When small isn’t cheap – How Middle class Indians are spending a sizable chunk on their kids’ wardrobes

Gap. Zara. Armani. The big names are here in India and here to stay. No longer accessible only to the elite, they have now modeled their marketing strategy to pull at the purse strings of India's budding upper middle class category - the ones who arrive at malls in self-driven cars but can afford valet parking, those who eat out at least once a week and for those whom the mall is just another outing with the kids. Purses have opened and how. Here's an article that talks about how the Indian middle class is now spending sizable amounts of money - all on their kids' wardrobe.

A little past 10 am on May 14, Ruchi Aggarwal stood in a queue at a posh mall in Gurgaon. The 34-year-old was accompanied by her four-year-old son, dressed in a crisp blue Armani shirt paired with white denims and pricey Hogan shoes. Her four-year-old daughter wore a peach dress from H&M, carefully matched with a Hermes Birkin look-alike.

“Even I don’t have a Birkin yet,” joked Aggarwal, pointing to her daughter’s tangerine satchel.

But on this day, Aggarwal’s clothes didn’t matter. The spotlight was on her children who were were auditioning for India Kids Fashion Week (IKFW) at Gurgaon’s Ambiance Mall.

By her own admission, the stay-at-home mother spends a lot of time and money dressing her kids. A pair of jeans for her son recently set her back by Rs25,000. “My kids have a very active social life and they need to be well turned out,” Aggarwal explained.

As India’s economy grows, its image-conscious, middle-class parents want to dress up their children in luxurious clothes. With 29% of the country’s 1.2 billion population under the age of 14, India is potentially a massive market for children’s clothing. And the country’s Rs6.60 lakh crore($10 billion) branded apparel industry is quickly catching up.

Kids are kings

Till a decade or two ago, children in India mostly grew up on hand-me-downs from elder siblings or stuff picked up from neighborhood markets. There were no fashion weeks or ripped denims on offer.

In early 2000s, domestic brands such as Lilliput, Gini & Jony and Catmoss started opening more stores, although the exact appetite for branded kids’ clothing remained unknown. Private equity money flowed from large global investment funds—including Bain Capital and TPG Growth—into what was then considered a promising market.

But things didn’t go smoothly for most. In 2011, a large accounting scandal hit Lilliput, turning the poster-child of children’s clothing into an unqualified mess. The retailer was accused of inflating profits and hiking valuations. By 2013, both Catmoss and Lilliput were straddled with debt and warring with their private-equity investors.

“India wasn’t ready for these stores then, at least not so many,” said Manoj Mahla, director at Craftworld Events, which has been organising the IKFW in Mumbai and Delhi since 2012 to connect designers to retailers. Five years on, according to Mahla, the market is finally picking pace as parents become more discerning and foreign brands bring better collections.

Brands meet kids

To meet rising demand, retailers are stretching realestate both inside existing stores, and creating standalone shops exclusively for children’s clothing.

In April this year, clothing retailer Pantaloons said it is adding apparel stores for children under Pantaloons Kids. “We realised there is an actual shortage for kids’ shopping and this is true even in malls where there are over 70 stores catering to menswear and womenswear,” Shital Mehta, chief executive officer, Pantaloons Retail told the Mint newspaper last month.

Arvind Lifestyle Brands, one of the largest domestic retailers, expects that sales numbers from its portfolio of foreign brands—such as The Children’s Place, Nautica Kids, U.S. Polo Kids, Elle Kids and others—will grow more than three times to Rs725 crore in the next four years. Children’s clothing accounted for over 8% of the company’s Rs2,729 crore turnover for the year ending March 31, 2016. Last year, Arvind brought in The Children’s Place, the $1.3 billion American retailer, to India.

Earlier this year, Atlanta-based children’s clothing company Carter’s Inc said it will sell in 15 cities in India through BabyOye stores, owned by domestic retailer Mahindra Retail. Swedish retailer H&M and Spanish fashion brand Zara also offer kidswear in India.

Even Disney, the world’s largest entertainment company, is reportedly preparing to open stores in India and join the action.

“Parents are living their childhood dreams through their kids and this is creating a huge demand for kids category,” said Mridumesh Kumar Rai, business head of The Children’s Place.

Amid all this noise, reckoned Mahla, kids are becoming the king. “Kids are finally feeling like they own a space,” he said. “They can now walk into a store and point a finger at what they want.”

For Aggarwal, who previously shopped for her kids on holidays abroad, shopping has moved closer to home. “Now that these brands are here,” she said, “I can go over to the mall and pick up clothes whenever I want.”

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