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Indian apparel retail giants continue to expand
05
Jan '12
While the world is apprehending a slowdown in the midst of ongoing financial crisis in Europe and the US, big apparel retail firms in India are continuing to expand in the country.

Apparel retailer Shoppers Stop has opened 11 stores in the current financial year, taking the tally of its outlets to 49. Reliance Trends, another major apparel retailer opened 30 new stores in 2011.

Speaking to fibre2fashion, Mr. Govind Shrikhande, Managing Director of Shopper's Stop Ltd., explained, “Although the short-term market conditions appear tough and uncertain, long-term prospects are bright. It is because retail market in India is large and the share of organized retail is minimal. The multiple advantages of favourable demographics, income growth and increasing aspirations provide tremendous potential for growth of organized retail in India.”

Mr. Shrikhande believes 2012 will be better for apparel retailers. He avers, “Apparel retail has suffered a lot during April-December 2011, due to the twin blows of rise in cotton price and the levy of excise duty on apparels. Both these factors impacted retail prices by 15 to 20 percent, resulting in loss of sales volume, which in turn, resulted in higher inventories and loss of profits.”

“Compared to this, 2012 should be better as cotton prices have softened and Government is expected to rollback the excise duty. This would help in reducing retail prices on apparel by at least 5-8 percent, and thus revive volumes once again,” he adds.

Mr. Arun Sirdeshmukh, CEO of Reliance Trends, agrees, “The term slowdown applies to some segments and not to others. For large format retailers like us, as long as we have good quality affordable clothing and we remain connected with consumers, people welcome us. There will be ups and downs in sentiments but the fundamentals will remain and we do not see any reason for us to slow down at all. Fundamentally, there is nothing that changes our view. Our business outlook for the next two years is very bullish.”

About 2012, he says, “We opened 2011 with 42 stores and ended at 72 stores. In 2012, too, we will continue to open more stores at the right places and time and grow aggressively throughout the country.”

Analysing the expansion strategy of these retailers, Mr. Harminder Sahni, MD of management consulting firm Wazir Advisors, says, “These retailers are in the investment mode and they will continue to invest. For them, slowdowns and rising costs are a part of their business. And, unless and until they expand their business, it will be even worse for them. Retailing is a business where you need to continue to invest and expand.”

“During the last downturn, most of these retailers had not figured out their models. But now, many of them are more confident about the formats that they have and when they need to expand, whether today or two years later. The only thing that can put a break on their expansion is the lack of availability of capital,” he adds.

Commenting about future scenario for apparel retail, he says, “The year 2012 will remain challenging for apparel retail as there is a lot of competition with many brands vying for the same customer and more and more brands are ready to offer better prices. However, the market will continue to grow as everyday new consumers are joining the consumption bandwagon.”

Fibre2fashion News Desk - India


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