Indian apparel retail sales to decline in S/S 2012

20 Feb '12

3 min read

Indian garment retailers are likely to witness their sales going down in the Spring-Summer 2012 season.

The good sales clocked during the end-of-the-season-sales (EOSS) last month mean that the consumers may not make their usual number of purchases during the approaching season.

The weakening of Indian economy, high inflation, the continuation of excise duty on branded garments and high cost of raw materials are the other factors that are likely to affect apparel sales during the forthcoming season.

Speaking to fibre2fashion, Mr. Rahul Mehta, President of the Clothing Manufacturers Association of India (CMAI), said, “The slackening of Indian economy, plus the high inflation, has definitely made an impact on the overall sentiment that is prevailing in the market. It has made apparel a discretionary purchase and therefore it can be postponed and purchases can be put on hold.”

“The situation is further worsened due to the specific effects of excise duty and high raw material costs. All these factors added up to give us some of the lowest results in the July-December period of last year. This can partly be confirmed by the sales during EOSS period in January, where most retailers have declared very good uptake. This indicates that consumers were postponing their purchase and purchased during EOSS in good measure because of the discounted prices. Even foreign brands have offered discounts up to 70 percent in their EOSS,” he adds.

Forecasting about Spring-Summer 2012 sales, he says, “The sales during EOSS period appears to have gone well. This, unfortunately, will again result in sales going down in the Spring-Summer 2012. I do not see the Spring-Summer 2012 going very happily for the apparel industry in India.”

However, Mr. Mehta hopes a turnaround for the apparel industry during the second-half of the year. He says, “During the last two seasons, the industry has suffered and has seen itself stuck with huge inventory and therefore they had to give heavy discounts during the EOSS period. So, this year Spring-Summer, I believe, excess production, pile up of inventory etc. will be controlled very strictly by most brands and retailers. And, therefore, there will be some kind of a turnaround in the latter half of 2012. I also hope that with inflation coming slightly under control, the overall sentiments will also improve and am hopeful of a better second half.”

He suggests retailers to be cautious in procuring their inventory and says, “I hope this spring-summer, the brands and retailers will not repeat the mistakes of excessive and optimistic production made last year. Lower inventory in the beginning of the season will bring discounts and the sales period under control. It will improve the consumer demand for apparels at regular prices.”

Analyzing further, the CMAI President opines, “This may affect the top line, but it will definitely improve the bottom line. Today, the top line is under reasonable growth, but the bottom line has been wiped out because, instead of selling at 30 percent discount during the EOSS, retailers had to sell at 50-60 percent discount. In fact, brands and retailers held much higher percentage of their sales as discounted sales this year as compared to the previous year.”

Fibre2fashion News Desk - India

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