Rupee fall may not suit some apparel brands

While the rupee depreciation has not had an immediate impact on the apparel industry, consumers may have to brace themselves for a retail price hike (again) in the case of brands that have a large import composition.

“The rupee depreciation, close on the heels of cotton price rise and excise duty, will be a big blow for us,” says Mr Ajay Ramachandran, Brand Director of formal-wear brand Van Heusen, which imports nearly 30 per cent of its fabrics (especially suit fabrics) from China, Korea and Indonesia.

“The price reduction we had planned in spring-summer – to pass on the benefits of softening cotton prices – is unlikely to happen. In fact, there could be a price hike in spring-summer.”

Mr Jacob John, Brand Director, Louis Philippe, which also has 30 per cent import content, fears a “severe” impact on margins. “There will be a 10-15 per cent rise in input costs for the spring-summer merchandise next year. If the situation worsens, we may have to pass on the extra cost to consumers.”

Consumers have already faced two rounds of price hikes this year, under the double whammy of increases in cotton price and excise duty.

Brands such as Calvin Klein, Tommy Hilfiger, Benetton and Blackberrys, which import a lot of garments or fabrics, could also face rough times ahead, says an industry observer.

Arvind, the licensee of Gant, a premium Swiss brand of American origin, is looking at a possible price hike. Unlike the other brands of Arvind, nearly 70 per cent of Gant is imported from China and Europe. “If the exchange (rate) situation continues till February, we may take up prices of Gant by Rs 200,” says Mr J. Suresh, Managing Director, Arvind Brands.

A Gant shirt costs between Rs 3,500 and Rs 4,000 today.

There will be no large-scale impact on those brands that have less import content – such as Arrow and Flying Machine wherein imports are just 10-15 per cent, says Mr Suresh.

The rupee depreciation has not caused any immediate impact on most retailers as the current stock in the stores were purchased well in advance. In fact, Indian Terrain has closed bookings till spring summer.

“Buying for our next season (autumn-winter) will happen in February-March. If the rupee continues to depreciate, we will then have to take a whole host of decisions – on how much quantity to import, if we need to take up retail prices or if the impact can be absorbed. But it is too premature to predict anything now,” says Mr Charath Narsimhan, CEO of the casual-wear brand Indian Terrain.

Cotton prices have softened in the last few months. Continued downward trend in cotton prices could offset any negative impact of the rupee depreciation in the future, adds Mr Narasimhan.

Indian Terrain imports 10 per cent of its requirements (niche fabrics and outerwear) from China. It also sources a range of ‘Made in America' jeans from Guatemala.

Should brands step up local sourcing? “We may have to look internally more but it will take time. Plus, certain kinds of specialty fabrics and fine cottons are just not available in India,” laments Mr Ramachandran.

Says Indian Terrain's Mr Narsimhan: “Our ‘Made in America' range offers a certain lifestyle concept to consumers. We cannot abandon that just because the currency is behaving a certain way.”

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