Santosh Ladha: Any upward adjustment in GST rates could influence consumer purchasing behaviour

Iris Clothings is a fast-growing readymade garment company. The company is engaged in designing, manufacturing, branding and selling garments for kids wear under the brand name DOREME in India. We deliver a broad range of unique apparels for infants, toddlers and junior boys and girls. Our quality and ability to continuously add new product lines and innovate with a new design makes us a preferred brand in the segment. Santosh Ladha, Managing Director, IRIS Clothings, in a conversation with Divya Shetty, shares the current state of the Indian kids wear segment and how his company is contributing to it.

How would you describe the present state of the kids’ apparel market in India, and what key trends have you observed recently?

The kids’ apparel market in India is experiencing robust growth, driven by increasing disposable incomes, heightened fashion consciousness among parents, and a burgeoning young population. Key trends observed include:

• Sustainable and ethical fashion: There’s a growing demand for eco-friendly and ethically produced children’s clothing. Parents are increasingly opting for garments made in an eco-friendly environment, reflecting a shift towards sustainability in consumer preferences.
• Comfort wear: Parents are prioritising comfort and durability in children’s clothing, leading to a rise in comfort wear in children.
• Rise of licensing and character-based merchandise: Licensing agreements between Indian brands and international entertainment companies are increasing.

Which types of fabrics are currently in high demand for children’s clothing, and how does Iris Clothings ensure the quality and suitability of these materials?

The demand for fabrics in kids’ apparel is driven by factors like comfort, durability, breathability, and sustainability. Cotton continues to be the primary choice for children’s clothing due to its natural softness, breathability, durability, and hypoallergenic properties.
It remains the most widely used fabric for casual wear. Along with that there is an interesting trend picking up in cotton blended stretch fabrics used for stretchable garments for ease of movement for the kids.

We ensure quality and suitability of these materials by various methods like fabric testing and certifications, use of sustainable and ethical sourcing, consumer and real-world testing, and the most important of it all technology driven innovations to stay ahead in the game.

The recent proposal suggests increasing GST rates to 18 per cent for garments priced between Rs 1,500 and Rs 10,000, and to 28 per cent for those above Rs 10,000. How do you anticipate these changes affecting Iris Clothings and the broader apparel industry?
Iris Clothings primarily offers products priced below the Rs 1,500 threshold. As such, the majority of its offerings would remain in the 5 per cent GST bracket, potentially insulating the company from direct tax increases. However, any upward adjustment in GST rates could influence consumer purchasing behaviour. The broader apparel industry is likely to face challenges related to consumer demand, operational costs, and economic stability. Companies will need to adopt agile strategies, including potential price adjustments, cost optimisation, and product diversification, to navigate the evolving landscape effectively.
What are the primary challenges Iris Clothings faces in the current market, and what strategies are being implemented to address them?

Iris Clothings, a prominent player in India’s children’s apparel market, encounters several challenges in the current business environment. These challenges stem from both industry-specific dynamics and broader economic factors.

Price sensitivity and consumer demand: Fluctuations in the economy influence consumer spending habits, with parents often seeking affordable clothing options for their children. This price sensitivity can impact profit margins and sales volumes.
Seasonal demand variations: The kids’ apparel market experiences seasonal peaks, during summer and winter seasons. Accurately forecasting demand and managing inventory to prevent overstocking or stock outs remains a persistent challenge.
Intense market competition: The Indian kids’ apparel sector is highly fragmented, with numerous domestic brands and increasing penetration by international players. This saturation intensifies competition, making market differentiation crucial.

Strategic responses;
Product innovation and design refresh: Iris Clothings introduces approximately 90% new designs annually, ensuring alignment with current fashion trends and catering to evolving consumer preferences.

Brand diversification and licensing: The company has secured licensing agreements with renowned entities like Disney, enabling the production and sale of apparel featuring popular characters. This strategy enhances product appeal and broadens market reach.

Expansion of retail footprint: Recognising the continued dominance of physical retail, we are looking at expanding our presence by going directly to the consumer.

Competitive pricing and quality assurance: By offering high-quality products at reasonable prices, ranging from Rs 200 to Rs 2,000, Iris Clothings appeals to a broad customer base, balancing affordability with quality.

Through these strategic initiatives, Iris Clothings strives to navigate the complexities of the current market landscape, aiming for sustained growth and a strengthened position in the Indian children’s apparel industry.

With the recent launch of woven night suits and plans to introduce innerwear and nightwear in FY25, how does Iris Clothings approach product diversification to meet evolving consumer demands?

Iris Clothings stays ahead in product diversification by adopting a strategic, consumer-centric approach that focuses on market trends, innovation, and expansion.

The company ensures its product lineup evolves to meet changing consumer demands while maintaining affordability and quality. Expanding into high-demand categories, licensing deals with Disney and Marvel allow Iris Clothings to offer exclusive designs that appeal to children and parents alike.

The company refreshes its collections regularly based on fashion trends, consumer preferences, and market research. By consistently launching new products, expanding its retail presence, leveraging data, and focusing on affordability, Iris Clothings stays ahead in product diversification while strengthening its position in the children’s apparel market.

Could you share any upcoming initiatives or expansion plans that Iris Clothings is considering to capitalise on emerging opportunities in the market?

Iris Clothings is actively pursuing several strategic initiatives and expansion plans to capitalise on emerging market opportunities in the children’s apparel sector. These efforts encompass product diversification, retail expansion, and digital transformation.

 Recognising the potential in the infant wear segment, Iris Clothings has introduced new categories such as infant sets, cord sets, and nightwear, with plans to increase the revenue contribution from this segment to approximately 15-17 per cent. The company is expanding its Disney x DOREME collection to include winter wear and sportswear featuring popular Disney characters, enhancing its appeal to both children and parents. On the distribution end, the company expects to expand distribution channel along with adding more physical retail stores.

Through these strategic initiatives, Iris Clothings is positioning itself to meet evolving consumer demands, expand its market presence, and capitalise on emerging opportunities in the children’s apparel industry.