Bespoke business is badly affected due to GST: Naveen Pishe

Founded in the year 1923, P N RAO is one of the oldest and largest family-led corporations in the Suit Industry, P N RAO has been in the forefront of suiting and groom wears for more than 93 years. Over the years patrons have grown across the country and even from around the world. In an exclusive conversation with Naveen Pishe, Partner, P N RAO sheds light on overall impact of GST (Goods Service Tax) on bespoke fashion.

Interview excerpts..

 What kind of implication of GST do you see on your bespoke business?  

The taxes have gone up from 5.5% VAT to 12% GST for ready to wear and initially, for accessories, the GST slab was decided to be 28% which was later reduced to 18%. However, the maximum effect of GST is on the tailoring business that has gone from 0% to 18%. This unprecedented spike is certainly hitting the bespoke business; we are registering a downfall of 20%-22% in the bespoke category whencompared to previous years. Additionally, the Fabrics now attract 5% GST, which was very moderate earlier. 

How has the response been from the ongoing wedding season where bespoke category attracts maximum surge? 

There was a slump in October, which later picked up in the following month. But there still is a strong comparison in terms of price factor between bespoke and ready to wear. For the preceding factor, people are now choosing ready to wear over bespoke wear as the customer is finding it difficult to shell out extra money on the latter due to sensitive economic conditions. Although the price of ready to wear has gone up, it still falls short when compared to bespoke fashion. Looking at how things are taking shape, it would take some time for the government to revisit the tailoring tax structure and bring it down to 5%.

As there already is 5% GST levied on the fabrics, keeping 18% GST on tailoring will strongly hamper the business.It would be safe to say that demonetization had a greater impact on the business than GST. Soonerthe government addresses this hiccup, the bespoke business will flourish. 

How do you compare the month of November to last year when demonetization was announced? 

Most of the business entities had to take the brunt when demonetization was announced in November last year. We were no different; it definitely affected our business, too. Having said that, the growth has been quite promising compared to the previous year. During the wedding season, purchasing from customers shifts to the top gear, however due to GST effects customers are compelled to buy cheaper products. Most of the premium brands in this segment such as Peter England, Louis Philipe, Vanu Huesen to name a few have witnessed drop in sales. On the contrary, brands like Max that caters to lower price points are doing better. Needless to say, the premium business category has taken a jolt due to the GST. 

Kindly shed light on current distribution of P N RAO? Also shed light on your strategies to scale-up the distribution channel? 

We are a regional brand primarily operating in Chennai, Tamil Nadu and Bengaluru, Karnataka where we have a total of 2 stores and 5 stores respectively.  As we are inching towards our 100th year, we are aiming to become a 20-store brand by 2023 from our present count of 7 stores. We largely cater to the Suit community, which has been our main focus in the last few years. At the same time, we have a dominant presence in the shirts and pants space with a huge customer base.  

What are your plans for online business? How bullish the company is as far as e-commerce business is concerned? 

We are looking into it but building an e-commerce platform is as expensive as opening a brick and mortar store. Moreover, this mode of operation may not suit a category such as bespoke, where just taking standard measurements will not work. Globally, online share of bespoke retailing is a mere 2%, we are not very bullish on this channel. In fact, we are keen to develop a platform where our existing customers can place repeat orders, so that they are not required to visit our stores time and again. However, it would be very challenging to do business with fresh set of customers via e-commerce channel.

Presently, we have an e-commerce website in place for shirts, we do see some kind of traction there but it contributes to only two percent of our entire sales. 

Tell us about your customer base? Also, is the company mulling to enter women’s category? 

As per our database, our current customer base is a little over one lakh. Presently, there is no such plan to enter ready to wear segment in the women’s category. However, we provide tailoring solutions to both women as well as well askids’ categories. Our clientele in this segment is less than five percent of our overall businessand is certainly not our focus area for now.