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Consumers, who have been battered by hefty apparel prices the last few months, may have to grin and bear for some more time. Even with cotton prices dropping by nearly 60 per cent in the last few months, it will take another six months before consumers can heave a sigh of relief.
Cotton prices increased by 200 per cent in the last eight months, peaking to Rs 63,000 a candy in March. It then dipped 60 per cent to Rs 39,000 per candy.
Retail prices
A natural fallout of this should be the softening of retail prices. But, most retailers bought fabrics at a time when cotton prices were ruling high. They had also stocked up for the next few months (as is the usual practice); hence, retailers say, they cannot pass on benefits to consumers immediately.
Retailers such as Indian Terrain and Indus League are planning a price correction during the spring-summer 2012 season (March-April). While Arvind Brands does not expect to reduce prices, its proposed retail price hike in April may not happen.
However, Van Heusen, which has bought fabrics only till September-October, hopes to pass on benefits soon. “Consumers can expect a relief of 5 per cent in November,” says Mr Ajay Ramachandran, Brand Director, Van Heusen, from Madura Fashion & Lifestyle.
Apparel brands had hiked retail prices in March this year, under the double-whammy effect of spiralling cotton prices and excise duty. Arvind Brands, which retails brands such as Arrow and US Polo, had hiked retail prices by 15-20 per cent. Madura had hiked prices by 5-10 per cent across its brands.
“The price hike affected our volume sales in summer by 5-10 per cent,” rues Mr Ramachandran. Indian Terrain saw volumes remain flat during spring-summer this year (over the same period last year); there was 12 per cent value growth, according to Mr Amitabh Suri, Senior V-P, Indian Terrain.
While summer saw a dry run, retailers managed to catch up during the recently concluded end-of-season sale in July-August. “This shows price is a crucial factor given the inflationary environment and overall consumer sentiments,” says Mr Ramachandran.
With discount sales ending and apparel being sold at full price, Mr J. Suresh, MD, Arvind Brands, says the next few months will be quiet, except in Kerala and Kolkata due to Onam and puja season.
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