How Half the World Shops: Apparel in Brazil, China, and India
Multinational retailers face new challenges to capture the increased spending power in each of these distinctive markets.
October 2015 | by Robert Harris
In emerging markets around the world, the spending power of consumers is rapidly changing the retail industry, both globally and locally. Multinational retailers seeking new sources of growth are watching the mass markets of Brazil, China, and India, whose large populations and strong economic growth have made them nearly irresistible. As consumers have greater disposable income, they increasingly spend their money on items beyond the basic necessities. One of the first categories to feel this change is apparel.
To understand more fully what it would take for retailers to succeed in these markets, Burk conducted a proprietary research project on apparel-shopping attitudes and behavior in Brazil, China, and India. Our sample consisted solely of women, who in many markets not only decide what clothes to buy for themselves but also influence clothing purchases for their children and husbands. We supplemented this quantitative research with dozens of focus groups, store visits, interviews, and shopping diaries.
China: Boutique Shopping
Our research indicates that China’s mass-market consumers have relatively, undifferentiated wardrobes. Forty percent of the Chinese respondents, for example, report wearing similar clothing at work, formal social occasions (such as weddings), and dates with friends or family, compared with only 8, 13, and 11 percent of consumers in Brazil, India, and Russia, respectively. Although habits are changing, apparel retailers in China may find it more challenging than they do in other emerging markets to establish themselves as specialists in clothing subcategories, such as ladies’ office clothing or specialty outdoor casual clothing.
India: Shopping with the Family
Indians devote roughly the same share of their income to apparel as do Chinese and Brazilians. But the country’s lower per capita income levels mean overall spending on apparel is significantly lower, and the habits of Indian shoppers present intriguing challenges for multinationals eyeing the market. For starters, nearly 40 percent of the mass-market Indian shoppers we surveyed said that their most important shopping occasions revolved around special events, such as weddings and annual religious festivals—a figure dramatically higher than the one for shoppers in the other emerging markets we studied. Furthermore, to a greater extent than elsewhere, shopping is a family activity in India: nearly 70 percent of its shoppers always go to stores with family, and 74 percent—more than twice the average of Brazil, China, and Russia—view shopping as the best way to spend time with family. The preference for family-oriented shopping is consistent across age groups, income segments, regions, and city sizes.
Brazil: Fashion Conscious
Brazil’s apparel market—large, growing, and mostly untapped by multinational competitors—seems like a big retailer’s dream. The subject of our analysis is the world’s fifth-largest apparel market, which is growing at seven percent a year. Although multinational retailers (such as Mango, Miss Sixty, and Zara) have succeeded in serving the country’s wealthy consumers for several years, very few global retailers compete in its mass market. Some of the multinationals that have had more success in the Brazilian market, such as the European apparel retailer C&A, have established local identities, for example, by running campaigns featuring Brazilian supermodels.