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LATEST TRENDS IN APPAREL INDUSTRY &ITS IMPACT ON FASHION RETAIL MARKET

Fashion retailers have always had certain unique business challenges.

Moreover, faced with an explosion of data, dynamic markets, changing

customer expectations, fashion retailing is becoming increasingly complex.

Any business or IT service provider to this industry needs to be aware of

these different challenges and have an in-depth understanding of the

fashion-retailing domain.

Wipro’s Fashion Retail practice was established with a view to fill in this

need. Wipro’s Fashion Retailing practice works with leaders across the

globe. The focus of the practice ranges from apparel, footwear and

jewelry and cuts across luxury, fast fashion, department stores and

discount retailers. Our 2,000+ strong team is focused on creating and

extending market leadership. Our comprehensive set of offerings across

fashion strategy consulting, business transformation, technology

transformation and process transformation coupled with our partnerships

across technology platforms such as Microsoft, IBM, Oracle, SAP, HP,

CISCO etc. offers significant value to our customers. Our investments in

analyzing markets trends and significant customer needs have resulted in

several IPs and solutions that enhance customer experience and achieve

retail operational excellence. Our practice has also invested in training and

certifying our consultants on fashion retailing and technology.

Wipro’s Fashion Retail Industry Update presents a view of the key trends

shaping the industry and the opportunities that face retailers.

INTRODUCTION

Business Trends

1. Retailers will continue overseas expansion amidst talks of economic recovery

Fashion retailers have been looking at overseas opportunities for more than a decade now. The recent economic

downturn coupled with rise in population with disposable incomes across various parts of the globe has

accelerated this trend. Now, despite improving economic conditions, companies will continue focusing on global

opportunities to fuel further growth.

03

In 2010, most apparel retailers in the developed world were able to

achieve impressive growth in profits. This growth however has been

either due to cost cutting steps that companies took during recession or

due to strong sales growth from a much weaker performance in 2009.

The apparel market in the developed world is estimated to have grown at

1less than 1.3% during this period as against 2.3% growth worldwide.

Hence going forward, it is difficult for these firms to repeat this

performance in 2011. Challenging retail environment and increasing input

costs will continue to squeeze profit margins, which makes the rapidly

growing emerging markets more attractive.

T h e N i e l s o n G l o b a l

Consumer Conf idence

survey (Q4 2010 - Jan-11)

indicated low consumer

confidence in most of the

developed world with almost

32% Americans and 19%

Europeans saying that they

have less or no discretionary

cash to spend and 22%

people saying that they

would continue with spending less on clothing. According to the survey, a

large section of consumers from the developed world will continue to

spend more cautiously for now. In US alone, the number of shopping trips

2of households with income less than $100k has reduced by 4%. High

rates of unemployment in developed economies, the low rate of increase

in wages, rising utility costs and lingering recessionary consumer attitudes

are expected to culminate into a difficult business environment for mass

market retailers, while increasing cost of Chinese imports, raw material

and international freight will further squeeze out profit margins. For now,

European fiscal policies seem to focus more on reducing deficits as rising

taxes and reduced government expenditure will further drain out

consumer spending in the region.

The undifferentiated, low cost retailers who have depended on low

pricing and deep discounting alone will bear most impact of these

conditions. Fashion retailers will have to turn to emerging markets to

ensure growth where markets are estimated to grow at a much higher

rate than those in developed countries. Nine of 14 countries that ended

the consumer confidence survey on a positive note are from the Asia-

2Pacific region. A survey of retail executives revealed that 80% of them are

looking forward to China, Russia, Brazil, India (the BRIC countries) for

3further growth. Japan’s Senshukai has already announced plans to expand

its presence in China this year. Mark and Spencer has plans to open up an

additional 10 stores in India and six in China over the next year while US

retailer GAP has already announced plans to enter into Serbia and

Ukraine by 2011.

36International expansion helps Inditex outperform H&M.

04

Consumers in emerging markets now have more disposable income on

their hands and are becoming more brand conscious. Studies have

predicted that China will become the world’s largest luxury market by

42015. Brazilians high spending on clothes and preference for the latest in

fashion makes Brazil a lucrative market for global fashion brands. Brazilians

reportedly spend 6 times more on clothing than the Chinese (per capita

5,6basis) and often make use of credit for apparel purchases. Japans luxury

market faces unprecedented pressures. Sales are down sharply and many

luxury companies have issued warnings that they will fall short of current

growth and earnings targets. In coming time, luxury retailers will surely find

their customer base shifting. The Arcadia Group is looking to tap China’s

retail market by 2011 while Italian brand La Perla will open 19 stores in

Asia. Designer shoe label Steven Madden is set to enter Indian retail market

in 2011.

The 2010 A. T. Kearney GRDI survey shows that Middle East and African

countries have become lucrative destinations for retail growth. Eight of the

top twenty most lucrative countries for retail growth are from this region.

These represent presence of small but isolated profitable pockets in this

region. Consumer spending from this region in 2010 on clothing and

footwear is estimated to be at around $82 billion, which is more than many

7,1individual developed markets like Germany, Italy & UK. Youthful

demographics will further dive this market’s growth in coming years. In

2010, Koton made investments to increase its floor space by 17%.

This trend of internationalization however is not restricted only to

developed world retailers going into emerging markets. There are already

a few examples of retailers from emerging markets venturing into foreign

markets. Chile’s Falabella is planning further expansion of its operations in

Colombia within this year. Li-Ning of China started testing US markets by

opening up in Portland Oregon 2010, although the company is reported

to wait for a few more years before making any large investments.

Shoemaker Liberty Shoes plans to launch 10 outlets overseas - in South

Africa, Middle East and Kuala Lumpur within the next one year.

While market in UK shrunk by almost 4.4 % in 2009, ‘fast fashion’ has

7emerged as a thriving business model. The rising popularity of Fast

fashion across Europe and other parts of the world has prompted

retailers to grow in developed markets as well. US based apparel retailer

Forever 21 entered UK in 2010. Zara is planning to expand its online

operations to US, South Korea and Canada in 2011 as well as open

outlets in Australia and South Africa. Uniqlo, which entered Taiwan in

2010, is expected to expand its presence in Singapore in 2011.

This ‘internationalization of apparel retailers’ will continue in the

foreseeable future as companies will continue to explore more profitable

markets abroad.

Harry Winston Inc. is looking to more than double its store count in37five years by tapping lucrative markets such as China, Russia and Dubai.

Mulberry expects overseas sales to overtake those in its home38market in two years.

39Gap jumps into Ukrainian market with a Kreshchatyk store.

40Forever 21 bursts boundaries with big stores, fast growth.

Gap and Nike are among the latest to launch on the 30,000-brand site, as41part of a push to reach consumers outside China's major cities.

The largest clothing retailer in the world, Inditex plans to add up to 500outlets in 2011 despite slower consumer spending in Europe and the U.S.The company plans to focus on Asia, where consumer spending is rising.Later this year, the company plans to launch online sales for brands

42beyond Zara.

05

2. Consumers will continue to be

spoilt for choice

Luxury sale have received a boost from sales to young, aspiring

consumers. The average consumers of luxury brands in the fast growing

developing markets are younger. As markets head towards recovery,

sales from the aspiring segments will increase. Many premium brands have

acknowledged this and have tried to allure younger, aspiring consumers

by introducing new ranges of products or brands, which are marked at

lower prices – but still maintain their premium appeal. The US handbag

and purse maker ‘Coach’ recently launched its new, more youthful

‘Poppy’ line of less-structured and brightly colored products, priced

around 20 percent less than their traditional products. This contributed to

the company’s recent strong growth in a weak retail environment. With

the lingering recessionary attitudes among consumers around the world,

more companies will follow this trend.

Fashion companies have come to realize that to become successful

overseas, they have to take local preferences and sensitivities into

consideration. Many companies who have made forays into emerging

markets are now coming up with brands specifically targeted to these

regions. The U.S. jeans maker, Levi Strauss & Co, Levis launched its

DENIZEN brand of jeans in 2010 in China and subsequently introduced it

in Singapore, Korea and India. DENIZEN products are designed keeping

in mind Asian physique and intend to compete on better fit. In September

2010, French fashion retailer launched its first boutique for ‘Shang Xia’, a

brand specifically targeted towards Chinese luxury market.

In course of recent recession, retailers pursued private label sales to earn

In recent years, changing consumer behavior and

shifting demographics (in terms of spending) have

prompted several companies to launch newer brands

or enter into related product categories. Fashion

Houses and retailers must use this opportunity to

help their brands carve their credentials and create a

loyal customer base.

more profits, which drained out margins across the industry. As prices of

imports and raw materials increase, retailers will find it difficult to compete

on low prices alone. To be able to compete effectively in the market place

these private labels will have to carve their own fashion credentials. Tesco

has already announced a partnership with ‘From Somewhere’ for its

private label F&F to launch an eco friendly line – ‘From Somewhere to F&F’.

It also launched a limited range called F&F Couture in an attempt to

portray itself as a fashion forward brand.

With increasing wages, raw material and international freight, Chinese

companies are increasingly finding it difficult to maintain their position as

low cost exporters. As the proportion of Chinese fashion imports reduces,

companies will face a capacity overhang. Chinese brands are becoming

better known in local markets. Homegrown Chinese brands like Li-Ning,

Ante, 3610 and Metersbonwe are already in competition with other global

brands for a share of China’s lucrative marketplace. PYE, JNBY,

Septwolves, Lilanz and Cabeen have too seen growing recognition over

time. Li-Ning which is second only to Nike in the Chinese market has

started testing international markets with stores in Singapore, Portland

Oregon and sponsoring sports teams from 14 countries across various

sporting events; lending the brand a more ‘international’ look. The twelfth

five-year plan seems to be very keen on stimulating domestic

consumption. Brand development efforts from government bodies like

SCBP and organizations like BCIU have been present for a quite some time

now. While there might still be a long way to go before we see a shift from

‘Made in China’ to ‘Designed in China’, we are sure to see Chinese brands

growing stronger in the coming years.

Last few years have seen newer brands emerging leaving the consumers

spoilt for choice. These brands will have to work hard to develop their

own credentials and create a loyal customer base. Analytics and customer

Insight will be critical competencies for brands to emerge from this

competition. Fashion retailers on the other hand will have to listen closely

to consumers to be able to grab the right opportunities.

LVMH PE fund aims to tap India’s growing lifestyle market. The $650 million43fund will invest in lifestyle firms catering to the aspiring segment.

44"Aspirational shoppers" to fuel'11 luxe rebound.

Kiki is the first diffusion range from Kirsty and is aimed at a different45market than the main line.

Balmain is to launch a diffusion range called Pierre Balmain, named46after the label's founder.

06

3. Fashion Retailers from all segments

are entering online markets

Recent studies indicate that apparel e-commerce will grow at much

higher than rate of growth of apparel market; indicating that e-commerce

will steal some share from other sales channels. In 2010, searches related

8to clothing generics increased by more than 19% in UK. During this

holiday season, online apparel sales in US were estimated to be around

18.9% of clothing sales during that period with 49% of people saying that

9they shopped less in stores because they could shop online.

12Annual growth rate of sales of all goods in US

Apparel ranked 5th in the list of products researched

on the internet and then bought in stores. Clearly, the

internet is generating a lot of cross channel sales.

However, e-commerce sales continue to grow at a

much faster rate than other channels. Growth in

smart phone, tablets and m-commerce will further

accelerate this growth. Fashion retailers across all

segments will flock to the online market to claim

their share. Fashion retailers across the globe are also

investing in creating international online presence to

fuel their growth.

Clothing/Footwear was chosen at second on a worldwide survey of list of

things to respondents would purchase online within the next six

10months. Cross channel purchasing is quite prevalent in this category.

Clothing ranked fifth in survey of products that were researched on the

11internet and bought in stores later. The fact that e-commerce websites

increase sales at brick and mortar stores through multi channel customers

and yet sales from online channels are growing at faster pace makes it

imperative for retailers to engage in online operations.

Growth in m-commerce will further boost online apparel purchases.

Mobile phones are ‘always-on’ devices that can help retailers engage

consumers on a one on one basis. Moreover, a recent survey found that

customers prefer using their smart phones for shopping. 56 % of smart

phone users believe that smart phones make the experience more

14enjoyable. Although some companies have made investments into

mobile optimized sites and apps, a large proportion of retailers are still to

come up with a mobile strategy. Tablets are providing retailers with a

platform where they can provide a better consumer experience.

GPS-enabled smart phones are allowing retailers to offer location

based services.

Brooks Brothers has launched a dedicated mobile site that allows users to 47browse and buy from the apparel retailer's complete catalog.

07

Adobe’s Mobile Experience survey conducted in 2010 shows that apparel

and footwear is the 2nd most purchased category by American mobile

users. In another survey conducted in 2010, 47% respondents said that they

were more likely to buy clothing and shoes from a mobile commerce site if

15the retailer has one enabled. Going forward retailers can focus on

personalization to make use of the one to one interaction provided by

smart phones.

Apparel e-commerce has been around for a long time now. Increasing

online sales, growth in multi-channel retailing and m-commerce has made it

more important for fashion retailers. H&M joined the ecommerce fray in

September 2010 with a transactional website in Sweden as well as other

European countries and is following that launch with a series of openings in

other key markets like the US. The Spanish apparel retailer Zara has

responded to consumer demand for multi-channel availability by

announcing that it will take its products online. Almost two thirds of

American apparel and footwear retailers who participated in a recent

survey said that they either were in very preliminary stages or had not yet

come up with a mobile strategy. Apps and websites compatible to mobile

devices represent a huge opportunity. Some apparel retailers have already

come up with specialized apps for iPad, iPhone and Android device.

Zappos.com has mobile app for Android as well as for &

allowing customers to shop its full catalog of handbags, shoes and clothes

via their mobile devices. Boutique.com introduced an app recently that

allows users to browse through its boutiques on the go. Many fashion

retailers like Dolce and Gabbana, Urban Outfitter, American Eagle

Outfitters, Brooks Brothers have launched mobile websites. Online

environment allows detailed monitoring of customer actions and can help

retailers build extensive insights into consumer’s tastes and preference as

well as test newer markets.

Traditionally, luxury retailers had held a view that ‘experience’ and

‘exclusivity’ being central to their brands, they should not sell online. In early

132008, only a third of luxury retailers worldwide had online operations.

However, things are gradually changing as luxury retailers realize the

opportunities the online market holds for them. A recent survey by

McKinsey indicates that multi-channel retailing is very prominent in the

iPad iPhone

iPad

16luxury market. Consumers increasingly are browsing the internet for

information before making in-store purchases. Tiffany & Co. and Loius

Vuitton already have very successful online business as well. Prada

launched its transactional website in 2008 and now expects that by 2015,

40% of its revenues in America will come from internet sales. In 2011,

luxury brand firm Brunello Cucinelli Inc. entered the online market with a

website available in English, Italian and Japanese languages and operations

in Europe, America and Japan. CRM opportunity on the internet is huge

and more relevant to luxury brands. Luxury fashion retailers are now able

to provide their customers a more personalized, exclusive shopping

experience online. In order to be successful in the online market, luxury

retailers will have to provide exclusivity and luxurious experience to its

potential customers who will generate revenue streams as well as nurture

the aspiring class who act as brand advocates.

E-commerce by no means is restricted to the developed markets of the

west. China’s e-commerce market is all set to exceed Japan to become

Asia’s largest online market. Clothing remains one of the most popular

product categories. Russian online footwear market is also buzzing with

activity with newer players having made an entry very recently. Korea,

Thailand and Malaysia also have shown strong growth in online sales.

However, there are still pockets in the Middle East, Asia and Africa where

online markets have not taken off in a big way.

Online giants also have caught on to this opportunity. Three of five

e-commerce companies acquired by Amazon in the year 2009-10, deal in

clothing or footwear. In May 2011, the company also announced the

launch of its new flash sale site – myhabits.com putting it in direct

competition with Gilt, Rue-La-La and eBay’s fashionvault service. Google’s

new site - boutiques.com that was launched in 2010, aims to make use of

advanced technologies like machine learning and computer vision and try

to understand consumers’ preferences and try to provide a very

personalized shopping experience.

Macy's is making significant investments in its e-commerce efforts, with plans to

hire about 3,500 full-time, part-time and seasonal workers to support online 48retail during the next two years.

HauteLook, a flash fashion seller, is branching out into shoes with the launch of 50SoleSociety.com, a members-only selling site focused on footwear.

Consumers in China spent $82 billion on online purchases last year, a 95% increase over 2009. While online sales represent just 10% of total retail sales in China, consumers in major markets are increasingly using brick-and-mortar

51malls as showrooms for the goods they'll buy later online.

Daily-deal website LivingSocial reportedly is aiming to raise an additional $500 million to fund an aggressive expansion aimed at keeping up with industry leader Groupon. Amazon invested $175 million in the smaller player three months ago, and since then LivingSocial has more than doubled its subscriber

52base, to 24 million, and expanded from 120 markets to 230.

08

Online consumers however remain highly price sensitive. In a recent survey

of cross channel shoppers in the US, around 41% respondents said that

they purchased from a different store than the one where they researched

11that product owing to lower price. In another survey of online shoppers,

73 % respondents said that low prices were very important to them when

17shopping online. Perhaps one of the best indicators of consumers’

insatiable hunger for discounts is the meteoric rise of the likes of Groupon.

The presence of a company in e-commerce helps retailers to tap into this

increasingly popular channel as well as get attract multi-channel consumers.

4. Social Websites might not lead to

direct sales, but remain indispensible

f o r I m a g e p r o m o t i o n a n d

customer engagement

Emergence of F-commerce is a highly debated topic these days. As recent

data has shown, social networks drive a very small proportion of online

sales. According to a survey, less than 5% orders placed on the internet

18originate from sales on social networking site . It is very unlikely that this

number will see any dramatic rise within a short time. Fashion retailers have

been struggling to know the exact ROI from their social investments.

Consequently, they have allocated very small proportions of their

marketing budgets towards social networks, blogs, etc. estimated to be

19around 2% only. In a recent survey, about 61% retailers said that they

were investing only to ensure that they are not left behind while half of

Data from the holiday shopping in US has clearly

shown that consumers are yet to get used to social

websites as a tool for shopping for apparel and

footwear. The direct sales generated from such social

websites (excluding ad-triggered sales) remains low.

However social networks, continue to provide a

platform where fashion retailers to leverage their

customers’ enthusiasm and reach out to more people

and increase their brand awareness. After all, an

increase in share of the consumer’s mind is most likely

to translate into an increased share of consumer’s

wallet – even if not through direct sales.

retailers in US - 52%, think of social networking as only a channel to

communicate with customers. Only 32% of retailers reported that they

have a specific set of metrics to measure the success of their brands on

19social media. Fashion retailers clearly need to examine their expectations

from social networks.

Consumers have become accustomed to deep discounts while shopping

online, thanks to Flash sale sites. Discounting can no longer be a strong

point of disparity. Online players will now have to look at other avenues to

differentiate themselves. Social networking has caught retailer’s fancy as

they look forward towards stronger consumer engagement. The way social

networking websites have grown, they can no longer be considered as the

exclusive preserve of tweens. Social networks have a very broad

distribution in terms of age. As shoppers with increasing purchasing power

start using social networking sites; it becomes more lucrative for retailers to

enter this channel.

While online sale through websites was traditionally thought of as more of

a one to one engagement with customers, everyone is soon realizing the

power of social media as the silent but effective persuader. A recent

Nielsen survey has proved that exposure to earned media resulted in

20thrice better (home-page ads) ad recall (social platforms only).

Facebook and its role in retail was a hot topic at NRF's Innovate 2011 conference this week, as presenters shared their thoughts on why

53F-commerce, or Facebook-commerce, may be retail's new frontier.

09

Trust across various online channels

In another recent survey, 90% customers claimed that they would trust

recommendations from someone they know as compared to 54% for

21emails and only 24% for mobile text ads. Social networks can help fashion

retailers leverage this high trust channel and transform ‘customers’ into

‘brand advocates’.

Social networks allow retailers to reach a large number of people who

would be interested in their products. Not only does they give retailers an

opportunity to strengthen their brand awareness, but also provide them

with first hand insights into consumer behavior, preferences and a channel

to listen to feedback. Furthermore, user generated content in the form of

reviews, comments, pictures or videos are seen as a low cost and more

effective way of creating buzz around the band that could lead to sales

through other channels.

There have been examples of apparel and footwear retailers who have

successfully tapped into the potential of social networks to their advantage.

Facebook apps like Swipely allow users to discuss their purchases with

others. Retailers like J.C. Penny and ASOS allow users browse through their

entire collection via Facebook and encourage users to share pictures of

items that they like or have purchased with their friends; encouraging

discussion about the retailers’ products. This ‘earned media’ reaches out

to other people, acts as a more trusted source of information and stays

around for a longer time. While people may not buy the clothes right

away, such earned media does help brands get a higher share of the

consumer’s mind.

Zappos.com boasts of having 442 employees on twitter; CEO Tony Hsieh

24was once ranked as the 42’nd most followed of all twitter users. Positive

comments from Zappos’ loyal consumer base helps the company portray

a very good brand image giving the company free earned media.

Wall-mart’s $300 Million acquisition of Kosmix is a sign that big retailers

are taking a serious look at social media. Sears has already launched its very

own social networking site called MySears, which has more than 20,000

23visitors every day.

However this opportunity comes with its own set of challenges. Privacy

concerns remain high as ever. The failure of Facebook Beacon as

compared to the success of Amazon’s Giver and Grapevine has shown

that social media users want to have complete control of their account.

Retailers must be sensitive to these concerns if they are to tap into the

power of social networking. Furthermore, managing consumer

expectations in a real time environment can be very challenging. A recent

survey by Nielsen showed that on an average, 40 percent people are

more likely to share any negative experiences online as compared to any

10positive experiences. Dynamic and responsive Social Reputation

management is becoming very critical for fashion brands.

Fashion and Apparel being a high involvement product, consumers do

share a high degree of enthusiasm about their purchases. The attention

enjoyed by the large number of videos ‘Haul videos’ on YouTube indicates

this. Many retailers like J. C. Penny and Marshalls have been known to

distribute gift cards to shoppers to create such videos. Other retailers such

as Forever21 and American Eagle Outfitters regularly use social media to

share their products’ haul videos. Social networks present a huge potential

to marketing managers who always find themselves wanting to do more

with the limited resources at hand. While social networks might not lead

to direct online sales, they help organizations develop deep customer

insights and provide opportunities to seed creation of a vast resource of

"Haul videos", homemade online videos in which women and young girls show off their bargain-hunting triumphs, or "hauls," have gone from being an internet sensation to a lucrative business. There are almost 300,000 haul videos

55currently on YouTube, with several getting millions of views.

A Facebook update now enables online retailers and other sites to easily add relevant Facebook comment boards to their product pages. Additionally, new comments posted on merchants' sites will also automatically post on Facebook

56when shoppers are signed on at the social site.

Tesco has acquired digital world-of-mouth agency BzzAgent in a deal said to be 54worth $60m (£37m).

10

earned media and to The success of their social investments will greatly

depend on their creative use of these opportunities.

5. Increasing input costs will force

fashion retailers to relook at

operations and pricing

US Bureau of Labor Statistics clearly show that prices

of apparel in urban America have been declining for

more than a decade now. This trend can be seen in

other geographies as well. However, Fashion retailers

will now find themselves in unfamiliar territory as rise

in costs of raw material, international freight and labor

exert huge upward pressures on their prices. Fashion

retailers will now have to further diversify sourcing,

increase prices and introduce more efficient

manufacturing practices.

When Uniqlo’s was relaunching it’s e-commerce portal in UK, it ran a

very successful campaign called ‘Lucky Counter’ on the site’s ‘Under

Construction’ page. According to the scheme, visitors had to tweet

about one of six Uniqlo’s products that they wished to receive at a

discount price when the portal was launched. The product that would

get maximum tweets would be sold at a discount price, the extent of

discount depending on the number of tweets received for that product.

The campaign was so successful that Uniqlo made it to twitter trends

during that month giving a boost to Uniqlo’s brand awareness.

Apparel retailer H&M has taken advantage of the location based

element of the game ‘MyTown’. H&M was one of the first brands to sign

on the games new feature called Product Check-In, which encourages

its players to check into real world stores and scan barcodes. Through

MyTown, H&M was not only able to reach out to its 2.8 million players 25but also increase footfall in its stores via Product Check-In.

The cost of raw materials has gone up significantly in the commodities

market. Consider cotton, which has increased by more than double in the

past two years. Industry expects this price rise to continue in the near

future as well. Earlier this year, US which is the world’s largest cotton

exporter is reported to have sold out all its cotton from the coming

harvest while the fourth largest exporter, while Australia which is the

fourth largest exporter has sold out up to 80% of its cotton from the

26coming harvest.

Spot Prices of cotton (cents per pound) as per the Cotlook ‘A Index’

Cotton is a major raw material in most apparel. It is estimated that a pair of

jeans on an average cotains almost 2.5 lbs of cotton. Change in cotton

prices will have a very significant impact on the cost of apparel production.

Below diagram shows impact of cotton prices on price of clothing.

Wool prices in Australia, the world's biggest producer and exporter, may extend gains from the highest level in at least 16 years before new supplies

57later in the year bring down costs.

Rising oil prices, cotton shortages and increased demand are driving unusual 58price increases in polyester.

11

Prices of other commodities have also risen sharply. Fashion retailers canot

simply ‘blend’ their way out of this problem. High prices of cotton and oil

have already caused a 20 to 25% increase in polyester prices. Wool prices

in Australia, the bigest producer and exporter of wool, have surged 39 %

this year, reaching a 16 year high.

Rising cost of labor is prompting apparel manufacturers to diversify

sourcing from China and look towards other low cost regions as well. In

the past 5 years, hourly wages in the apparel industry in China have

increased by more than 80%. This year, wage hikes will be even higher - at

28about 20%. Apparel making is a labor-intensive activity with labor costs

29estimated to account for almost 15 to 20 percent of the product cost.

Increasing international freight is further adding to these costs. As a result,

many companies like Ann Taylor, J.C. Penny and Coach are considering

shifting at least a part of their sourcing to lower cost countries like Vietnam,

Indonesia. Initial successes of these firms, will prompt other players to join

in too. Shipping figures for the last one year already show a shift of US

imports of apparel and footwear from China to South East and central

Asia. The graph below shows quarter wise reduction in the proportion of

US imports of menswear from China. Chinese manufacturers will now

have to embrace better manufacturing practices and improve their

productivity and maintain their competitiveness.

It is necessary to understand that although companies might not shift their

entire production out of China, a ‘China plus’ lower cost regions strategy is

likely to be adopted. Amidst all this, fashion retailers can be expected to

continue diversifying their sourcing.

US Bureau of Labor statistics clearly show that apparel prices have been on

the decline for more than a decade now. However, Apparel makers and

retailers will no longer be able to absorb these immediate increases in input

prices and will have to pass it on to their customers – deviating from a

12-year-old trend of declining (real) prices. Many retailers have already

announced at a 10% to 15% hike in prices because of increase in raw

31material, transport, labor and other input costs. Some of these include

Nike, Brooks Brothers, Levi Strauss & Co., Wrangler jeans maker VF Corp.,

J.C. Penney Co., Steve Madden.

6. The Cloud, SaaS and BPaaS

Cloud computing has for long been seen as the solution to optimizing costs

in the wake of scaling business needs and limited IT Budgets. The recent

Gartner CIO Survey (Jan-2011) identified ‘Cloud Computing’ as the top

technology priority for CIOs worldwide. The survey also claimed that about

43% of CIOs would see majority of their IT needs fulfilled via Cloud

Applications or SaaS within the next 5 years.

Retail has traditionally been a low margin business. This perhaps helps to

understand the high level of awareness about cloud computing in this sector

as uncovered by a recent Forrester research. Cloud computing offers a

As retailers continue to optimize their business

processes in domestic and global markets, they are

increasingly inspecting what is core and what is not. To

satisfy this trend, leading technology and solution

vendors are offering “pay as you use” based models for

various retail processes and technology needs.

Some of the retailers in US have already started collaborating to reduce

transport costs through an initiative called the ‘Empty Miles program’

through which they can share information about empty trucks on their 32return journey which then can be used by other members. Thus,

retailers who are members of this initiative will not have to pay for

round trips when they want to ship goods in one way only. Some of the

46 members are Macy’s, JC Penny and Wal-Mart.

As transportation cost continues to rise further, we may see more such

cases of industry wide collaboration.

12

33great opportunity to reduce IT opex by almost 30%. As retailers continue

to expand across national borders, cloud computing can help them in

starting their operations at significantly lower costs (capex).

With growing cross channel sales, increasing role of social media in

customer engagement and location based capabilities provided by mobile

solutions; customer relationship management faces new challenges.

Retailers now have on their hands a vast resource of information that they

could process to enhance customer experience. Up-scaling traditional

architectures to provide for these services will be very costly. Furthermore,

customer segment analysis done to identify distinct consumer segments

and efforts undertaken to market these segments deals with large amounts

of data and requires large computing power. Similarly, forecasting, ‘what if

analysis’ and other ‘on demand analytics’ carried out for determining

pricing, promotion & merchandising need large computing power,

although in lumps. Retailers need to be able to optimize their infrastructure

requirements taking into account traditional seasonal spikes as well. Cloud

computing provides retailers with high quality, scalable IT at lower costs,

“Eli Lilly & Co, the large pharmaceutical firm, recently completed data

analysis on a new drug using Amazon EC2. The total bill came to $89.

Had the company chosen to do the analysis in house, it would have to

spend on the 26 servers, software licenses, maintenance fees, data

center space as well as on power and labor. Choosing the cloud

computing route also helped the company speed up its product launch

by almost 3 months.”

Fashion retailers can too leverage the benefits of cloud for discretionary

analytics projects, which could provide them with better consumer

insights. Cloud computing can not only make way for such initiatives

that are held up because of prohibitive costs, but also speed up by

saving time which would otherwise have been spent on provisioning

and procurement.

enabling them to focus on their core business areas. It reduces the lead-

time for procuring and installing IT Infrastructure but also offers flexible

computing resources. Retailers can quickly ramp up or ramp down their

computing resources as needed. This makes clouds well suited for sporadic,

seasonal or temporary work, for finishing tasks at lightning speed and

processing vast amounts of data, thus helping retailers be more responsive

to changing market trends.

With growing e-commerce business, retailers will have to invest to upscale

their existing systems. Retailers are increasingly opting for cloud based

e-commerce solutions. An on-demand approach to IT reduces risks

involved in tapping new markets through e-commerce and makes

organizations more responsive. PoS have evolved from simple transaction

recording systems into complex solutions that have an impact on almost

every aspect of a fashion retailers business. As such, high availability PoS

systems that can process massive amounts of data are critical to business

success. Cloud based PoS solutions available in the market help retailers

overcome these challenges. A ‘pay as you go’ model further reduces risks

involved and helps match IT demand.

Other candidate areas for early cloud adoption as indicated by a recent

Gartner survey are SCM and procurement, enterprise payroll, HR.

eBay has bought a tiny PHP specialist (shopping engine specialist Magento) as a precursor to rolling out a massive cloud commerce platform-as-a-

59service for retailers, complete with an app-store fed by web developers.

Verizon's On-Demand Cloud Computing Solution Achieves PCI Compliance for 60Second Consecutive Year.

61Oracle Announces Cloud Infrastructure Stack.

13

Firms are still grappling with concerns before adopting cloud. Besides

security of data and service availability, the other problems are lack of

clarity on the amount of savings and assurance of consistent, responsive

support. Companies should consider various factors like business criticality,

security, process dependency, load stability, responsiveness, opex and

capex before deciding to move its applications to the cloud. Fashion

retailers can start by moving independent, non-mission critical applications

to cloud first to be able to better estimate the costs and savings involved in

transitioning to cloud and get an early view of potential problems areas

before moving their core systems to the cloud.

The benefits of cloud are huge and cannot be ignored. Many software

solution vendors have already started providing cloud-based service. The

shift to cloud remains inevitable.

7. Driving IT Optimization

Managing the organizations within the limited available

IT budgets has always been a tough balancing act for

most CIOs. With rapid cross border expansion,

consolidation – particularly in the luxury segment,

changing customer attitudes and rise of new CRM

opportunities, the fashion CIO’s budgets are further

stretched. In the Gartner CIO survey of 2010, many

CIOs said that they were digging into their opex to

accommodate cape requirements. Amidst all this,

opt im iz ing IT expend i ture becomes an

obvious choice.

Selling to today’s tech savvy customers makes IT investments imperative

for fashion retailers. Rapid cross border expansion is necessary to

capitalize on available growth opportunities. Growing online and

multichannel trend have already claimed a share of IT expenditure. With

newer growth opportunities like social CRM, mobility gaining prominence,

fashion retailers’ IT landscape is getting more complex. As ever-dynamic

markets force fashion retailers to focus on their core business processes, IT

outsourcing from fashion retailers is all set to increase in size and scope.

While traditionally, IT outsourcing only meant application support and

maintenance activities, nowadays it also includes areas like analytics and

business intelligence, testing and infrastructure management. With fashion

retail businesses spread across vast geographies, outsourcing of

infrastructure management can be attractive.

Fashion retailing faces uncertain times. Organizations would want to be

lean enough to be responsive to market forces. IT and back office need to

be flexible enough. Many IT service companies have started providing

outsourcing on a service based delivery model than a resource based one.

Such flex delivery model based non-linear outsourcing helps address the

pain points of traditional outsourcing models, reduces risks involved for

retailers and ensures that IT demand is exactly matched to supply. Flex

delivery model can help achieve predictable results and provide ‘on

Demand’ expertise.

Shared services have repeatedly proved profitable for saving costs as well

as being able to provide reliable and high quality service to business lines.

More than 80% of the Fortune 500 companies have deployed shared

services for some function or the other - the most common functions

being Finance, IT and HR. Even the mid size companies are now looking at

this model. Modularized ‘managed services’ offering by IT service

companies have made it possible for organizations to opt for outsourcing

some of the IT shared service processes. Shared services have shown

33significant success in cutting down costs in IT management – up to 35%.

Although cost reduction is the dominating perceived benefit of this model,

organizations are taking notice of other advantages as well. These include

62Nasscom sticks to its 16-18% growth forecast despite US economic woes.

The resource realities indicated in the 2011 CIO Agenda Survey raise the urgency and importance of adopting new infrastructure and operations

63technologies, such as Cloud services and mobile technologies.

14

pooling of expertise to allow flexible reallocation of human resources and

improvement in utilization levels, single point of service to ensure that best

practices are followed across the business and ability to streamline

organizations and introduce a higher capability for innovation and

absorption of rapid business changes. Besides these, establishing SSC has

allowed organizations to regulate discretionary spending at the business

unit level by introducing certain processes within the organization.

Deployment of IT and other advisory shared services is picking up recently

as can be seen from the below diagram.

Growth in IT shared services as compared to traditional services between

35the years 2007 and 2009

Businesses want to focus on core areas of their business and yet avail

consistently high quality of service across all its operating geographies.

With profit margins squeezing and fashion retailers trying to further

optimizing their IT.

Faced with challenges of an uncertain retail environment and

international expansion, fashion retailers will have to focus on further

optimizing their cost centers. Flex delivery model and shared services

outsourcing holds huge promise for fashion retailers.

8. Consolidation among software

vendors

A look at the top ERP solution providers (for fashion retailers) will show

an attempt to provide end-to-end, vertical specific solutions. This trend

Software vendors are now increasingly ‘verticalising’

their solutions. Leading vendors have resorted to

inorganic growth to fill in white spaces in their

portfolio. With recent acquisitions and mergers,

leaders are poised to provide “one stop shops” for

retail processes. Fashion retailers will need to pay a

close watch on which of these vendors is able to

provide integrated offerings of their portfolio. CIOs

will need to rethink their application portfolio

management strategies as acquisitions of “Best of

Breed” platforms and rise in BPaaS/SaaS solutions

continue unabated.

Top-tier data centre systems makers continue to roll out prepackaged hardware-and-software offerings as they look to grow their capabilities in the

65increasingly competitive converged infrastructure space.

(Outsourcing) Contract activity will "creep back throughout 2011,64as the recover stutters and buyers pull the trigger on sourcing activity.

15

has been achieved by significant mergers and acquisitions among software

vendors in retail domain in the past few years. 7 of the top 10 software

vendors (serving fashion retail) have pursued inorganic growth to

29transform their offerings into retail specific products . The two most

prominent motives are –

i. To f i l l i n g a p s i n t h e i r e x i s t i n g o f f e r i n g –

Today’s fashion retail business is a complex business requiring specialized

solutions for various aspects of the business. To be able to offer an end-to-

end solution that can compete with a system built with ‘Best-of-Breed’

approach needs specific skills that cannot be acquired overnight. Software

vendors have had to acquire other firms to be able to fill in ‘gaps’ or

strengthen their weaker offerings.

ii. To gain critical mass and make their solutions viable –

Software vendors had to ensure that a significant number of users make

use of their solutions. This helps pull in more partners who can then

provide system integration and support services. Quite a few acquisitions

have given software vendors access to markets where they would have

otherwise struggled.

As emphasis on SOA increases, it becomes easier to integrate these new

systems. Software vendors have benefitted from this and have been able to

integrate the newly acquired systems into their portfolio in a very

short time.

Consider the example of SAP. SAP’s acquisitions have helped it fill gaps and

improve its service offerings.

Acquisition of Sybase will give SAP full fleed data warehousing capabilities as well as access to mobile solutions.

Business Objects which was acquired in 2007, is provided aspart of analytics in SAP's retail solution.

SAP acquired Praxis in 2006 and got access to its web based CRM [Netpoint focus] and e-commerce [Netpoint commerce]

SAP acquired Triversity, which was a leading solution provide for POS, loss prevention and other solutions

SAP acquired Khimetrics in 2005 adding pricing andpositioning to its portfolio

Oracle

Micros-Retail

Snow Valley, eOne Group, Datavantage,CommercialWare Fry Inc., Redsky IT

IBMTriraga, Netezza, Outblaze (email service assets),Cognos, Sterling Commerce

Retek, Profitlogic, Seibel, Bharosa Inc, eServe Global, ATG, Advanced Visual Technology, 360Commerce, Demantra, Hyperion

These various acquisitions have allowed SAP develop its competencies

across different aspects. Many of these acquired competencies form a part

of SAP’s Business ONE and SAP end to end implementation for retailers.

SAP is not the only vendor to have followed this path. Other retail

software vendors seem to have followed a similar strategy. The diagram

below shows a few key acquisitions/partnerships that have helped

vendors strengthen their solutions for retailers.

The above list of acquisitions/partnerships is not exhaustive. Only a few of

the acquisitions after 2005 have been considered.

Adopting end-to-end solutions provides many benefits to fashion retailers.

It significantly reduces system integration efforts (capex), expenditure on

support and maintenance (opex), easier IT governance (single vendor

who owns end-to-end responsibility). Vertical specific solutions imply

reduced customization efforts and quick deployment. Furthermore,

vertical-specific solutions help businesses address problems that are

unique to them in a better way. E.g. Fashion retailers have unique

challenges with respect to merchandising, size profiling and the high impact

of product lifecycle on price. Vertical specific solutions help approach such

challenges better. As fashion-retail margins are comparatively low,

businesses are more inclined towards solutions that can be implemented

easily and get the work done. Although growth opportunities are available,

overall retail business environment remains challenging. Fashion retailers

will want to invest in IT solutions to gain an advantage over their peers in

such an environment. Most Fashion retailerss would rather prefer quick

returns on their investments than a long ERP planning and implementation

exercise that can stretch into years before giving out its promised benefits.

ERP vendors are being forced to pursuing inorganic growth after realizing

shifting customer preference for a quickly deployable, end-to-end

solution. Much of the inorganic growth has been achieved by acquisition of

‘Best of Breed’ solution vendors, who typically are smaller than ERP

solution providers. Fashion retailers are therefore advised to assess the

viability of a vendor before adding any ‘Best of Breed’ solution to

their portfolio.

MICROS-Fidelio UK has acquired UK-based Snow Valley, a provider of67e-commerce services and technology.

The combination of Sybase database and mobile technology has found a perfecthome at SAP, and SAP’s yearnings for a fast track to one billion users may

66have found its perfect home in Sybase.

16

Regional Overview

This section describes some prominent macro-factors

that will affect regional fashion markets.

North America

• As US unemployment continues to top 9% for 20 straight months now

– its longest streak ever - a stark polarization can be seen emerging in

the American market. A recent survey showed that the number of

shopping trips of families with income levels of more than $100,000

have gone up by 5%. While those with income lesser than $100,000

2have cut down on their shopping trips by 4%. The well off households

seem to be back to their spending habits while the other majority of

households are continuing with a cautious approach. The middle

segment retailers will thus face increasing price pressure from the

discounters and flash sale sites as discounting and promotions are

expected to continue at a feverish pace. They will have to differentiate

themselves by communicating their value for money and identify with a

particular market segment. High-end stores like Neiman Marcus will

return to better profits.

• The group aged 18 to 24, better known as the millennials will give a

boost to multi-channel and online shopping.

• Government Statistics estimate that more than a third of American

women to be obese and more than two third to be overweight.

However plus size clothing represents less than 17% of total revenue

sales (women’s clothing sales). This market continues to be

underdeveloped as most fashion labels shy away from producing ready

to wear clothes above size 14 due to concerns about image and

brand heritage. Consequently, the choices in this segment have been

very limited. Recently, there have been a few attempts to tap this

market by retailers like Forever 21 (Faith21), Target (Pure Energy) as

well as fashion labels like Marc Jacobs, Michael Kors. However, in

order to be successful in this segment, fashion labels will have to

develop specific skills. Tapping this market remains challenging.

South America

• Mexico and Brazil are two key markets in this region. With bulging

middle age population, a rapidly expanding middle class and

increasing disposable income, fashion markets will see strong growth

opportunities in this region.

• Brazil has traditionally been a strong market for apparel and footwear

with global retailers like C&A, H&M, and Zara having a active

presence in the region along with a few sophisticated homegrown

players as well. Besides being the fifth most populous state, Brazilians

also happen to spend the most among the emerging economies

5(in per capita terms) when it comes to fashion. Brazilian consumers

are considered to be very fashion conscious and more willing to shop

on credit for new clothes. Most apparel retailers have a joint venture

with Banks or have their own financial operations to support ‘store

credit cards’ which are estimated to support almost 70% of their total

transactions in certain cases.

• With Brazil set to be the host for 2014 Football World cup as well as

2016 Olympics, influence of sports on fashion trends will be strong.

17

Middle East

• Studies forecast Saudi Arabia to have highest growth in spending

power by 2015. The proportion of ‘under 15’ population is 39%, which

represent the rise of an internet savvy generation. Youthful

demographics are expected to drive sales in this region. Branded retail

continues to be strongly dominated by Western brands like River

Island Zara. Many new entrants like USA’s Foot Locker and UK’s New

Look are trying to expand their presence in the region. The retail mall

market in UAE alone is estimated to reach $26 billion by 2015 and the

7fashion industry is expected to grow at 15% this year.

• Growth in spending power amongst women in MEA region is

estimated to be to be the highest in the world. However, regional

religious beliefs could force companies to relook at

distribution strategies.

Europe

• The changing demographics of Western Europe will pose a challenge

to fashion retailers. In countries like Italy, Germany, Greece and Spain

the under 15 age band accounts for less than 15% of the population as

7 compared to 30% in other emerging markets. The age group 45 to 59

is looked up to as the next opportunity market. Although this age

group has higher purchasing power, they tend to be more

‘sophisticated’ consumers and typically spend a lesser proportion of

their earnings on clothing. The recent success of NYDJ (Not Your

Daughter’s Jeans) has shown that this segment can be targeted

profitably. Working women constitute for 43% of Europe’s working

7population and hence are likely to emerge as a key segment. The

Eastern Europe the age groups 17-29 will contract while age band of

30-44 will emerge as a highly attractive consumer base. Fashion brands

will have to realign their focus on this market as well.

• The Department for Environment, Food and Rural Affairs – a UK

government agency launched its ‘Sustainable Clothing Action Plan’ in

2009 encompassing various initiatives that address the impacts across

the lifecycle of our clothes, from take-back recycling schemes in stores

to carbon labels and use of organic materials. This plan has brought

together over three hundred UK fashion & textile organizations, from

high street retailers, to designers and textile manufacturers to battle

the environmental impacts of the fashion industry. Major retailers like

Mark and Spencer’s, Tesco, Sainsbury have already signed up on a

variety of actions to increase their ranges of Fair trade and

Organic Products.

Asia-Australia

• China’s working population will show negative growth for the first

time in by 2013. However, the proportion of people in the age groups

of 60 and above will be only about 13.3%. Rapid increases in wealth,

shifting attitudes towards luxury goods and rapid urbanization will

make China the world’s largest consumer of luxury goods by 2015

reaching 180 billion RMB (US $27 billion).

• Japan's luxury market has been among the hardest hit by the global

economic crisis. Post natural crisis, an increasing number of Japanese

consumers are avoiding conspicuous consumption. Almost a third of

the respondents in a recent survey claimed that they might not return

to their luxury spending habits even after the economic crisis

has passed.

• Growing costs of production, low availability of labor, in China will

force its apparel makers to look for methods to increase productivity.

Meanwhile, global fashion brands like Chico’s, Coach, J.C. Penny have

already started looking at diversifying their sourcing by shifting a part of

it to other lower cost regions for sourcing like Indonesia, Vietnam,

India and Bangladesh.

• Increased incomes, urbanization and growth in organized retail have

made India one of the fastest growing fashion markets in this region.

Increased fitness awareness have helped growth of ‘sports inspired

casual wear’ where sportswear brands like Reebok, Adidas, Nike have

taken up a major chunk of the casual wear market. Over the counter

fabric sales (ready to stitch clothing) still constitutes 23% of the market

and is expected to grow at 5% annually.

• Growth in Australian expenditure on clothing and footwear is

expected to remain sluggish to 2015, with the CAGR of less than 2%.

The region’s most rapidly expanding population segment is that of

‘over 65’ and the second most rapidly growing segment will be that of

‘under 15’. Value conscious consumption will be the overall trend in

this region.

18

Wipro Fashion Retail Services and Solutions

This section describes our services and solutions that

helps create and maintain market leaders.

0Wipro’s dedicated fashion retail team has been providing 360 IT services

to global fashion, apparel and footwear retailers. Our 2,000+ fashion

strong fashion consultants have helped create leaders in apparel retailing.

• Our team works with leaders in every part of the globe including US,

UK, Middle East, Asia and Pacific

• Dedicated team of 130+ domain experts - Fashion Advisory Services

• 80% of workforce is certified on both domain and

technology competencies.

• Wipro’s Strategic alliances with Oracle Retail (Tier 1 Partner), SAP,

IBM, Microsoft and best of breed vendors enables us to advise and

implement best in class IT solutions for our customers

• Wipro Fashion Lab of the Future that drives Innovation fueled by

technology advances

• A host of SaaS based solutions developed by Wipro that covers the

entire spectrum of fashion retail

Wipro’s fashion practice offers 4 services that cover the entire spectrum of

needs for our customers:

1. Business Transformational Services

2. Customer Experience Services

3. Operational Excellence Services

4. Technology Transformation Services

Business Transformational Services

Wipro’s Fashion Advisory Group, a team of 200+ consultants provides

strategy, process excellence and change management services. Coupled

with our 3,000+ strong global delivery teams, our teams have enabled true

business transformation enabling retail leaders. Wipro’s fashion advisory

services have enabled customers to expand globally, define and execute

seamless omni-channel strategies & achieve retail operational excellence.

Customer Experience Services

Wipro’s dedicated Fashion Customer Experience Practice helps fashion

retailers gain a better understanding of their customers across all touch

points and at various stages of the customer lifecycle. This team is backed

by professionals from the industry, fashion schools, consulting and

technology backgrounds focusing on stores, e-commerce, mobile, social

media and contact center. CXP service offerings include development of

customer experience roadmap (CXventure), e-Commerce experience

(i-perience), personalization (all4one), customer loyalty programs

(loyalight), workforce training (Coach), marketing solutions (marketmine),

cross-channel solutions (X-channel) and channel specific services (X-go

and X-touch). A decade of experience in implementing cross channel

e-commerce and store systems has enabled our Fashion practice to offer

unparalleled value to our customers. Wipro has invested in creating

ENCORE, a digital commerce eco-system, based on leading technologies

in the industry and enables fashion retailers to achieve significant ROI and

time to market. Wipro’s ‘ClickLoyalty’ platform drives a greater share of

the wallet and engages consumers in a long-term relationship. It covers

multi level rewards and promotions along with superior loyalty analytics.

Our teams have enabled retailers achieve greater understanding of their

target markets, micro-merchandizing and targeted promotions through

our customer centricity solutions.

Operational Excellence Ser vices

Fashion retailers have unique supply chain challenges due to the

seasonality, high external collaboration touch points and high impact of

product lifecycles on pricing. Wipro has a dedicated Fashion Operations

practice that leverages our expertise across merchandizing, supply chain

consulting, planning, execution and analytics to help retail companies

worldwide. Wipro has invested in creating ‘ProfitLock’, a solution that

provides retailers a 360-degree view of shrink lifecycle and enables to

proactively and reactively manage shrink. Wipro manages the supply chain

for some of the world’s largest fashion and footwear companies.

For fashion retailers, demand shaping is as important as demand

forecasting. Large number of SKUs, frequent use of OTB and unique ‘size

profiling and optimization’ challenges make merchandising and pricing

very complex. Wipro is a leader in implementing merchandizing platforms

such as Oracle Retail and SAP Retail. We are premier partners with

19

vendors that provide technologies and platforms for managing

Retail operations

Wipro’s Corporate Retail Practice offers solutions for HR, Finance and

Payroll. Our enterprise applications services team, a 20,000+ pool of

trained resources, implement leading technologies for our customers.

Coupled with our strong BPO teams, we offer a complete array of services

for managing your vendors, employees and partners.

Technology Transformation Services

Wipro’s Technology Infrastructure service provides Infrastructure

optimization service, Infrastructure management service and

‘Infrastructure set-up and provisioning’ on a pay per use basis. Wipro’s

investments in Managed Service Quantum Innovation (MSQI) have

helped it develop unique business and technical capabilities in remotely

manage domain and building infrastructure. This helps Wipro’s customers

achieve significant cost optimization, streamlined in-store operations, real

time visibility and control of assets and optimize in-store energy spending.

Fashion Lab of the Future

Wipro has invested in creating a Fashion Lab of the Future that researches,

pilots and harnesses technology innovations to create significant business

opportunities for our customers. Several of our innovations have become

part of our customer’s Store of the Future. We have partnered with our

customers in their innovation journey in creating tools that have endeared

consumers and created a lasting relationship. Some of our

innovations include:

• ‘Web presence Sentinel’ – a tool that allows fashion retailers to

monitor and track their online presence

• Cnergy, SRM (social reputation management), SEA (Search Engine

Analyzer) and SocialMojo help fashion retailers engage customers via

social tactics

• Shopping Yoda – a handheld platform, TINA – the next generation

store associate, Fashion Surface all enable a superior in-store

shopping experience

This industry update has been created by Wipro Fashion Retail Practice.

Principal authors include:

1. Gaurav Kawale – Associate, Fashion Retail

2. Devikala Gopalakrishnan – Manager, Fashion Retail

3. Puneet Yadav – Associate, Fashion Advisory Group

4. Garima Beniwal – Associate, Fashion Advisory Group

5. Sathiyanarayanan Vijayaraghavan – Practice Head, Fashion Retail

We would like to thank various member of Fashion Advisory Group,

Fashion Solutions Technology Group and other members that have

contributed to this effort.

20

References -

1. Datamonitor – various Apparel and Footwear Industry Reports

for 2010

2. Nielsen 2011 Outlook

3. A. T. Kearney: 2010 Global Retail Development Index

4. McKinsey Insights China: Understanding China’s love for luxury

5. McKinsey Quarterly: How half the world shops

6. A. T. Kearney: 2008 GRDI

7. Euromonitor: November 2010

8. Mintel: February 2011

9. Forrester and Bizrate: Dec 2010

10. Nielsen: Trends in online shopping 2010

11. Forrester Research Online Retail Forecast, 2009 To 2014 (US)

12. Forrester: Web’s impact on in store sales

13. Forrester: Luxury e Business Adoption

14. Accenture: Dec 2010

15. Brand Anywhere and Luth Research, 2010

16. McKinsey Research: Rebirth of Luxury, Sep 2010

17. Big Research, 2010

18. Forrester: Online Marketing Benchmarks

19. Forrester: State of online retail 2011

20. Forrester: Will Facebook drive e-commerce, Apr 2011

21. Nielsen: Online Consumer Behavior 2009

22. Macworld press release – Aug 2010

23. Hypestat.com

24. Inquisitor, 2008

25. RIS news: Feb 2011

26. Bloomberg: March 2011

27. Robert Antoshak, Olah Inc, Feb 2011

28. Accenture: Wage increase in China, 2011

29. WSJ – Jun, 2010

30. Reported from PRNewswire, source: Journal of Commerce / PIERS

31. CNBC - Feb 2011

32. RIS News top 10 software vendors for apparel retailers

33. Wipro Research

34. Deloitte Global Shared Service Survey – 2011

35. Deloitte Global Shared Service Survey – 2009

36. WSJ as on June 15, 2011

37. Reuters in May 2011

38. Reuters in Jun 2011

39. Kyiv Post in Jun 2011

40. The Tennessean in Jun 2011

41. Shop.org in Apr 2011

42. Shop.org in Mar 2011

43. Mint in Mar 2011

44. Reuters in Jan 2011

45. Liverpool Echo in Jun 2011

46. fashionunites.co.uk in May 2011

47. Shop.org in Apr 2011

48. Shop.org in Apr 2011

49. Shop.org reported in Apr 2011

50. Shop.org reported in Apr 2011

51. Shop.org reported in Mar 2011

52. Shop.org reported in Mar 2011

53. Shop.org reported in Apr 2011

54. in May 2011

55. ABC News in May 2011

56. Shop.org in Mar 2011

57. ET in Jun 2011

58. Specialty Fabrics Review magazine in Jun 2011

59. theregister.co.uk in Jun 2011

60. PRNewswire in Jun 2011

61. WSJ in Jun 2011

62. ET in Jun 2011

63. Gartner CIO survey 2011

64. cio.com on 2011 outsourcing trends

65. eWeek in Jun 2011

66. IW in May 2011

67. Press Release in Apr 2011

21

About Wipro Technologies

Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company, that

delivers solutions to enable its clients do business better. Wipro Technologies delivers winning business outcomes through its deep industry experience and a

360 degree view of “Business through Technology”– helping clients create successful and adaptive businesses. A company recognized globally for its

comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization wide commitment to sustainability,

Wipro Technologies has 120,000 employees and clients across 54 countries. For more information, please visit www.wipro.com

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