Premium clothing brands such as Van Heusen, Arrow, Izod, US Polo, Reebok and Kimaya Fashions are looking at hiking prices by up to 10 per cent to offset higher input costs. Others such as Wills Lifestyle, Marks & Spencer, Reebok and Benetton plan to absorb higher costs to keep their sales growth intact.
Many garment retailers now see room to push up prices in the premium segment on the back of rising demand after spending most of last year wooing buyers with lower prices and cutting costs by consolidating sourcing and shutting down non-performing stores as sales slumped due to the economic slowdown.
Cotton prices have increased almost 30 per cent in just three months, while yarn prices have gone up by 20 per cent. The increase in prices of cotton and yarn in India is a reaction to global prices and has directly affected textile prices.
The increase in input costs may imply seven to eight per cent more expenditure for apparel retailers. But when garment sales started to rise after reporting a 25 per cent drop last year, retailers were extremely wary of increasing rates that could hit demand.
The dilemma, where retailers are torn between increasing prices that may impact sales in a recovering market and absorbing a 25 to 30 per cent jump in prices of yarn and cotton to take a hit in their margins, has vertically split the industry.