Within apparel industry, the impact of demonetisation has been felt, across the board. However, large and giant brands seem to have adapted to the situation and managed their brands’ growth. While large brands were at 7.23 points, giant brands scored 8 points. Small brands, however, were hit badly recording negative growth at -0.55 points, while mid brands managed to grow a meager 1.22 points, according to a CMAI report on its Apparel Index for October-December 2016 quarter.
Large and giant brands were able to maintain growth with fast clearance off goods and discounts that increased the sales turnover to 4 and 6.67 points and reduced inventory holding increase to just 0.68 and 1.77 points, respectively. Comparatively, small and mid brands lost sales turnover in Q3 by 0.45 and 0.22 points and inventory holding increased for small brands at 2.70 and mid brands at 1.25 points. This had a cumulative impact on sales turnover and inventory holding of overall Index Value as small brands and mid brands outnumber large and giant brands greatly.
Indeed there is a strong correlation between sales turnover and inventory holding and this explains the difference in the Index Value of different groups. Since small and mid brands are more dependent on trade and have less control on retail, they could not push sales, while large and giant brands could stimulate sales turnover, thereby restricting inventory holding. As Anant Daga, VP, ‘W’ and Aurelia, says, “Inventory reduction is a result of better than expected sales against planned buys.”
Explaining the plight of winter wear makers and retailers which was impacted the most due to demonetisation, Vinod Kumar Gupta, MD, Dollar Industries, says, “Some of our products like thermals—which are seasonal in nature and production—had been done in the month of July and August, to be sold up in winter months; but with demonetisation, the entire industry witnessed a drastic fall in the last quarter. Naturally, our inventory increased by a huge margin.”
Inventory holding recorded an Index Value growth of 2.53 points. Inventory duration increased in Q3 amongst all brands—62 per cent. Nearly 28 per cent brands reported an increase of between 1-20 per cent in holding; another 22 per cent reported an increase of 21-40 per cent; and only 12 per cent said their inventory holding went up 41 per cent, or more. However, 21 per cent respondents said their inventory holding remained the same. For 17 per cent respondents, there was a decrease in inventory holding—13 per cent between 1-20 per cent whereas 3 per cent decreased between the 21-40 per cent slab and 1 per cent more than 41 per cent.
According to the report, sales turnover saw an Index growth of 0.72, while 54 per cent of brands reported an increase in sales turnover. Of these, 40 per cent grew between 1-20 per cent; 10 per cent grew between 21-40 per cent; and 4 per cent grew 41 per cent, or more. The brands that grew 41 per cent or more were mostly giant brands at 22.3 per cent, followed by large brands at 9.1 per cent. Nearly 8 per cent respondents said their sales turnover remained the same. A significantly high number of respondents reported a loss in Q3 at 38 per cent, maximum respondents who reported a loss in turnover were from small brands with 71.05 per cent respondents, followed by mid brands—23.68 per cent—and large brands at 5.2 per cent. No giant brand indicated a loss in turnover in Q3.
However, around 41 per cent of brands feel that the outlook for January-March 2017 quarter in ‘Good’. Another 10 per cent say the outlook is ‘Excellent’. Nearly 42 per cent foresee an average outlook and 7 per cent feel it will be ‘Below Average’. (RKS)
Fibre2Fashion News Desk – India
| On 23rd May 2022
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