According to retailers and manufacturers their inventory has piled up owing to a steady rise in prices in the past three months(after the budget where 10 per cent excise was rolled out on branded garments) and the sales have dropped almost 20-30 per cent during this period. Since the price hike came into force, apparels, which are one of the fast selling categories on the retail shelf, have taken a downward turn. Margins too are under severe strain owing to high finance charges, labour and production costs, among other things as per few retailers.
Brands such as Woodland, Mango, Allen Solly and Catmoss have started clearance sales to attract footfalls. Big retailers too have followed suit. Mr Harkirat Singh, Managing Director, Woodland Shoes and Apparels, said: “This year, peak season sales were not up to market expectations. Since we sell shoes and apparels, the impact has been marginal on us. However, in apparels, we are noticing inventory pile-up. We hope the end-of-season sale will perk up demand”. He said the real impact of the price hike can be gauged only after the end-of-season period. “Sale period is an important part of the yearly calendar with almost 25 per cent of annual sales coming during this period. We hope this will attract buyers”. Even the likes of Allen Solly have had to resort to putting up the sale sign due to pressures from their competitors. Mr Amit Pande, Retail Director, Allen Solly, said, “Our competition has started the sales early. So we were forced to respond. However, we plan to close the sales early as well.”
Same applies to the apparel brand Catmoss who are providing their season-end sale with attractive discounts. Talking for the brand Mr. Mayank Gupta, Sales & Marketing, Catmoss Retail Pvt. Ltd. said “There has been a considerable effect on our margins for the year with the rise in prices of textiles, as a brand we have underperformed and hence the need to clear out the stock is imperative”.
The impact of price rise has been constant. The market is yet to absorb new prices. If sales drop due to the price rise, the inventory pressure will be high. The new priced stock has just started arriving so the impact has been difficult to gauge. In the next season, the full impact will be visible. So how the discounting is undertaken is the critical aspect. “Our products are discounted keeping in mind the highest and lowest selling, ranging from 20% for the highest to 50% for the lowest selling product category” Mr Gupta added. An early clearance stock also refers to the conclusion of the season at the earliest.
A report has been submitted to the Textile Ministry by clothing manufacture association to sought removal of the tax to slash prices of apparels and boost demand. If the required alterations are not undertaken on the textile end, the consequences are bound to be of serious proportion.