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Tepid business is forcing fashion brands to cancel orders, delay deliveries from suppliers

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Several fashion and lifestyle brands report a 10% to 20% decrease in business in the last three months compared to the same months last year as consumers cut down discretionary spends

Mumbai: Fashion brands across the board are reporting tepid sales in the last three months, prompting many retailers to postpone purchases or decline deliveries of goods from suppliers as inventories pile up due to lacklustre consumer sentiment.

Several fashion and lifestyle brands IndiaRetailing spoke to said business is down 10% to 20% in the last three months compared to the same months last year as consumers have started cutting down on discretionary spending amid high-interest rates and spiralling costs of everything from food to fashion.

“There is an overall dip of about 10% and that is being talked about by retailers throughout the country,” said Vipin Kapoor, chairman of Kapsons, which operates about two dozen Kapsons and Kapkids department stores and runs franchisee stores of Tommy Hilfiger and Jack & Jones among other brands. Sundeep Chugh, president of the ethnic brand Biba Fashion Ltd, also said business has been low over the months.

Top executives of various brands said last year saw a major uptick in business post-pandemic due to pent-up demand from consumers for apparel and other lifestyle items. Companies were hoping to continue the positive business streak this year as well which prompted many fashion retailers to go ‘overboard’ with orders from suppliers. They were expecting growth over the last year, which failed to happen.

“For example, a consumer who wanted to buy two shirts last year ended up buying three or four. So, people’s wardrobes are already full to an extent,” said Rahul Mehta, chief mentor for the Clothing Manufacturer Association of India (CMAI). He said high unsold inventories prompted fashion retailers to advance the bi-annual end-of-the-season sale to mid-June compared to the traditional practice of having the discount season in mid-July. “The end-of-the-season sales haven’t worked well this year and that is a cause of concern.”

A chief executive of a global sportswear brand also cited heightened competition among the growing number of fashion and lifestyle players in the market with an increasing number of global and local brands entering India and the existing players expanding aggressively post-pandemic amid a return of customers to the physical stores.

“The differentiation is very low among the competing brands or their products ……. a T-shirt is a T-shirt,” he said asking not to be named. “So there is an intense competition among brands to lure the same wallet share and that hurts especially in low consumer sentiment time.”

As inventories are piling up in warehouses, brands are cutting down on new orders as well. In many cases, they are declining to take deliveries of products they have already ordered, according to executives working with garment suppliers.

Both Kapoor and the CEO of the global sportswear brand said sales on online channels have also been hit. Generally, online sales compensated or complimented brick-and-mortar sales.

“The next two quarters look tough,” said the chief executive.

As a result, a raft of small to big brands have curtailed their orders and are not honouring deliveries of previously ordered goods.

“Brands are delaying pick up of goods by up to three months,” said Kapoor of Kapsons. “There will be a lot of stock adjustment to do this year in the next two quarters.”

However, Harminder Sahni, co-founder of retail consultancy Wazir Advisors, feels the current business downturn is a small blip. He said it will have virtually no impact on India’s overall consumption story. He said brands should continue to focus on the long-term market rather than getting bogged down by smaller blips like the current one.

According to rival consultancy Technopak Advisors, India’s apparel market is expected to swell 12% annually to reach $168 billion by fiscal year 2031 from its current level of $65 billion annual business.

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