Retailers looking for cheer in festive buying

Thursday, 15 September 2011

Excise duty and the hike in cotton prices forced manufacturers to raise garment prices. This made consumers wary of purchases and has lead to an increase in inventory. As a result ‘End of Season’ sales started earlier than usual this year. For instance Shoppers Stop began their sales from August 7 instead of August 15. Govind Shrikhande, MD and CEO of Shoppers Stop, is of the view that everyone started their sales early to increase the cash inflow as prices had gone up, affecting sales. Last year, Century Mills which gave discounts up to 50 per cent, this year it gave customers a flat 50 per cent off on the total bill if they bought four or more apparel. This resulted in higher sales. Arvind Retail expects the coming days to be tougher on the apparel industry. “We began the discount season late yet the impact seems imminent," says J Suresh, Managing Director and CEO, Arvind Lifestyle Brands and Arvind Retail.

Though cotton prices have started falling but fabric makers had procured most of it when prices were high. Despite a 50 per cent fall in cotton prices in recent weeks, new procurement will start only after three to four months, when new cotton comes into the market. During that time, they will have to get rid of the old stocks. Rahul Mehta, President, The Clothing Manufacturers’ Association of India (CMAI) points out that the month of July saw the full impact of excise duty on branded garments wherein demand slackened. However, it’s doubtful if the extended discount season helped apparel manufacturers or retailers. Margins squeezed for almost all players with demand dipping by as much as 15 per cent. What’s more, squeezed margins have forced most players to even cut down on production. Now, with festive buying round the corner, retailers and brands are pinning their hope and expecting business to pick up.

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