After a turbulent year, the branded apparel industry is bracing itself for modest growth as it enters a period of consolidation in 2012.
With excise duty and escalating cotton prices prompting retailers to hike retail prices, walk-ins and consumption dropped in 2011.
“Inflation had a major impact on consumer sentiment the past year. Real disposable incomes went down. Shopping appetite was limited to basic products rather than high fashion garments that consumers could avoid buying,” said Mr Amit Gugnani, Vice President – Apparel Operations and Engineering, Technopak Advisors.
According to Mr J. Suresh, Managing Director, Arvind Brands, though there was value growth last year, thanks to hefty price tags, people were buying fewer clothes. “This will be a worrying factor going forward too. Inflation and rising interest rates will also continue to be of concern in 2012.”
The size of the retail apparel industry in 2010 was $36 billion. In 2011, it grew to $39 billion. “2012 too will not see exponential growth as the one seen in 2010,” said Mr Jacob John, Brand Director, Louis Philippe.
Consolidation
The apparel industry will see consolidation this year, industry players and analysts said. According to Mr Gugnani, retailers will look at strengthening sourcing and supply chain and focus on speed to market, cost and quality.
This is good news for consumers as they can expect good merchandise for less, says Mr Gugnani.
Real estate prices will come down this year and retailers must take advantage of this, said Mr John. “For instance, Louis Philippe will be aggressive in retail expansion, especially in increasing reach and penetration in smaller towns. The brand will also focus on expanding product categories such as footwear and sports wear.”