Will 2012 bring in the much-awaited cheer?

Year 2011 is nearing its end and we are on the cusp of a New Year 2012. Looking back at the Indian apparel industry it has been a mixed year. While towards the start of the year, moods were dampened with the imposition of 10 per cent excise duty

on branded apparels and the constant increase of raw material prices especially cotton, towards the end of the year the weakening of Euro and the beginning of another global recession has, falling export orders, low consumer buying sentiment and the fall of rupee against dollar have negatively affected businesses. With India easing imports of apparels from Bangladesh, smaller apparel makers were in the line of fire.

Barring a few apparel companies and denim players, almost all the apparel retailers witnessed decrease in their net results in second quarter results due to the factors mentioned above. Even retailers’ schemes and prolonged discount season sales failed to attract consumers during the festive season further affecting sales. At the moment increased inventories and debt pressure continue to hamper the growth prospects. Fashion retail brands belonging to companies like Kewal Kiran, Globus, Provogue, Pantaloon Retail and many others are not too excited with their performance even this quarter.

The government’s flip flop on FDI in multi-brand retail, a much awaited move that could have boosted spirits of many Indian and global retailers too has put a spanner on many brands’ plans. Of course, the government did take a bold step by approving 51 per cent in multi-brand and 100 per cent in mono-brand retail in the Union Cabinet. But with a strong opposition from almost all political parties, the consensus over the matter is yet to be reached. For now, another move which was considered would bring in reforms and bring down inflation, has been dumped into the bin for now.

And even though the CII-AT Kearney report on Indian luxury market predicted a bright future for the luxury segment in India, the luxury consumer is also just evolving, having a very limited and recent exposure to high end brands. So their expectations could differ. For example, luxury malls with their imposing large stores and polished staff might scare away a rich Indian small industry owner, who can’t pronounce the names of French or Italian brands, does not read magazines, where these brands advertise in and, hence, does not know the brands. But he has the money and wants to buy high quality, expensive products if properly educated. So the luxury brands vying to capture India’s market pie have to make some bold marketing moves like focusing on the SME segment of consumers and domestic production of luxury goods.

However, one segment that witnessed a positive growth was the e-commerce platform. According to a recent ComScore data, 60 per cent of online users in India visited retail sites in November. The year 2011 can be considered as the year when online shopping came to life in India. The number of online shoppers increased by 18 per cent in the past year with Indian consumers continuing to turn to the web to shop and retailers continuing to launch and increase their online visibility through active marketing campaigns.

With a mix of negative and positives, the year 2011 has generated very little hope for the industry as a whole. Stake holders are now looking forward to the New Year with much expectations… will their wait and watch pay off only time can tell.