Clothing brands and consumers more price-conscious post-pandemic: CMAI
According to the Garment Manufacturers Association of India (CMAI), clothing brands and consumers have become more price-conscious than before the pandemic, even though the hard-hit sector is poised to record 75-80% of pre-pandemic revenue by FY22. following a strong recovery.
The brands plan to tweak their design specs to become more price-competitive, the cluster’s lead mentor, Rahul Mehta, told Business Today. CMAI represents 20,000 apparel retailers and manufacturers. “As it is, apparel brands are struggling because our raw material costs have gone up 25-30%, which is adding pressure on pricing and margins. Yarn prices, prices packaging and logistics costs have all increased.
Additionally, most brands have also learned to work with less inventory, finance and labor than before the pandemic, lead times have become shorter and there is greater pressure to avoid excess storage, he added. “Previously, we didn’t bother too much if the squad was 100 when in reality it only took 80-85. We could live with this additional manpower. Now people say, ‘If we can make do with 85, why do we have 86?’ This impacts workflow systems, he said.
Last week, CRISIL Ratings estimated that physical apparel retail sector revenue will grow an average of 20-25% year-on-year in FY22, after declining 40% year-on-year in FY22. in FY21 due to Covid19. This was an upward revision to their previous estimate of 15-20% growth.
The sector has been hit hard during the pandemic as much of the workforce has been confined to their homes for most of the past two fiscal years. “The strong recovery seen in the second and third quarters of this fiscal year and the good performance expected in the fourth quarter will propel revenues to 75-80% of the pre-pandemic level,” said Anuj Sethi, senior director of CRISIL Ratings, in Note.
The rating agency had based its analysis on 35 clothing retailers which account for a quarter of the sector’s revenues. Of these, the top eight apparel retailers, accounting for one-fifth of industry revenue, saw a strong recovery in the first nine months of this fiscal year, with revenue growing 55-60% year-on-year thanks to the rise in party and wedding sales, he noted. .
Mehta also attributed the strong recovery to positive consumer sentiment, less fear of catching the infection and plans to gradually return to the office. But, he said, consumers will be more aware of the value of what they are buying. “Brands will have to convince the consumer that the shirt is only worth Rs 5,000 or Rs 7,000. The middle class will spend a little less on clothes.