A Profit Story.

The year 2017 is the first time the Pakistani clothing market hit Rs1 trillion in consumer spending (according to an analysis conducted by Profit based on data from the Household Integrated Economic Surveys, published by the Pakistan Bureau of Statistics). It is also the year the biggest brand in the industry – Khaadi – learnt about both the benefits and the costs of being the market leader, with a very public labour dispute and a string of negative stories published about it in the print media.

In the nearly two decades it has existed, Khaadi has gone from being a small store on the corner of a narrow street in Karachi’s Zamzama commercial area to become the industry-defining brand in Pakistan’s retail fashion sector. On the way, it has created, expanded, and conquered market that was virtually nonexistent prior to Khaadi’s launch in December 1999. Yet even as it stands as the clear champion of a rapidly growing market, Khaadi’s future has never been more precarious. In the next year or two, the actions of Khaadi’s management, particularly founder and CEO Shamoon Sultan, will determine whether it becomes a true national (and possibly global) corporate icon, or whether it will wither and fade away into obscurity.

Expanding locally, and globally

While Khaadi clearly started as a passion project focused on selling khaddar clothing, it did not stay that way for long. Shamoon and Saira may have an artistic passion for the products they create, but they are clearly commercially focused as well, launching women’s clothing lines, pret, and lawn. The company sells both readymade garments and unstitched fabric.

The company began expanding its presence, first within Karachi, then on to Lahore and Islamabad, followed by eight other cities across Pakistan. By 2010, Khaadi felt confident enough to make its first foray into international retail, setting up a in Dubai, followed quickly by a store in Abu Dhabi. In 2013, Khaadi began opening stores in the UK.

The evolution and expansion of Pakistani fashion

While Khaadi has been remarkably successful, its success needs to be placed in a broader context: the rise of the Pakistani middle class, specifically the rise of the working woman, who has enabled families to rapidly expand their household incomes and move out of subsistence living and towards a truly consumption-oriented economic existence.

Pakistan’s female labour force participation rates have increased dramatically, from 16.2% in 2001 to 23.4% in 2015, the latest year for which data is available from the Labour Force Survey conducted by the Pakistan Bureau of Statistics. As a result, household incomes have risen to Rs34,707 ($333) per month, according to data from the 2016 Household Integrated Economic Survey. That represents an annualized increase of 9.3% per year over the past 15 years (5.7% in US dollar terms).

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