High prices left shopping bags lighter

Swetha Kannan Chennai | Updated on March 12, 2018 Published on December 28, 2012

The economic slowdown forced retailers to tighten the supply chain and revise sourcing strategies. — R. Eswarraj

Apparel industry saw demand pick up slowly in festival season

For the apparel industry, 2012 was a challenging year. Barring the end-of-season discount period, consumers didn’t exactly throng the shopping malls and high streets. The shopping bags were certainly lighter than the previous year and average bill sizes too dropped, courtesy hefty price tags.

Apparel retailers saw a value growth of 8 per cent, compared to 12 per cent the previous year. Volume growth of 4 per cent was more or less similar to the previous year, according to Arvind Singhal, Chairman, Technopak Advisors.

J. Suresh, CEO, Arvind Lifestyle Brands, said the slowdown effect was felt the most from March to September. With the festival season, the demand picked up slowly, he said.

The biggest deterrent was the price, of course. Reeling under a weak rupee and high raw material costs, most retailers had hiked retail prices in 2012. “Having said that, consumers are slowly getting used to high prices and realising that one cannot get anything good without spending for it,” said Jacob John, Brand Director, Louis Philippe.

Clothing is still a fundamental need and this is what kept retailers going, despite the inflationary environment. Consumers looked for clothes which offered good value for money, said Singhal. “While brands at the luxury end were generally not impacted, the mid-end of the spectrum felt the brunt the most. Value retailers such as Pantaloons, Reliance Trends and Max did reasonably well.”

The slowdown forced retailers to tighten the supply chain and revise sourcing strategies.

Louis Philippe, for instance, is focused on replenishing stock faster, reducing inventory pile-up at stores and warehouses and reducing lead time taken to manufacture a piece of garment. “We are working with bigger mills that are more stable and supply on time, instead of several small players,” said John.

Peter England too is working with fewer vendors to achieve economy of scale. The brand has also cut down on imports due to the rupee depreciation, said Kedar Apshankar, COO.

As the New Year unwraps itself, apparel retailers hope for a brighter weave.

Arvind Brands’ Suresh said, “Growth will come back in terms of walk-ins and sales. It may not be like 2010 and 2011, but it will certainly be better.” Apshankar expects consumer sentiments to lift with interest rates softening.

But retailers are not getting carried away as they believe in opening stores with caution. Every store must count and there is no point in running stores that are not making profits, concur retailers.

Technopak’s Singhal advises retailers to focus on building women’s wear and denims in a big way. Niche categories such as women’s intimate wear and active clothing must also be exploited.

Bangladesh offers fairly good competitive advantage and retailers must look at sourcing from this market in a big way, advised Singhal.

Published on December 28, 2012
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