Stock pile-up forces retailers to advance clearance sales

| | Updated on: Jul 02, 2011
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Price hikes by firms to offset rising costs begin to tell

Unlike previous years, the end-of-season-sale in apparels has begun a good three weeks ahead of schedule.

Retailers and manufacturers say that inventory has piled up owing to a steady rise in prices in the past three months. Sales have dropped almost 20-30 per cent.

Apparels, which are one of the fast selling categories on the retail shelf, have been seeing a slump since the price hike came into force. Margins too are under severe strain owing to high finance charges, labour and production costs, among other things, said a slew of retailers and manufacturers Business Line spoke to.

Brands such as Woodland, Lee, Esprit, Mango, Allen Solly, Levi's and Celio have started clearance sales to attract footfalls. Big retailers such as Tata-owned Westside and Spencer's too have followed suit. Mr Harkirat Singh, Managing Director, Woodland Shoes and Apparels, said: “This year, peak season sales were not up to market expectations. Since we sell shoes and apparels, the impact has been marginal on us. However, in apparels, we are noticing inventory pile-up. We hope the end-of-season sale will perk up demand”. He said the real impact of the price hike can be gauged only after the end-of-season period. “Sale period is an important part of the yearly calendar with almost 25 per cent of annual sales coming during this period. We hope this will attract buyers”.

An Allen Solly official, too, admitted that it had to put up the sale sign due to pressures from competitors. Mr Amit Pande, Retail Director, Allen Solly, said, “Our competition has started the sales early. So we were forced to respond. However, we plan to close the sales early as well.”

On price rise, he said: “In our case, so far, the impact has been mixed. The market is yet to absorb new prices. If sales drop due to the price rise, the inventory pressure will be high. The new priced stock has just started arriving so the impact is difficult to gauge. In the next season, the full impact will be visible. If the economy slows down we will be in a difficult situation”.

Meanwhile, a Clothing Manufacturers Association of India (CMAI) report submitted to the Textile Ministry sought removal of the tax to slash prices of apparels and boost demand.

Published on July 08, 2011

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