It’s a summer of discontent for consumers, retailers and textile and apparel makers in India. The rising cotton prices have taken its toll and faced with a squeeze on margins due to higher production costs, most retailers started to raise their prices. Already, leading retailers such as Reliance Trends and Arvind Brands have raised apparel prices. Meanwhile, Pantaloon Retail, the country's largest retailer, is looking at increasing the prices of its apparel products up to 18 per cent, to improve margins in the coming quarters.
This is just the beginning as predictions are the summer of 2011 might become an expensive season for consumers looking to replenish their wardrobe to go with the heat and humidity. Experts say garments can get dearer by a whopping 30 per cent, thanks to the enormous rise in raw material, especially cotton and polyester, the former being the staple summer fabric in India. Sandeep Jain, Executive Director of Monte Carlo expressed his concern when he said cotton and polyester have already become dearer. There is an increase of 15 to 20 per cent in the prices of summer wear and when one goes for the next booking in April, the rates might again go up by another 10 to 20 per cent. It is inevitable because of the rising raw material prices. Kishore Biyani, MD, Pantaloon Retail says, “There is an increase of 80 to 90 per cent in raw material prices. Almost all brands have increased prices by 30 per cent to offset the increase in costs.”
Even other apparel retailers such as Shoppers Stop, is expected to increase apparel prices in the next quarter. "We see a strong pressure on prices in the next quarter, and the bigger pressure would be in the first quarter of next year because of the rise in cotton prices. We should see an impact on MRPs across all apparels between 10 to 15 per cent next year," opines Govind Shrikhande, MD, Shoppers Stop. Mandhana Industries, with a client list that includes Mango and Tommy Hilfiger, said profits had been eroded due to higher cotton prices. The company has increased its prices by as much as 30 per cent in the past six months.
However, the industry is worried about consumers absorbing this big hike. Chairman of Duke Fashions India, Komal Jain feels this summer there would be an increase in the apparel prices by 25 to 30 per cent. Demand would be less in the beginning, but later, it would increase. He feels they will manage their production as per demand and is sure things will settle down soon and summer will see as good demand as winter. Raymond Apparel, expects to raise its prices by five to 10 per cent in the coming year to compensate for increasingly expensive cotton and other fibres, said Shreyas Joshi, the company's president.
While Jain might be expecting an increase in demand once the shock of the price hike settles down, the average consumer is not so sure. And manufacturers are worried. The President of Knitwear Club, Vinod Thapar argues that there is an increase in yarn rates by 25 per cent as compared to last year and it will continue to rise in the coming days. Thapar and other industrialists plan to take up the matter with the government and give a memorandum to the deputy commissioner soon.