The Indian garment industry is a vast and intricate ecosystem that encompasses both organized and unorganized segments, contributing to increased competitiveness. A critical component of this industry is the Supply Chain Management (SCM), which plays a pivotal role in managing global sourcing complexities and ensuring a well-integrated supply chain. In recent years, the SCM has become increasingly essential to navigate the risks and complexities of international sourcing. It’s no surprise that retailers are focusing more on delivering value to their customers through robust supply chains, as it allows them to outshine their competitors.
In this blog post, we delve into the fascinating world of India’s secondary garment market, with a closer look at the thriving hubs in Bargur, Chickpet, and Tirupur. These secondary markets are vital cogs in the Indian garment value chain, offering affordable and sustainable clothing options to consumers while also providing unique employment opportunities.
In the garment industry, the reverse supply chain operates in the opposite direction to regular supply chains. It deals with the flow of materials, money, and information, with the primary goals of recycling, returning, or repairing products. In essence, the reverse supply chain handles everything from damaged goods to returned items, contributing to customer satisfaction and maintaining market reputation.
This reverse supply chain solves two crucial purposes: creating high-value recovery and managing low-to-no-value recovery. The latter has contributed significantly to the growth of the secondary garment market in India.
Our study focuses on the western region of Tamil Nadu and Karnataka, specifically in Coimbatore, Bargur, and Tirupur. These regions have gained recognition as garment manufacturing clusters and are often referred to as the “Manchester of India.” The products produced in these remote locations heavily rely on logistics and supply chain management to reach consumers on time and meet growing demands.
However, challenges have emerged, such as bulk storage issues, rising inventory costs, labour shortages, and disruptions in the supply chain network. The recent economic downturn due to the pandemic has only exacerbated these problems. As a result, large quantities of unsold stock have accumulated, leading to cash flow constraints and product wastage.
Bargur, often dubbed “mini Surat,” is a town in Tamil Nadu known for textile trade. Its secondary market for garments is a fascinating ecosystem where shopkeepers purchase products from various cities, catering to the latest fashion trends. This market has been coined as a “grey market” due to its ability to handle smuggled goods through an efficient hidden supply chain.
Credit purchasing is common within the close-knit community, and shopkeepers prefer group purchases for bulk discounts. Logistics are handled by suppliers, and damaged goods are sold to roadside vendors or returned to suppliers in exchange for new products. Bargur’s secondary market is popular among brand-conscious customers from metro cities, with sales reaching up to 15% to 25% of the investment daily.
Chickpet, located in Bengaluru, boasts a rich history as one of India’s oldest shopping destinations. It’s renowned for its variety of sarees, silver, and gold jewelry, as well as its wholesale and retail apparel shops. Shopkeepers in Chickpet purchase rejected and damaged apparel from manufacturers who produce for leading brands.
Agents and agencies act as intermediaries between manufacturers and wholesalers/retailers, ensuring smooth transactions. Credit terms are established based on reputation, and transactions are primarily conducted in cash. Unsold goods are accepted but exchanged for new products. Chickpet’s market enjoys a return on investment of 15% to 20%.
Tirupur, a small city in Tamil Nadu, has emerged as a major textile hub, contributing to nearly 90% of India’s cotton knitwear exports. The city is known for its massive textile industry, with customers from various parts of India flooding in with bulk orders.
Manufacturers in Tirupur acquire customers through agencies, providing payment guarantees. The secondary market in Kadarpet thrives on handling rejected, surplus garments, and products with defects. These markets are unique because they run on cash transactions, with no credit encouraged. Returns are not accepted, but goods can be exchanged for new products.
The secondary markets in Bargur, Chickpet, and Tirupur play a vital role in managing rejected, surplus, or damaged garments, serving as a source of affordable clothing for the middle-class population. These markets have created a unique business model characterized by low investment and high returns. They offer employment opportunities and cater to consumers looking for sustainable and cost-effective clothing options.
In conclusion, the secondary garment markets in India are thriving ecosystems that have carved a niche for themselves in the complex Indian garment value chain. As they continue to grow and evolve, they provide consumers with accessible and sustainable fashion choices and create employment opportunities for countless individuals. These markets are a testament to the ingenuity and adaptability of India’s garment industry.