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Top brands see brighter 2010

Top brands see brighter 2010
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First Published: Wed, Feb 10 2010. 11 06 PM IST

Updated: Wed, Feb 10 2010. 11 06 PM IST
Bangalore/New Delhi: The fading economic downturn has left at least one sector divided—apparel retailers.
India’s top brands are rushing to increase prices and introduce premium lines as the market recovers; the foreign brands would rather hold on the lower prices of last year or cut the rates some more.
Indian brands blame rising raw material costs, particularly that of cotton. Brands such as Indian Terrain, Scullers, Allen Solly, Van Heusen and Turtle spent most of last year attracting buyers with lower prices, but see a brighter 2010 to cash in on. “We are increasing prices after two years and it is due to higher raw material costs,” said Surya Narayan, executive director of the Chennai-based Celebrity Fashions Pvt. Ltd, which owns Indian Terrain.
The firm is increasing prices of its casual wear brand by 5-15% though it will retain the entry tag at Rs999 for a shirt.
Kolkata-based Turtle India Ltd is raising prices by 5-6%, again citing higher cotton prices, according to managing director Amit Ladsaria.
Cotton prices have risen around 8% in the past eight months to Rs3,000-3,200 per 100kg.
Retail consultants don’t buy that. The increase in apparel prices, they say, has more to do with the cheer that’s returning to the sector.
“What many brands are doing is increasing prices by saying it is premium fabric, extra embellishment or launching new ranges,” said Ashish Dhir, associate vice-president, Technopak Advisors Pvt. Ltd, a consultancy. “This is because they know that they can’t sell the same product at a higher price unless there is some visible difference.”
For foreign brands, it’s a different post-recession reality. For years, these brands sold in India at prices higher than in their home markets. But with customs duties going down and increased local sourcing of products, these brands are relying on a more even-handed price strategy. Marks and Spencer, Esprit and Next are shedding their premium labelling to push sales.
“The franchisee had positioned us as a very premium brand, and the reality was that we were very expensive,” said Mark Ashman, chief executive of Marks and Spencer Reliance India Pvt. Ltd, a 50:50 joint venture between the UK retailer and a unit of India’s Reliance Industries Ltd. In mid-2009, it reduced the entry price for its basic polo shirts for men to Rs395 from Rs495.
Planet Retail Holdings Pvt. Ltd, India franchisee of Marks and Spencer before the UK retailer joined hands with Reliance Retail Ltd, said it has been pushing foreign brands it represents to reduce prices.
One reason for the premium pricing was that many foreign brands sourced their portfolios from parent firms, drawing hefty customs duties. Customs duties have come down by around 10% in recent years and local sourcing has increased.
Even among Indian brands, much of the price rise is in the higher segments. Scullers, the casual wear brand of Indus League Clothing Ltd, part of Future Group, is maintaining its average price at Rs1,199 a shirt, but introducing a more expensive brand. Called Premium League, its prices will start at Rs1,599.
madhurima.n@livemint.com
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First Published: Wed, Feb 10 2010. 11 06 PM IST