July was the first month when the industry emerged after clearing pre-GST inventories. “Interestingly, GST augured well for organised players, as bigger brands and organised players were quick to adapt, and this is evident in the Apparel Index of various brand groups,” CMAI said in a press release on Apparel Index research conducted by DFU Publications.
Bigger the brand group, higher the growth was seen in July-September quarter. Giant brands (turnover above Rs 300 crore) clocked in 8.72 points, followed by large brands at 6.65 and mid brands 1.25 points; small brands, which are generally managed by owners singlehandedly, recorded the lowest index growth of just 0.29 points. Thus, Q2 Apparel Index clearly indicates, once more, that giant brands have outdone large, mid and small brands.
Overall, the Index Value, during the quarter, saw most dynamism from sales turnover, and other attributes like sell through, inventory holding and fresh investments reflected a much lesser change. Small and mid brands could manage little growth in sales turnover, perhaps because the GST implementation process stalled or reduced deliveries during these months.
The index clearly reflects a strong correlation between sales turnover and inventory holding which impacts investments. This quarter, the biggest effect was from GST, as brands across the board looked at ways to reduce its impact. As Sunil Kumar, proprietor, Blueman explains, “The reason why our inventory holding increased is due to GST. The market slowed down and stocks had to be held. The other reason is, now there are plenty of players in the same segment and common items are available, so demand is low.”
“The reason for a dip in our turnover is the market is slow since GST was incorporated. The parties whom we take orders from are disturbed. People doing job work stopped working, customers reduced demand or material and stocks were stopped. Retail sales decreased,” says Nirmal, owner, Detail Clothing.
During the three-month period, 43 per cent brands reported an increase in sales turnover. Inventory duration increased by 54 per cent across all brand groups.
While there may still be a sense of optimism about overall business especially among bigger brands, nearly 48 per cent brands have said their outlook for next quarter is average. Another 36 per cent feel the outlook is ‘good’, and only 9 per cent foresee an ‘excellent’ outlook. At the same time, 7 per cent also feel it will be ‘below average’. (RKS)
Fibre2Fashion News Desk – India