the poor quality of the product. We have understood this behaviour and work on an omnichannel approach to ensure that we provide the right price for a product. We do not compete to be the lowest bidder as we are trying to focus on the needs of our loyal customers who demand high quality.”

Studies show that the Indian kidswear market is growing at 8 per cent CAGR, which means that it will reach Rs 145,445 crore by 2027; whereas, the men’s wear and women’s wear are expected to grow at relatively lesser CAGRs of 7.5 per cent and 7.6 per cent respectively.

BUSINESS MODEL

“Ability to get the location right is perhaps the secret sauce that every retail brand with offline stores is looking to get right,” says Aga. A typical outlet in this segment would range between 800-1200 sqft, the rent of which will vary from city-to-city, pan-India. However, in the case of Toonz Retail, the company will undertake the rent of the franchise outlet and the company also pays franchisees a commission to manage its operating expenses as well. Franchisees are required to buy the merchandise on a need-based basis and return what remains to the company to be reimbursed. 

The operational expenses of the franchise store will be borne by the franchisor ranging from Rs 50-75000, including the salaries of 4-5 people ranging up to Rs 45,000; electricity can cost up to Rs 10,000; and Rs 10,000 is for miscellaneous expenses. Against these expenses, a kids’ wear franchise outlet can generate revenue of up to Rs 6-10 lakhs a month. “We generally look at franchises that are keen to take over the store themselves and not just being investors. Our franchise stores are run on FOFO models,” claims Venkta. The services of marketing, merchandising, training and back end IT infrastructure are some of the fields a franchisee store expects help from the company in.