Unhealthy competition poses hurdles for hosiery industry

Textile is one of the largest and fastest growing industries in India. It is expected to grow from $126 billion in 2015 to $200 billion by 2020. “Despite positive statistics, the state of domestic hosiery industry is not very optimistic,” says Jyoti Jain, Jt Managing Director, TT, adding, “The scenario is very bleak and unpromising at present as the industry is facing cut-throat competition.”

Points to Ponder

India is one of the world’s fastest growing economies with GDP likely to grow over 8 per cent, benefiting from the acceleration of infrastructure projects, strong consumer spending and other favourable macro-economic factors. It also has a strong retail market worth $600 billion. However, players are not practicing healthy competition, and that is proving to a bane for the overall industry.

Jain states, one example of negative impact of herd mentality is, when a brand reduces product prices due to some personal reasons, other players follow suit and there is a domino effect. Ultimately, no one gains from the price cut. In fact, the market scenario becomes worse -- spoiling consumer sentiment and impacting overall demand.

Continuous deals and discount strategies are adding to the woes if players, since low consumer sentiment pushes shoppers to buy only during the discount season. Jain points out that the industry has created this situation and now, the consumer is not willing to purchase a full-price product and ultimately companies bear the brunt since on the prices of all raw materials and labour costs are rising.

“Offering some festive deals to please the shopper is fine but we are too generous and keep offering schemes after schemes. Who offers discounts when we buy raw materials in bulk?” questions Jain.

An appeal to the hosiery industry

Jain appeals to hosiery industry players to follow certain rules such as not giving credit to wholesalers, ensuring timely payments by wholesalers/distributors, not turning a financer for dealers, so that they can buy other related categories offered to sell in the market and so on. “Due to lack of unity among us, often dealers delay payment or even default on payments. Our association should be strong enough to inculcate fear among dealers about default,” she says.

Keeping the hosiery industry’s current situation in sight, Jain is of the opinion that players must act quickly instead of unnecessarily investing funds in heavy advertising and marketing efforts, discounting strategies hoping to race ahead of other brands. “Are any of our friends in hosiery manufacturing business benefiting from the cut throat competition? I don’t envisage any brand actually reaping benefits. Therefore, I request all brand owners to introspect and look for answers,” she asserts.