Clothing Brands Likely To Get Costlier By 35% This Diwali.

Apparel buyers will have to shell out 35% more when they begin their festival shopping this October. The price rise made regional brands such as Liverpool costlier by 40% and national brands such as Arrow by 25%.

Garment prices have already risen 20% since Diwali and a further 15% rise is expected after July. For consumers, the choice brands will cost a third more than what they did during the last festival season. "Buy apparel now if you must. Manufacturers may pass on the hike in raw material prices to the consumer by July," says Arvind Limited CFO Jayesh Shah. Mr Shah believes 5-6% hike could still be passed on by manufacturers.

"We would not like to outprice the wallet of Indian consumers. But, we had no option considering the steep hike in prices of cotton over the last few months. While the initial response to the hike has been satisfactory, I believe if we are able to sail through July with these prices, we should not look back," adds Arvind Ltd chairman Sanjay Lalbhai whose company has hiked prices between15-25% in last three months alone.

Arvind brands like Arrow and US Polo are 25% dearer, while the likes of Ruggers and Excalibur put up at the company's value retailing arm Megamart are 15% more expensive, notes Arvind Brands CEO J Suresh. It was inevitable due to spiraling cotton prices and imposition of excise duty, he adds. The industry blames volatile cotton prices, a 10% excise on readymade garments and other inflationary pressures from wages, diesel and petrol for the multiple rounds of price hikes that hit finished apparel.

Cotton touched a record high of 62,000 per candy (up 63% since the new cotton arrived in October) shooting prices of yarn up by 24% during the period. The prices later corrected to 42,000 levels. The fashion industry that seldom pushed on such hikes to the consumer, could not absorb such an unprecedented hike. Usually, garment labels raise prices by 5-7%, never beyond.

"All FMCG companies steadily hiked their prices by 20-25% over the last two years as prices of various commodities went through the roof. Even an automobile company does so whenever steel prices shoot up.

Although under pressure from cotton, the textile industry never passed on their share of burden to consumers as brands lack of courage to take a call. This time, however, the price hike was inevitable. Premium apparel went up by 25% while others shot up by 15-20%," notes Wazir Advisors' MD Harminder Sahni who consults on consumer products and services.

While cotton is currenlty down 44,000 per candy, the downstream would take time to soften prices. Price hikes, meanwhile, have happened across the spectrum -- from a pair of trousers to a skirt and even a denim jeans. While consumer has so far accepted the hikes, those at the bottom of the pyramid (in context of modern retailing - budgeting their apparel buys within 1,000), are anticipated to keep off shopping.

"For someone who plans his purchase, even a 100 rise in cost of shirt would keep him away from shopping," adds E&Y's partner and national leader (retail practice) Pinakiranjan Mishra. No wonder, the price hikes have made the supply chain nervous.

Source : economictimes.indiatimes.com