Year 2013: Optimism, buoyancy rule business sentiment

The Indian apparel industry, which witnessed sluggish growth in the first half of the fiscal year, is on a revival mode. Leading apparel brands and retailers have witnessed a rise in sales since September and the growth momentum is continuing.As J

Suresh, MD & CEO, Arvind Brands points out, “The year 2012 was a difficult one, particularly till September. There was a drop in GDP, which affected consumer sentiment and buying. However, with a slight improvement in consumer sentiment, the market revived during Diwali and sales are sustaining post Diwali. In view of this, and also based on the improved sentiments expected in 2013, we are looking for a good year ahead. It would be definitely better than the current year.”

The sluggish growth in market had a direct impact on inventory and stocks of most retailers. In an attempt to solve this problem, most of them offered early and prolonged ‘End of Season Sale’ (EOSS). In fact, it’s a trend that has caught up in a big way. As Kewalchand Jain, CMD, Kewal Kiran Clothing, opines, “EOSS is just a marketing strategy and our business cannot depend on that. Many retailers took the easy way out by extended EOSS to clear their dead stocks. However, this is not the way business should be done as it has a negative impact on customer sentiments. The trend may backfire and customers might get so used to EOSS that they might not go to a store to buy fresh stocks without discounts. We hope 2013 will have a more controlled EOSS.”

As always price fluctuations were also observed in 2012. However, apparel prices remained steady since yarn prices have not surged much; demand has been steady and most brands have managed to clear their inventory. This momentum is going to continue for next summer as well since the market has already peaked. Sentiments are positive after a long time.

Rahul Mehta, MD, Creative Lifestyles agrees and says, “Due to an increase in excise duty on branded apparels prices had shot up. This subsequently had an impact on the pricing of like-to-like products. However, the situation seems to be under control now and with positive customer sentiments, we look forward to a good year in 2013.”

Meanwhile the apparel industry has realized the importance of e-markets and social networking sites. With more and more websites mushrooming in the virtual world retailers see it as a brand building and marketing tool, while actual sales are still very low. As Mehta avers, “E-commerce has its own set of challenges in India. Indian customers are still wary of frauds and cyber crimes. Due to this, actual sales don’t happen on websites. Only two per cent of our inventory goes through such websites, so we don’t really focus on this area.”

But while brands fail to encash on the growing e-markets they have ensured a strong presence on social networking sites like Facebook. “While we use conventional media, we have been exploring New Age media as well to reach out to our consumers in an engaging manner. We now have 75,000 plus Facebook fans,” informs Amit Kothari, Marketing Manager, Marks & Spencer.

Statistics reveal 184 textile and apparel companies are in the profit regime this year compared to 155 last year. The number of loss-making units has gone down. As against 120 loss-making units in FY-12, the number has come down to 91 in the first half of FY-13. A positive sign indeed of how business could go in the New Year.