The ethinc wear segment will see demand erosion of Rs 15,000-20,000 crore in FY21, as compared to the previous fiscal
Ethnic wear brands in the country are pinning their hopes on the festive season for a revival in demand. With fewer occasions to wear ethnic clothes, the segment saw muted sales, 10-20% of pre-Covid levels, in April, May and June. However, the onset of festivities — starting with Eid in July and Raksha Bandhan, Ganesh Chaturthi and Onam in August — brought back some of the demand. Brands such as Fabindia, W, Aurelia and Ethnix by Raymond have reported a surge in sales, to the tune of 35-45% of the pre-Covid period.
The festive season contributes about 25% to the yearly sales of ethnic wear brands. Companies expect a further revival in October and November during Durga Puja, Dussehra and Diwali. According to Siddharth Jain, partner, Kearney, the ethnic wear category has a 20% (Rs 45,000 crore) share in the Rs 2.35 lakh crore urban apparel market in India. The segment, he says, will see demand erosion of Rs 15,000-20,000 crore in FY21, as compared to the previous fiscal.
Rising to the occasion
Fabindia is now reaching customers directly, as opposed to customers visiting its shops. Ajay Kapoor, president, retail, Fabindia, says for the festive season, the company will set up shops in housing societies, and provide contactless shopping experiences to consumers.
Fabindia is also betting on e-commerce to bring in higher sales this season. The company claims to have seen a 100% jump in online sales in recent months. “Our offering won’t be as wide this time, but we plan to come out with a Rajwada collection for markets in East India in September, and North India in November,” says Kapoor. Fabindia expects to clock 50% of last year’s festive sales.
TCNS Clothing, which owns brands like W and Aurelia, is focussing on its casual ethnic wear line. “We have observed that consumers are opting for casual ethnic clothes and low-cost everyday functional wear,” says Anant Daga, MD, TCNS Clothing. The company is also building “a flexible inventory and a responsive supply-chain, as demand forecasting is difficult in these uncertain times”. Daga believes this will help them offer relevant options even if there’s a surge in demand last minute.
Ethnix by Raymond, too, plans to keep its supply chain nimble. Although the absence of large-scale weddings has impacted the business, Suman Saha, COO, Raymond Apparel, says “the need for ethnic wear hasn’t gone away, as people are still attending small gatherings and digital ceremonies”. The apparel company will be launching BTL activations over the next three months.
While e-commerce will emerge as the leading retail channel this season, Anand Ramanathan, partner, Deloitte India, says it will come at a price for apparel companies. “The margins these brands earn from online channels are 30-40% lower in comparison to offline channels,” he says.
According to Jain of Kearney, it takes six to eight months of planning to get ethnic wear products in the market. And this year, that period was disrupted due to the lockdown. “Since all the work would have happened from March to September, these companies would have faced supply chain challenges during these months,” he adds.
The ethnic wear category relies heavily on skilled designers and embroiderers. The shortage of artisans owing to the pandemic has also affected the business.
Industry watchers expect a subdued festive season. Although sales may pick up during Durga Puja and Diwali, it will remain 30% lower than last year. However, this will depend on how effectively brands can lure customers into their stores, both online and offline.
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