The Rs 3.15 lakh crore fashion and apparel retail segment in India, which is battling an unprecedented 70% rise in cotton prices, is undertaking a sle1w of measures including smart pricing, efficient marketing and a revamped product mix to counter a possible slump in demand. Cotton prices in the domestic market have shot up from Rs 3,200-3,500 per quintal in calendar year 2010 to Rs 5,500-5,700 this year.
While a section of retailers feel demand may fall as much as 15% in the last quarter of the current financial year owing to higher apparel prices as retailers pass on part of the raw material cost hike to customers, others are betting on impulsive buying from the youth and the growing interest in green products to arrest any demand slump.
According to Govind Shrikhande, MD, Shoppers Stop apparel buying is expected to see a dip of 15% in the fourth quarter of the financial year. ?Conspicuous consumption will come down leading to a dip in demand. Hence, retailers may have to take a hit on margins and price their products smartly.?
However, other big retailers do not expect minor changes in prices to significantly impact buying. Rakesh Biyani, CEO of Pantaloon Retail, said, ?There?s an exponential growth seen in the ready-made garment business in India. We did clothing sales of Rs 3,600 crore across 300 outlets in 2010. Minor changes in product prices do not bog down the young consumer.? With fashion and lifestyle trends changing frequently, consumers are exhibiting changes in buying behaviour, but buying does not stop, he added.
Prashant Agarwal, MD of Bombay Rayon Fashions, agrees to this view. ?Fashion and apparel retail is not only about cotton. It’s more about having the right product mix, pricing and marketing strategies to not only draw consumers to stores, but convert footfalls into sales? he said.
The impact of cotton price-rise on higher-end brands, priced in excess of Rs 5,000 is expected to be minimal. Sheetal Mehta, COO, The Collective says, ?Buyers of premium apparel don?t mind a Rs 300 change in the price of a garment. The product matters more to brand-conscious consumers.?
Most retailers say impulsive buying by the youth is a major driving force in the apparel business.
?The young consumer?s passion for green cotton products, and the desire for adapting to new fashion trends, will not allow a dip in clothing sales,? feels Thomas Varghese, CEO of Aditya Birla Retail. Besides that, diverse range of products and consumer discounts, offered by retailers also attract the youth to stores.